I am pleased to report that we have had a great year in all respects in spite of the economy being under pressure.

We improved EBITDA margins for the combined business to 13.3%.

Dear Shareholders,

I am pleased to report that we have had a great year in all respects in spite of the economy being under pressure and the resultant devaluation of the rupee driving inflation upwards.

Despite a challenging business environment, we have managed to turn the Henkel business around successfully. In doing so, we have created a new sustainable growth platform for the entire business. We broadly realised all objectives that we set for the management team in the last year. We had set ourselves a goal of realising efficiencies to the tune of ` 100 crores post the Henkel integration in the areas of supply chain, distribution channel margin optimisation, sourcing benefits and overheads control. I am happy to say that we achieved these objectives in their entirety. We reinvested part savings to brand building and improved EBITDA margins for the combined business to 13.3%.


Contribution of Power brands to our business


We have implemented the Power brand strategy with all media investments behind our six Power brands, growing our revenues by 23% in the full year. Power brands constitute 90% of our business and grew in excess of 20%. Ujala Fabric Whitener grew by more than 15% in volume terms after years of low category growths. Exo Dishwash Bar and Pril also grew healthily and our dishwash portfolio is poised to improve in the future. Maxo saw healthy growth with liquids growing by more than 90% and coils growing moderately at 9%. We also invested strongly behind Maxo and the brand is poised to play a significant role in the fast-growing Household Insecticides market. Our investments in Margo yielded strong results and has enabled it to assume the status of a national personal care brand. The year saw intense price competition in the detergents market. In this scenario, Henko had moderate growth of 17%. We are readying Henko for a comprehensive relaunch in 2nd quarter of FY 2014-15.

We have also stabilised the unified distribution approach for our brands. Today we have 1,500+ distributors, 220 super stockists and more than 4,000 sub-stockists covering smaller urban and rural towns. We now cover more than 400,000 outlets directly through our stockists and sub-stockists in this country. We are confident that the distribution platform that we have set will play a stellar role in growing our business in the future.

We have improved our brand presence in urban India and have started growing our non-South business aggressively with our revamped distribution focus and more media investments. Our brand spends have grown by 65% in this year (10.8% of revenues on A&P spends). Contribution of our non-South business has improved from 52% to 56% during the year, building a foundation for sustainable revenue growth.

We have managed to realise these ambitious objectives that we set for ourselves and are confident that the business will outperform the industry in the going forward.

I take this opportunity to thank all employees who have exhibited values of passion, creativity, speed and hard work which are essential for success in companies like ours. They have shown enormous resilience to accept change and to adapt to the new business model which is extremely commendable.

The current economic environment is challenging, competitive intensity is high and inflation puts pressure on our margins. We also have a challenge to reinvest strongly behind our brands and grow business aggressively. We are confident that we will measure up to the challenges and deliver sustainable growth and value to our shareholders.

With warm regards,

S. Raghunandan
Chief Executive Officer