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Corporate OverviewPerformanceGovernanceFinancial Statements11It used to be said that knowledge ispower. That remains true, but in thiscentury, digitisation is power. Digitisationis, indeed, the channel through whichNQRZOHGJH ÀRZV LQ DEXQGDQFH ,W LV WKH lifeline of modern industry, the foundationof skill-building, and the enabler of a levelplaying ground.The government’s digital policy aimsto empower Indians. Harnessingtechnology can give them accessto greater employment and skilldevelopment opportunities. Digital toolscan connect trained tradespeople andsmall entrepreneurs with the right clientsand markets. In governance, digitisationremoves bottlenecks, facilitating startups, letting business owners devotetheir energies to productive work. Theoverarching purpose is to turn Indiainto a digitally empowered society andknowledge economy.performers, accelerating careeradvancement. With the errors resultingfrom human intervention minimised, theemployee satisfaction rate has spiralledupwards.Jyothy Laboratories has made optimaluse of technology for a range offunctions, in particular, human resourcedevelopment and deeper market reach.Digitisation has helped us streamlineadministrative functions, lettingemployees speedily carry out proceduresthrough a self-servicing platform. Digitalrecords of employee appraisals haveincreased the visibility of outstandingThe digital world knows no limits, justlike human potential.ɟs Njs OŸŘʩ sŘǼ ǼÌ Ǽ ǼÌNjŸȖ¶Ì ŸŘsʰ ɠs can unleash the other.The ultimate positive outcome of anyÞ¶ÞǼ Ķ ÞŘÞǼÞ ǼÞɚs Þǣ ǼŸ ȖĶʩĶ ǼÌs ÌȖŎ Ř potential. Investment in technologyis really about investment in people.Just the reason why automation at themanufacturing units is meant to makeour products perfect, but never todownsize manpower.

12Jyothy Laboratories LimitedAnnual Report 2015-16Make in Indiais AboutInclusiveGrowth

Corporate OverviewPerformanceGovernanceFinancial StatementsIf India is to rise and rise some more, noone can be left behind. There is a treasuretrove of talent waiting to be discoveredeverywhere, in the remotest corners ofthe country. Women, in particular, canbecome the strongest growth drivers ofthis economy. In our march forward,everyone must walk to the same rhythm.The cornerstone of the state policy isto take progress to every nook andcranny of the country, to help people inmyriad little ways. Villagers are gettingmore targeted subsidies and womenentrepreneurs are promised access toeasier loans. Inclusive growth is aboutraising the standard of living throughʩŘ ŘOÞ Ķ ÞŘOĶȖǣÞŸŘ Ř NjȖNj Ķ sŎƼĶŸɴŎsŘǼ schemes.Corporate social responsibilityprogrammes are undertaken to not onlyimprove people’s life, but also to givethem a space from where they can stepout with a sense of pride and hope.ŷȖNj EsŘsʩOÞ NjÞsǣ Njs ƼNjÞŎ NjÞĶɴ ¶ÞNjĶǣ Ř women. They are the ones most in needof a helping hand; they are also theones who change society the most whenempowered.The core belief of Jyothy Laboratories isthat Indian corporate houses must go tothe rural areas and create jobs. Women’sinclusion is a fundamental of theCompany policy. At the manufacturingȖŘÞǼǣ ŸNj ŸȖNj ʩNjǣǼ ENj Ř ȕĠ Ķ ʰ ɠŸŎsŘ workers outnumber men. Within theCompany, we promote equality andinclusion through our people-friendlymeasures. No distinction is madebetween higher and lower ranks ofemployees in providing health care.As with our product innovations, oursocial initiatives, too, are designed forthe maximum impact.Progress is permanent only whengether.everyone walks together.13

14Jyothy Laboratories LimitedAnnual Report 2015-16Make in Indiais AboutDomesticConsumption

