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Jyothy Laboratories Limited“The products made for the common man has led to the success of the fast moving consumer

goods company Jyothy Laboratories Limited.”

– M.P. Ramachandran,Chairman and Managing Director,

Jyothy Laboratories Limited.

Jyothy Laboratories Limited (JLL) is a Fast Moving Consumer Good (FMCG) company wherein it deals with fabric care as also household insecticides, surface cleaning, personal care and air care segments in India. Its product range includes fabric whitener, mosquito repellent, dishwashing, bath and incense products under the brand name of Ujala, Maxo, Exo, Jeeva, and Maya respectively. Its leading brand Ujala, a fabric whitener, has a market share of 71.7% and accounts for 45% of company’s revenue, which amounted to Rs.3,619 million for the financial year 2007 (June-Ended). The other key brand Maxo, a mosquito repellent, has a market share of 20.7% and accounts for 39% of company’s revenue for the financial year 2007. Its other brands Exo, Jeeva and Maya are in the growing stage. It also has a strong distribution network across India.

Overview of the Indian FMCG Sector The FMCG sector is the fourth largest sector in the Indian economy. According to ASSOCHAM, its present market size is approximately worth Rs.700 billion. It plays a key role in the Indian GDP. In India, this sector happens to be a prominent direct and indirect employer accounting for 5% of the total factory employment. It creates employment for three million people in downstream activities especially in small towns and rural India. The major share of the FMCG segment sales comes from low-priced products. The lower and middle-income groups contribute more than 60% of the sector’s sales. Besides this, around 56% of the consolidated domestic FMCG demand comes from rural markets. Agricultural sector is closely related to the FMCG sector as the agro-based products contribute approximately 71% of the FMCG sector sales. It is a prominent value creator and its market capitalization is next only to IT sector. It also contributes considerably to the public exchequer. According to Indian Brand Equity Foundation, Indian FMCG segment is characterized by a well-established distribution network, intense competition between the organized and unorganized sector and low operation costs. It is also expected to increase from US$ 11.6 billion in 2003 to US$ 33.4 billion in the year 2015. In India, the penetration level and the per capita consumption in most product categories indicate a huge unexploited market potential. The growing Indian population, especially the middle class and rural segments, provides the manufacturers of branded products an opportunity to expand.

The Associated Chambers of Commerce and Industry of India (Assocham) conducted a research on the future of FMCG products in India; according to it, the consolidated market size of FMCG products is estimated to grow at a CAGR of 12% in the next 5 years and would be approximately worth Rs.980 billion by 2010 and around Rs.1,233 billion by 2012. Out of the total market, the Indian rural and semi-urban areas cover about 60% by 2012 mainly due to increasing rural penetration as also growth in disposable incomes. The key segment of the FMCG sector is household care products. Household care products include household cleaners, laundry care, toilet cleaners, air fresheners, insecticides, mosquito repellents, polishes and other products related to household care.

Figure 1(a): Household Care segment 2005 (Actuals) Total Market Size – Rs.96,641 million

Figure 1(b):Household Care segment 2010 (Projected)

Total Market Size – Rs.106,630 million

Source: Euro Monitor International, “Household Care – India”, December 2006.The following figure 2 shows the estimated sales growth rate of various segments in the Indian household care sector:

Figure 2

Source: A.C. Nielsen.

Main Features of the IndustryBrand Creation

Brand building is a key and essential component of an FMCG company for which considerable amount of time and money is allocated. A clear understanding of consumer tastes and requirements play a major role in brand creation. The basic strategy of an FMCG company should be to design a product, its delivery format, pricing and communication. A company builds strong brand image either by providing good quality products over a period of time or by innovating a product that offers superior functional attributes supported by strong advertising and sales promotion campaigns. The price that a consumer is willing to pay reflects the product, its packaging, its availability and also the image built around the brand. During the initial stages of building a brand image, the company may go through higher expenditures on advertising and sales promotion so that the product is positioned as a brand in the minds of the customers. And once the brand is recognized by the customer, company will be in a position to command a better price and reduce the proportion of advertising support to maintenance levels and thereby improve its margins and profitability. A company with a portfolio of some potential brands can invest in new brands to create a pipeline of new brands and products for the future. In FMCG sector, the success of a product depends heavily on brand building, positioning, and brand extensions. If any product of a company faces the slowdown in demand and fierce competition, then it focuses on major brands and ensures cost reduction in addition to focusing on aggressive and penetrated marketing. Rarely, companies go for the re-launch of the product by re-positioning it, so that the life cycle is re-started to extract better value.

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Cost Considerations

The primary costs the company incurs in the FMCG sector are: materials costs, marketing costs, and advertising costs. In some cases, the company that undertakes large-scale production will purchase raw materials in bulk; as a result, they can negotiate on costs and can get lower input costs of raw materials. Many innovations have taken place in the packaging segment thereby providing superior and more convenient packaging with cost effective packing material. FMCG sector gives importance to branding; consequently, the term cost includes advertising expenses and sales promotion expenses. In order to popularize a brand and position it in the minds of consumers, constant investment is required over a period of time. Generally, to build strong consumer franchises and create demand for their brands, companies spend huge amounts on advertising and sales promotion including the above-the-line advertising. In order to increase sales in short-term, companies spend huge amount on sales promotion and channel discounts. This has comparatively low manufacturing costs, as the process to manufacture goods is simple. Investments in manufacturing assets are relatively low which leads to high turnover to investment ratio. Companies further reduce their investments in fixed assets through availing third party manufacturing facilities as the highest value addition comes in the process of branding. In recent times, companies availed certain excise and income tax concessions by setting up their own manufacturing facilities in selected tax-free zones.

Wide Distribution Network

The key determinant of a company’s success in this sector lies in delivering products based on consumer demand. A strong distribution network helps the product to grow volumes through increased penetration levels. Any company, which wants to establish in a big country like India, must establish a wide distribution network. The main mediators of the distribution chain are the company’s C&F agents, distributors, wholesalers and retailers. With the help of these intermediaries in the widespread distribution network, a company can deliver products to the consumers wherever they want them.

Huge Unorganized Segment

The growth of strong unorganized sector in India is due to many factors like, low entry barriers in terms of low capital investment, fiscal incentives from government, and low brand awareness in small towns and in rural India. This segment offers both localized brands and products in a loose unbranded form. Under this segment, unorganized players offer products to customers pricing them low and also provide high margins to the stockists and intermediaries to boost their sales. On the other hand, organized sector players incur losses due to fake and counterfeit products manufactured by the players of unorganized sector. The FMCG sector incurs 10% to 30% loss in its business due to these fake and counterfeit goods.

Third Party Manufacturing

Companies subcontract their production requirements to third party manufacturers in order to concentrate on building brand, to develop product and to create distribution networks. In recent times, the concept of contract manufacturing gained momentum as small-scale industry units enjoy tax incentives.

Comparatively Low Product Penetration

In India, the per capita consumption in most of the FMCG categories comprising high penetration categories is low compared to both developed and emerging economies. This shows that there is huge scope for increasing product penetration.

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Figure 3

Source: A.C. Nielsen.

Changes in Retail FormatFMCG sector in India has witnessed new forms of distribution with the introduction of super markets, hypermarkets and large-scale retail malls. They offer wide range of products at discounted rates through direct selling or through multi-level marketing wherein agents instead of the usual bulk or small-scale retailer carry on the sales. There is huge impact of newer distribution channels on the traditional retail margins as they allow greater penetration of products, which lead to an overall increase in revenues for this sector.The following figure depicts the prominent increase of supermarkets and hypermarkets with regard to the share of Household Product sales between 2000 and 2005.

Figure 4(a): Household Product Sales Distribution – 2000

Figure 4(b):Household Product Sales Distribution – 2005

Source: Euro monitor International, “Household Care – India”, December 2006.