Corporate OverviewPerformanceGovernanceFinancial StatementsIndia is about booming consumerism andthriving aspirations. It is a land of excitingopportunities and boundless possibilities,with one of the most promising growthpotential globally, the nation is ready for aconsumption wave.In a country on the go, wants and needsgrow. We are in the household goodsevolve rapidly. Now exposed to the bestspace, directly related to people’sin the world, consumers here expectkethealth and hygiene. Making this marketto see that same standard – or bettergrow has meant constantly renewing– from home-grown manufacturers.ersconnections, reaching out to consumersThe expanding Indian middle class areier.not served by what was available earlier.big spenders; they are also increasinglyconscious of the value proposition ofEncouraging domestic consumptionbrands backed by solid research andis, for us, both a business need anddevelopment. The people here have aa valuable contribution to nationalstrong desire for competitive pricingprogress, which we are optimistic willcombined with the best quality.make our economy future-proof.At Jyothy Laboratories, the endeavourToday, for the global conglomerates, NjŸŎ ǼÌs ɚsNjɴ ʩNjǣǼ ɴ Ì ǣ EssŘ ǼŸ w itIndia is the land of promise. We knewserve the domestic market, to introduceenlong ago, and that knowledge has beenpeople to the world-beating technologyour best ally.that an Indian company can offer.Localised, affordable goods, createdby understanding the minute details ofpeople’s life, have helped this Company15

16Jyothy Laboratories LimitedAnnual Report 2015-16Make in Indiais AboutSelf-Reliance

Corporate OverviewPerformanceGovernanceFinancial StatementsPeople make a nation. Their skills makethe economy. When citizens are highlyskilled and their entrepreneurial spiritLV ¿UHG XS D FRXQWU\ WUDQVIRUPV LWVHOI from ground up. Indians of today haveenormous potential to be job creators,not just job-seekers. The possibilities areendless. And exciting.Skilling India and Make in India are twosides of the same coin. Skill leads toemployment, or self-employment, andthat has a cascading effect on the entirecommunity. The desire for self-relianceǣƼNjs ǣ ĶÞĨs ɠÞĶ ʩNjsʰ ¶ÞɚÞض ƼsŸƼĶs ǼÌs OŸŘʩ sŘOs ǼŸ ŎŸɚs ŸNjɠ Nj ǣǼsNjʳ Modern India has made the promotionof entrepreneurship its priority. The aimis to develop and channel the energyof our greatest resource: our young,energetic population. Skill training andindustrial training are among the primaryobjectives of the ‘Skill India’ mission.We motivate employees in order tobuild an engaged workforce. Trainingand guidance are given at every step, Ř Ķs sNjǣÌÞƼ LJȖ ĶÞǼÞsǣ Þ sŘǼÞʩs Ř encouraged. New growth avenues arealways made available to the mostdeserving. A ‘Skill Recognition Award’puts the outstanding employees inthe limelight, making them feel valuedand inspiring others. Besides technicalknowledge, enthusiasm and innovationare also rewarded.There is no doubt that the qualitiesɠs ʩŘ Ř ŘȖNjǼȖNjs ÞŘ ŸȖNj sŎƼĶŸɴssǣ are present in most Indians. It is ourAt Jyothy Laboratories, we embraceresponsibility to give them a chancebuilding skill sets with passion andto shine. Every Indian company mustaggression. We have always believedthat the answer to greater and sustained partner the nation in the Skill Indiaprogramme. We shall leave no stoneprosperity for a company and a nationunturned to create a workforce that willlies in encouraging employability androw.contribute to an enriching tomorrow.development. With over three decadesof enhancing the skills of its ownemployees and of the communities thatJyothy Laboratories sees as its own, theCompany is committed to the goal ofcomplete self-reliance.17

18Jyothy Laboratories LimitedAnnual Report 2015-16Make in Indiais AboutYouthPower

Corporate OverviewPerformanceGovernanceFinancial StatementsThe energy of the millennials is India’sgreatest strength. As much world citizensare rooted in the country’s tradition, theyDUH WKH FRQVXPHUV RI WKH IXWXUH )XO¿OOLQJ their unmet needs is the key to success.The majority of the country’s populationour loyal customer base built over threeÞǣ EsĶŸɠ ǼÌs ¶s Ÿ ǼÌÞNjǼɴ ʩɚsʳ ǻÌÞǣ decades, our focus is on engaginggeneration is proud of home-grownwith the millennials through strategicingenuity, and wants to triumph againstcommunication, earning their trust andevery international benchmark. Globaladmiration.businesses woo them as consumers,yet they remain supportive of nationalWe are not thirty-three years old; we arebrands that deliver world-class quality.thirty-three years young and averageage of our employees is below thirty-Today’s India is driven by theirthree. As a Company, we are among theaspirations. This population ismillennial. Like the youth, our optimismdemanding, and that compels businessesand ambition knows no bounds. Everyto innovate. The youth are the catalystsinnovation that will happen in thisfor the transformation of moderncentury can happen here. We shall makeindustry.it so.Jyothy Laboratories has always believedthat the future is here. We are certainthat as India grows, youth power shallpropel national brands to positions ofmarket leadership. Even as we retain19

20Jyothy Laboratories LimitedAnnual Report 2015-16Chairman andMD’s StatementDEAR SHAREHOLDERS,It pleases me to say that we haveʩŘÞǣÌs ɴsǼ ŘŸǼÌsNj ɴs Nj OĶÞŎEÞض a few more steps towards growth.ŗŸɠ ɠs ƼNjsǣsŘǼ ǼŸ ɴŸȖ ǼÌs ǣÞ¶ŘÞʩO ŘǼ shareholder value that was created bythe strong performance of our team.The market is never without challenges,but we have continued on a growthtrajectory, reinforcing core strengths,which enabled us to ride out themacroeconomic uncertainties. I canǼsĶĶ ɴŸȖ ɠÞǼÌ OŸŎƼĶsǼs OŸŘʩ sŘOs OŸŘʩ sŘOs ǼÌ Ǽ Þǣ E ǣs ŸŘ ǼÌs ÞŎŎsŘǣs power of the whole Jyothy Laboratoriesteam – that we are poised for largertasks.We shall do everything to retain thiswinning edge, and the national policyenvironment in the country has becomeour tailwind. This environment isextremely encouraging for businesseslike your Company. We have always beenin India, for India, and we are proud of‘Make in India’. The initiative, launchedin late 2014, gained momentum in 2015,the year under review in this report.We have walked this path from ourinception. The fundamental principleof Jyothy Laboratories is making lifebetter for the people of this countryby manufacturing world-class productsusing local skills. We believe thatindigenous skill should be much betterthan what is available abroad.At Jyothy Laboratories, we want to –and we do – contribute something tomake the nation proud. ‘Make in India’should spread across the country; we goto the rural areas and create jobs. Webelieve that the manufacturing sectorcan reduce the excessive dependence onagriculture and bring more people intothe bracket of prosperity.Our corporate social responsibilityinitiatives are driven by the sameprinciple of making Indians proud. Whenwe present underprivileged widows oradivasis with the gift of housing, theyget more than a shelter; they develop agreater degree of self-esteem, as theyare now able to step out from a placethey can call their own.Business, for us, is so much more thannumbers. It has a higher purpose, thatof giving back to society. Our peopleconnect helps us to identify the mostrelevant areas of corporate socialresponsibility. CSR is very importantto us, and we choose our programmesto make a real impact, working in afocussed manner. We have put all ourmoney in one district in Kerala, wherethe company started. In the Thrissurdistrict, we have installed 350 goodtoilets in all the government schools forgirls. Then we built homes for peoplewho were displaced by a dam projectbut were given land by the government.We also gave pukka houses to 27ɠÞ Ÿɠǣ Ÿ ʩǣÌsNjŎsŘʳOFFERING PRODUCTS DIFFERENTLYThe keystone for us is differentiation– every one of our products has tohave a USP, every single product mustbe different and better than otherproducts in its class. With each newlaunch, we have targeted a particularsegment, offering a solution that Jyothyĵ EŸNj ǼŸNjÞsǣ ǼÌŸȖ¶ÌǼ Ÿ ʩNjǣǼʳ The consumers always deserve better;it is possible to always give themsomething better. Society grows byalways wanting more.In keeping with this, the technology usedin our manufacturing is of the highestquality. Our plants are highly automatedfor the purpose of making the output asperfect as possible. Simultaneously, weinvest in manpower and strengthen the“WHEN AN ORGANISATION HAS ALLTHE RIGHT SYSTEMS AND A TEAMWITH ITS HEART AND BRAIN IN PLACE,IT CAN FOCUS ON DELIVERING THEGREATEST VALUE TO THE CUSTOMERSAND INVESTORS.”