Key Factors and Trends in the Fast Moving Consumer Goods SectorLarge Unexploited Rural MarketRural areas have a share of more than 50% in the total revenue of major FMCG companies while 70% of India’s population lives in rural areas. In case of brand choices, rural market consumer has less access to branded products compared to urban market consumer. Rural market is untapped to a large extent and has vast potential with attractive prospects, but difficulties confront it in exploiting this market. For example, high prices of branded FMCG products, inadequate infrastructure facilities (like roads and power), a strong unorganized sector, heavy dependence on external factors (like monsoons), a low per capita income as also low disposable income, and seasonal consumption linked to harvests, festivals and similar events. On the other hand, government has taken steps to improve rural infrastructure, to increase efficiencies in distribution, ensure availability of branded products at lower price levels. Also, price correction by the FMCG companies, penetration levels in many FMCG categories are expected to go up in rural areas.

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Growing Economy

Indian economy has grown rapidly in recent years. According to Reserve Bank of India (RBI), in the last three years, Indian economy has grown significantly with the GDP recording at 8.5%,7.5% and 8.4% for fiscal years ended March 31, 2004, March 31, 2005 and March 31, 2006 respectively. This has positively affected the FMCG sector wherein many companies had experienced slow growth in the few years prior to 2005. The Indian economy growth has been accompanied by an increase in disposable incomes both in urban markets and rural markets.

Increase in Disposable Income Levels and Growing Middle Class

The growing middle class, which is considered the consuming class, is set to boom the demand for FMCG products. According to Indian Brand Equity Foundation, the following figure 5 shows the expected increase in middle class.

Figure 5

Source: IBEF.

The increase in disposable income in the hands of the middle class with the growing share of middle class will impact effectively on the increase in demand for FMCG products.

Expanding Retail

In the last few years, the retail segment underwent revolutionary changes. In recent times, the concept of chain-of-stores is gaining momentum as they focus on affordability delivered through squeezing efficiencies from their supply chain. As a result, they offer better discounts compared to other stores. Besides these, large modern retail format like supermarkets and hypermarkets has been on the rise. Though they do not have significant share in the total FMCG sales, they are expected to increase in future. Foreign Direct Investment (FDI) in this sector is expected to be permitted. Through this, overseas retailers are allowed to participate in one of the fastest growing consumer markets in recent times in India. If this happens, players in the FMCG sector have to improve their skills in merchandizing and shelf management as the open formats in order to allow more interaction between the consumer and the products. By this, experimental consumers will get an opportunity to try new brands and products and the companies can also improve their information in order to create supply chain synergies.

Household Care – Profiles and Outlook of Product Segment

Laundry Care

In the year 2005, the total sale of the laundry care product segment of household was Rs.6,69,034 million, accounting for about 69.23% of total sales in the household care sector. Laundry care products include laundry detergents, laundry aids, fabric softeners and carpet cleaners. Out of these, Laundry detergents alone cater to 92.44% of total laundry care sales amounting to Rs.61,842.8 million in 2005 while Laundry aids is the second largest category catering to 7.56% of

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total laundry care sales amounting to Rs.5,060.6 million in 2005 according to Euro monitor International, “Household Care – India,” December 2006. Laundry boosters like fabric whiteners, spot and stain removers, starch and ironing aids in addition to the general products used in laundry are included in the Laundry aids.

The key players in the laundry care product segment are: Hindustan Lever Limited with its brands “Wheel,” “Surf,” and “Rin,” Nirma Limited with its brand “Nirma” and Procter & Gamble Home Products Limited with its brands “Ariel” and “Tide” according to Euro monitor International, “Household Care – India”, December 2006. Over the past five years, laundry detergents have grown at a CAGR of 4.7%, laundry aids have grown at a CAGR of 8.7% and overall laundry care market have grown at a CAGR of 5%. The following figure 6 shows the historical and projected sales values as well as CAGR growth rate of total laundry care in India according to Euro monitor International.

Figure 6: Total Laundry Care

Source: Euromonitor International, “Household Care – India”, December 2006.

Insecticides

Insecticides are products used for eliminating insects. Products in this segment comprise insecticide coils, electric insecticides, spray and aerosol insecticides and other forms of insecticides. Their sales comprised 7.53% of household product category sales amounting to Rs.12,840.7 million during 2005. The sales of insecticide coils were 43.52% of total insecticides sales amounted to Rs.5,588.9 million. The sales of electric insecticides were 42.59% of total insecticides sales amounting to Rs.5,467.7 million. For the last five years, the sales in insecticide segment grew at a CAGR of 7.2% and from 2004 through 2005 it has grown at a CAGR of 6%. The following figure 7 shows the historical sales values as well as CAGR growth rate of total insecticides in India according to Euro monitor International.

Figure 7: Total Insecticides

Source: Euromonitor International, “Household Care – India”, December 2006.

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Dishwashing ProductsThis segment includes products used for washing dishes like powders, bar soaps and liquids. Bar soaps has a major share in the Indian hand dishwashing segment according to the Euro monitor International. In India, presently dominant share of sales are from hand dishwashing segment because the concept of automatic dishwashing is still new with penetration of dishwashers remaining at below 1% in India as a whole and 2% in urban India in particular. In the year 2005, the total sale of dishwashing products was Rs.7,759.2 million, or 8.03% of total sale of household products according to the Euro monitor International. The following figure 8 shows the historical sales values as well as CAGR growth rate of dishwashing products in India according to Euro monitor International.

Figure 8: Dishwashing Products

Source: Euromonitor International, “Household Care – India”, December, 2006.

Air CareThis segment includes spray and aerosol air fresheners in addition to other household air care products. This segment has strong presence in urban areas of the country as it has aspirational consumer demand within the increasingly prosperous urban consumers. The following figure 9 shows the historical sales values as well as CAGR growth rate of total air care products in India according to Euro monitor International.

Figure 9: Total Air Care

Source: Euromonitor International, “Household Care – India”, December, 2006.

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Jyothy Laboratories Limited – Company HistoryIn the year 1993, Mr. M. P. Ramachandran started a sole proprietorship firm in Kerala by name Jyothy Laboratories. The firm’s basic business was to manufacture and sell fabric whitener, “Ujala”. On January 15, 1992, the company was incorporated as Jyothi Laboratories Private Limited using certain intellectual property rights and got license from its promoterMr. M. P. Ramachandran. Later, on September 13, 2002, the rights of the promoter and Jyothy Laboratories were transferred to the company Jyothi Laboratories Private Limited. On October 6, 1995, it turned into a public limited company and changed its name to Jyothi Laboratories Limited. On August 12, 1996, finally the name was changed to Jyothy Laboratories Limited.

Table 1: Key Milestones

Year Exent1983 Mr. M. P. Ramachandran starts Jyothy Laboratories as a proprietary concern in

Kerala.Ujala is launched.

1984 Ujala is sold house-to-house through a team of six sales people in the Trichur and Malappuram districts of Kerala.

1986 Jyothy Laboratories releases its first print advertisement in the Kerala-based Mathrubhoomi newspaper.

1987 Jyothy Laboratories starts advertisements on radio.Jyothy Laboratories graduates to a formal distribution system.Jyothy Laboratories ventures out of Kerala to the neighbouring state of Tamil Nadu.

1992 Chennai factory is commissioned to make Ujala.Our Company was incorporated.

1994 We commission the Pondicherry plant, our first in a backward area utilizing government incentives.

1995 We launch Nebula, an oil-based antibacterial washing soap in Kerala.1997 We launch Ujala all over India.

2000 We launch Maxo (mosquito repellent) in the state of West Bengal.Exo, an antibacterial dish wash bar, is launched in Kerala and later launched across Karnataka, Tamil Nadu and Andhra Pradesh.

2001 We launch Vanamala washing soap in Kerala.We launch Maya incense sticks in selected states.We acquire the detergents plant at Pithampur, Madhya Pradesh from Tata Chemicals Limited.

2002 We acquire our subsidiary, Sri Sai Homecare Private Limited, which has a mosquito coil production facility in Hyderabad.We launch Jeeva Ayurvedic Soap.