Corporate OverviewPerformanceGovernanceFinancial Statements21M. P. RamachandranChairman& Managing Directorpeople connect, so that we can think likea consumer and imagine what they want.Consumers have desires, but are notalways able to articulate them. It is up tous to draw out that desire, and create aninspired offering.As a business, our success is based onthe insight gained from reading theconsumer’s mind; crystallising that into aviable product idea; and then developingthat product to make a meaningfulimpact for the consumer. So, with pride,I can share that the three pillars of yourCompany are: insights, ideas and impact.TRANSLATING OUR EFFORTS INTONUMBERSThe strategy of launching uniqueproducts, and reinventing brands withnewer advantages, has led us to anoverall 9.3 per cent growth during theyear under review. The operating EBIDTAjumped to 237.6 crore, a sharp increaseof 24 per cent over the previous year.Each of our six Powerbrands gainedmarket share and the overall Powerbrandǣ Ķsǣ ÞŘONjs ǣs ˠ ʳˢ ƼsNj OsŘǼʳ N ǣÌ ƼNjŸʩǼ stood at 206.9 crore, an increase of13.4 per cent over the previous year.Our working capital cycle, which wasdown to 17 days in FY14-15 from27 days in FY13-14, has now comedown to 14 days in FY15-16. Basedon our positive results, the Board hasrecommended a dividend of 500 percent, or 5 per share, inclusive ofthe interim dividend of 400 per centdeclared and paid earlier.The external challenges during the yearunder review, mainly the subdued ruraldemand caused by low rainfall, weresomewhat mitigated by the drop in oilprices, which reduced our input costs.Automation of our manufacturing unitscut operational expenses. The marketingstrategy continued to centre aroundpeople power. Our brand ambassadorsare celebrities, but our real connect withconsumers and sales outlets comes froma proprietary system of building onthe-ground relationships. This is a verycost-effective way to grow. The strategyof developing people and developingtechnology further streamlined ouroperations. When an organisation hasall the right systems and a team withits heart and brain in place, it can focuson delivering the greatest value to thecustomers and investors.GOING FORWARDThe strategy of your Company is toconsolidate and grow by presentingproducts and experiences that capturethe imagination of a new generation.We see every year as an opportunityrather than a challenge; there is alwaysroom to grow, room to become moresustainable, room for giving more valuefor money. In the years when externalfactors make business easy, we do nottake it easy – we set the bar still higherand create something unique.This journey of three decades is that ofthe entire Jyothy Laboratories family,as we have earned the loyalty ofboth employees and consumers. OurOŸŘǣÞǣǼsŘǼĶɴ ƼŸǣÞǼÞɚs ʩŘ ŘOÞ Ķ NjsǣȖĶǼǣ Ř solid reputation are the outcome of theefforts made by everyone at every level.We thank all the people within andoutside the organisation who haveplaced their faith in Jyothy Laboratories– our highly energised team; our supplychain stakeholders; and our valuedshareholders, who always give us suchexcellent support.Our ceaseless endeavour has beento build trust and value, and we shallcontinue doing so, giving all we can tothe dream of making India a better placeon the globe.M. P. RamachandranChairman & Managing Director