2003 Maxo is awarded the “AAA Brand Performance Award” by the All India Advertisers Association.

2005 Exo Liquid and Ujala Stiff & Shine launched in south India.2007 We start marketing and distributing coffee products under the brand name

“Continental Speciale” in a joint venture with CCL Products (India) Limited.We enter into a joint venture agreement for the marketing of dhoop through a joint venture company Balajee Telebrands Limited.We enter into a deed of assignment of trademark and copyright for the brand “Ruby”.We enter into a deed of assignment of trademark and copyright for the brand “More Light”.

Source: Adopted from Company’s Financial Report.

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Business OverviewJLL is an FMCG company that manufactures liquid fabric whitener under the brand name Ujala, household insecticides under the brand name Maxo, surface cleaning product under the brand name Exo, personal care soap under the brand name Jeeva, and air care segments under the brand name Maya. According to the world’s leading marketing information company, A.C. Nielsen, in the year 2006, the liquid fabric whitener Ujala had a 68.1% market share value in the Indian organized segment. According to a survey conducted by Marketpulse – IMRB’s Household Purchase Panel, during the period between April 1, 2006 and March 31, 2007, 75.4 million surveyed households purchased Ujala accounting to 37% of the surveyed household population. The brands of JLL have a strong association with its core values including the “Offering value-for-money products to the common man”.

ProductsThe important brands of JLL are – Ujala, Maxo, Exo, Jeeva, and Maya. The brand Ujala has a product line that consists fabric whitener, fabric stiffener and washing powder. The brand Maxo product line consists mosquito repellent coils, liquid vaporizers and aerosol sprays. The brand Exo’s product line consists of dish wash bars and dish wash liquid with an anti-bacterial agent, dish wash powder, and dish scrubbers. The brand Jeeva is a natural soap and the brand Maya product line consists air freshening incense sticks or agarbatti. JLL also entered into joint ventures wherein it markets and distributes coffee and spiritual dhoops. Gross sales of the company’s major product segments are given in the following table 2:

Table 2

(Rs. millions)Product Categories 9 months ended

March 31, 20079 months ended March 31, 2006

Financial Year ended June 30, 2006



Fabric Care 1,432.02 1,331.85 1,806.21 1,600.20 1,389.57

Mosquito Repellent 1,376.95 1,097.40 1,367.13 1,315.12 1,319.63

Dishwashing 230.96 138.55 196.78 132.77 107.99

Other Products 178.24 175.21 223.50 127.43 646.14

Joint Venture andThird Party Products

76.40 54.45 69.38 0.00 0.00

Source: Adopted from the Company’s Financial Reports.

The brands Ujala and Maxo have leading positions and major market share in their respective product segments. According to A.C. Nielsen, JLL brand Exo has a market share of 17% in southern India as at 31st March 2007 and the company has plans to expand its operations nation wide in 2008. Other branded products of the company have a presence across India including urban and rural areas. These products are targeted to suit the consumer needs and tastes. They have strong presence in southern India, especially Kerala. For example, Ujala has a market share of 96.6% by value in Kerala as at 31st March 2007, according to A.C. Nielsen. The following table 3 shows the market share of the brands Ujala, Maxo coils in India and Exo in Southern India:

Table 3

Product Categories

Market Share (%)

Year endedMarch 31, 2007

Quarter endedMarch 31, 2007

Month endedMarch 31, 2007

Month endedApril 30, 2007

Value Volume Value Volume Value Volume Value Volume

Ujala Fabric Whitener 68.3 52.8 68.6 53.2 68.5 53.0 68.7 53.5

Maxo Coils 19.1 21.1 19.4 22.2 20.5 23.7 20.9 24.1

Exo Dishwashing Bar 14.6 14.2 17.0 16.8 17.0 16.8 17.2 17.1

Source: A.C. Nielsen.* For Southern India only.

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JLL has a well-established distribution network across India. It has a sales staff of more than 1500 people servicing approximately 2,500 distributors and the field staff has a direct reach to around1 million retail outlets. The brand Ujala is available in about 2.63 million outlets in India as on March 31, 2007 as per A.C. Nielsen. It has 21 manufacturing facilities in 14 locations across India, out of which eight are tax efficient units where the company takes up the advantage of certain tax breaks offered by the central and state governments. JLL also plans to expand its manufacturing facilities by establishing new tax efficient manufacturing units in Uttaranchal. Besides this, the company outsources manufacturing a part of the product Maxo; also it is now planning to invest Rs.170 million in two plants located at Jammu and Guwahati in order to manufacture that part of Maxo, within the company. In addition to this, at Pondicherry, JLL has an in-house engineering research and development and machinery manufacturing facility.

Business PhilosophyThe business philosophy of JLL has enormous influence on the company’s success. It plans to maintain its present position and to achieve new business opportunities in accordance with its philosophy. The company has always catered to the needs and desires of the customer. The company takes every care and leaves no opportunity to assess the gap between consumer needs and the products available. In addition, JLL also alters its products according to consumers’ desires and needs and offers an effective solution to bridge the gap. JLL believes in effective communication strategies; it has innovative and appropriate communication strategies for its products. It communicates about the products’ attributes and effectiveness. It has a strong advertising and marketing strategy and believes in innovation to effectively position its products so as to attract the attention of the targeted segment. It ensures that its products are effectively positioned and differentiated. It seeks to improve with its achievements. These act as a catalyst to grow. JLL gets motivated and inspired from its achievements and continuously assesses itself for improvement.

StrengthsJLL has a strong position in the market, based on which it can utilize the existing opportunities to expand household goods sector in urban and rural India and also abroad. It has a good local presence and wide distribution reach. It has a strong focus on production, sales and distribution of its products locally. It has manufacturing facilities and sales offices, which are tactically located to take the advantage of local presence in the main markets. It hires local employees, who have the complete knowledge of local languages and customs, in the areas of production, sales and distribution. JLL has a benefit in understanding and communicating with its customers due to its local presence and local focus. It also has the capability to launch new products and extensions at the local level in a short span of time. It also has a strong and wide distribution network across the country. It has a sales staff of 1500 people and around 2500 distributors. On March 31, 2007, its dominant brand Ujala whitener was available in approximately 2.63 million outlets in India according to A.C. Nielsen. Its field staff has a direct reach to around 1 million retail outlets.

JLL has a strong brand identity. Its portfolio of brands has the brand image and consumer association. As a result, this brand portfolio provides a strong platform to maintain and grow its revenues from the present products, product improvements and new products under its existing brands. The brands of JLL enjoy the strong association with its core values such as offering value-for-money products and service to the common man. As on 31st March 2007, its brand Ujala ranked first with a 68.3% market share across India, according to A.C. Nielsen. As per the survey conducted by the Marketpulse-IMRB’s Household Purchase Panel, is purchased by 75.4 million of the surveyed households bought its brand Ujala between 1st April 2006 and 31st March 2007. According to the Brand Equity Survey conducted by The Economic Times, May 30, 2007, June 6, 2007 – the brand Ujala was among the top 50 most trusted brands, ranked 8th in the home and fabric care segment and ranked 19th among class 2 cities. According to A.C. Nielsen, as on 31st March 2007, its another brand Maxo has a 19.1% market share by value across India and in April 2007, it was the leading mosquito repellent coil in rural India. In the year 2002, the brand Maxo received “AAA Brand Performance Award” from All India Advertisers Association.

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Branded household care products have a slow penetration due to the distribution difficulties in rural India. But JLL identifies it as a growing sector and intends to focus on this segment to market its products. According to the Euromonitor International, “Household Care”, December 2006, the brand Maxo mosquito repellent coils were focused on Indian rural market; it became the leading coil brand in rural India as rural people prefer coils to other methods as the supply of electricity is unreliable. The demand for FMCG products in rural India is increasing due to a monetary trickle-down effect from increased urbanization and improved rural economic conditions. In addition to this, improved agricultural performances in the period 2003-2006 has increased the rural household incomes also led the customers shift from unbranded products to branded and packaged products. For instance, improved conditions in the rural Indian market led to a notable advantage in the use of bar, detergents, household antiseptics/disinfectants and hand dishwashing liquid.