22JYOTHY LABORATORIES LIMITEDANNUAL REPORT 2015-16Q&A with Joint ManagingDirector and CFOUllas Kamath, Joint Managing Director, sheds light on the insights, ideas andimpact that have helped Jyothy Laboratories move steadily ahead in the industry,powered by both business gains and customer trust“WHEN A COUNTRY DOES WELL,EVERYONE DOES WELL. ONCE THEUPSWING COMES, THE COMPANIES THATARE EXCEPTIONALLY WELL-POSITIONEDWILL DO EXCEPTIONALLY WELL – AND WEARE ONE OF THEM.”HOW DO YOU SEE THE PAST YEARFOR JYOTHY LABORATORIES, INRELATION TO THE INDUSTRY ANDTHE NATIONAL ECONOMY?To answer that, let me talk about theğɴŸǼÌɴ ĵ EŸNj ǼŸNjÞsǣ ŗ ʩNjǣǼʳ DsO Ȗǣs our performance in the past year standson the shoulders of our achievementsof more than three decades. Duringthis time, we have positioned ourselvesas a company catering to the needs ofevery Indian household. Those needscan only grow, and we have a long trackrecord of meeting them effectively. Allour product innovation has been donekeeping in mind the smallest details of aconsumer’s life.Against this backdrop, in the year underreview, compared to the rest of theFMCG industry, we have done well. Asfor the national economy, it all comesdown to job creation and consumption.The ‘Make in India’ initiative is veryimportant in this context. Because ofthis initiative, Indian manufacturingis getting the attention it has nevergot before. ‘Make in India’ is aboutOŸŘʩ sŘOs ÞŘ ɴŸȖNj ŸɠŘ ǣǼNjsضǼÌǣʰ ÞǼ Þǣ about self-reliance in manufacturingand quality – things we have alwaysbelieved in.WHAT ARE THE BIGGEST STRENGTHSOF JYOTHY LABORATORIES IN THECONTEXT OF INDIAN COMPANIESCOMPETING WITH INTERNATIONALPLAYERS?Our portfolio has products that areof world standard and offered at anaffordable price. We are competingwith the multinationals, and all ourENj Ř ǣ Ì ɚs EsOŸŎs ƼNjŸʩǼ EĶs ÞŘ ǼÌs shortest possible time. We have takenŸŘ ǼÌs ʩsNjOsǣǼ OŸŎƼsǼÞǼÞŸŘ Ř OŸŎs out a winner, because of our ear-tothe-ground insights, the agility ofour product idea development, andthe impact of our precisely targetedcommunication. With every launch, theCompany has been able to disrupt thatparticular category, gaining market shareat an exponential rate.ARE YOU ALSO ABLE TO REACH OUTTO EVERY CONSUMER SEGMENTNOW?Yes, indeed. Following the acquisition ofthe Henkel India bouquet of products,our Company has a presence in everyconsumer segment. That acquisitionwas a turning point in other ways,too – it infused an additional measureof modern business practices into theCompany, helping us adapt still fasterto changes in consumer needs andspending patterns.WHAT IS THE BEST THING TOHAVE HAPPENED AT JYOTHYLABORATORIES IN THE PAST COUPLEOF YEARS?As we expanded across segmentsand launched new products withinthose segments, we also built a greatmanagement team to deliver the desiredresults. The major transformation,as I said, began from the point ofacquiring Henkel India. We were alreadydoing very well, taking leadershippositions in extremely competitiveproduct segments. Building on that,we revamped our managementpolicies and systems, and broughtnew team members on board, makingthe company culture even moreperformance-driven. As a result, we areŘŸɠ ŎȖOÌ ŎŸNjs ǣǼNjs ŎĶÞŘs ʰ s ʩOÞsŘǼʰ Ř EsǼǼsNj ŸNjǼÞʩs ¶ ÞŘǣǼ sɮǼsNjŘ Ķ factors.All aspects of key functions were lookedat with a critical eye – this includedsales, marketing, manufacturing,research and development, and human

Corporate OverviewPerformance

02 The World of Jyothy Laboratories 06 Made in India. Made for India. Make in India is About 08 Pride & Excellence 10 Digital India 12 Inclusive Growth 14 Domestic Consumption 16 Self-Reliance 18 Youth Power 20 Chairman and MD’s Statement 22 Q&A with Joint Managing Director and CFO 24 Financial