JLL’s ability to innovate and develop its product range on a continuous basis is a key factor in the success of its business. It intends to sustain and strengthen its business by creating and introducing new products, which meet or create customer demands that are presently not satisfied by the available products. For this purpose, it has established an internal culture to encourage innovation and development. Members of the product development team of the company go through competency-building training programs in order to understand the needs of the consumers in an efficient manner. It follows a structured process in developing a new product which includes the identification of project ideas, testing hypotheses, establishing prospects, implementing improvements and sustaining benefits. This process helped the company in developing products like fabric conditioner, Ujala Stiff & Shine and Jeeva natural soap. In addition to this, the company was able to reduce the weight of Ujala bottle, with the help of this process, which resulted in the important raw material cost savings. It also has a Research and Development (R&D) team, which includes scientists and technicians from various disciplines. It has a product and formulation R&D center where it aspires to formulate innovative products and package concepts into aesthetically attractive products that offer benefits to customers. This led the company to successfully identify and implement new products and product improvements.

The company has a strong employee base and proven management team. This employee base is the major competitive advantage of JLL. Across the country, it has employed a work force of about 3450 employees by the end of 30th April 2007. The senior management in the company has huge experience in the field of FMCG industry. It has 146 senior members working for more than five years. Employees of JLL have such skills and diversity that provide flexibility to the company in order to cater the needs of its consumers. It provides training and skills to the employees to develop their expertise and know-how. Its well-qualified and experienced management team provided many benefits such as development of good corporate governance, effective internal controls and accounting policies, strong employee relations, and stable supply chain relationships.

VisionJLL has a vision to develop pioneering brands, to tap high growth categories and to reach underdeveloped markets and emerging categories so that its products are used in the day-to-day living of every Indian household. It also promotes its core value that offers value-for-money products to the ordinary man.

StrategyJLL plans to work in order to achieve its vision to develop its business through implementing some key strategies. JLL intends to expand its popular brand Ujala by launching Ujala Stiff & Shine and Ujala washing powder products. In the year 2007, the company planned to introduce Ujala Stiff & Shine product nationally. Its wide distribution network and strong brand equity of Ujala, is bound to assist in developing Ujala Stiff & Shine as a national brand. It has already launched the Ujala washing powder in Kerala and intends to expand it to southern Indian states in 2007. It has a strong presence and local knowledge, which will assists the growth of Ujala washing powder as a strong regional brand.

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JLL intends to increase the presence of Maxo by launching liquid vaporizers and aerosol spray products. It plans to attract customers from the segment where it has tough competition by marketing and enhancing the product designs. It also intends to acquire local brands in selective markets. It plans to attract the joint ventures with the existing brand products and new innovative product ideas by utilizing its strong distribution reach and marketing expertise. It also plans to obtain joint brand ownership and joint control based on marketing, sales and distribution of these branded products wherever possible. For instance, it has already entered into joint venture to market and distribute coffee, Dhoop and Godrej Tea brand in India. The Company Board has approved the proposal to enter into a joint venture to manufacture and market Ujala and Maxo in Bangladesh wherein it would hold a minimum of 75% of equity with an investment of approximately Rs.75 million. In addition to this, it intends to target acquisitions to strengthen its market position in the key market segments or to improve manufacturing capabilities. In this regard it acquired a local fabric whitener “Ruby Liquid Blue” on April 19, 2007 from Bangalore Detergents and Plastic Company for a consideration of Rs.10 million and another fabric whitener “More Light” on May 31, 2007 from Modern Chemical (India) & Mod Chem (India) Private Limited for a consideration of Rs.9.5 million. The company takes up acquisition on a continuous basis.

JLL intends to reduce costs by improving cost efficiencies from sourcing raw materials to the supply of the finished products to the customers. It has identified a few areas to cut down costs; these include packaging design, raw material management, improving yields and tax structuring. Every year it sets cost improvement targets and gives incentives to those managers who meet the targets. With the reduction of costs aggressively throughout production, distribution and sales process will give the company an edge over its competitors.

In recent times, Indian market has observed a new trend of super market and hypermarket chains. JLL does not have a good share of revenues from these chains; hence, it intends to raise the revenue from these chains in the near future by concentrating more on larger cities. In India, these chain markets expect more trade margin and discount than traditional retail outlet. But these chains provide a better opportunity for merchandising and also visibility and cost savings as they go for direct sales instead of intermediaries and rationalization of packaging. JLL intends to take the advantage of the increasing popularity of these chains and accordingly change its selling and distribution strategies to maintain and strengthen its brands sales.

Subsidiary and Joint VenturesSri Sai Homecare Products Private Limited – A Subsidiary

On December 11, 1996, Sri Sai Homecare Products Private Limited was incorporated in Andhra Pradesh. It is a wholly owned subsidiary of JLL. As on May 31, 2007, it had an issued share capital of 1,039,550 equity shares with a face value of Rs.10 each and the shares are not listed on any exchange.

Table 4




Total Income 74.83 70.59 87.20

Profit/(Loss) after tax 5.55 1.13 13.10

Reserves and Surplus (excluding revaluation reserves) — — —

Debit balance of Profit and Loss Account (7.68) (13.22) (14.35)

Equity share capital (paid up) 10.39 10.39 10.39

Earnings/(Loss) per share (diluted) (Rs.) 5.33 1.08 12.60

Book Value (Rs./share) 2.38 (3.04) (4.21)

Source: Adapted from Company’s Financial Reports.

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The key objectives of the company as mentioned in the Memorandum of Association is to manufacture, sell and distribute various mosquito coils, repellants and other related and allied products; to do the business of trading, importing, exporting, distributing, stocking, acting as Clearing and Forwarding Agent or otherwise and usually to deal in all kinds of domestic homecare and healthcare products, formulations and their allied products; to manufacture all varieties of machinery, equipments and other related components and parts of mosquito coils, repellants and their allied products; and to do the business of trading, importing, exporting, distributing, stocking, acting as Clearing and forwarding agents or otherwise and to usually deal in all types of machinery, equipments and other related components and parts of mosquito coils, repellants and their allied products.

Continental Speciale (India) Private Limited – A Joint Venture

On May 10th 2007, Continental Speciale (India) Private Limited (CSPL) was incorporated in Andhra Pradesh. The key objectives of the company as mentioned in the Memorandum of Association include acting as traders, distributors, brokers, importers, exporters of maximum varieties of coffee, setting up the network of marketing and distribution of coffee, coffee vending machines, and marketing products supplied by CCL Products (India) Limited. It was set up in joint venture with CCL Products (India) Limited. The shares CSPL are not listed on any exchange. The following table 5 shows the share holding pattern of CSPL as on May 31, 2007:

Table 5Shareholder No. of equity shares of Rs.10 each Percentage shareholding

Ms.M.R.Jyothy on behalf of Jyothy Laboratories Limited 5,000 50%

Mr. Challa Srikant on behalf of CCL Products (India) Limited 5,000 50%

Total 10,000 100%


Balaji Telebrands Limited – A Joint Venture

On November 8, 2006, Balaji Telebrands was incorporated in Mumbai. The key objectives of the company as mentioned in the Memorandum of Association include manufacturing, processing, buying, selling, exporting, importing agarbattis, incense, scented body sprays, hair oil, perfumed idols, of not only their own brands but also the national brands and international brands. JLL has set up this joint venture with Ms. Shobha Kapoor and Ms. Ekta Kapoor. The shares of Balaji Telebrands are not listed on any exchange. The following table 6 shows the shareholding pattern of Balaji Telebrands as on May 31, 2007:

Table 6

Shareholder No. of equity shares ofRs.10 each

Percentage Shareholding

Ms. Shobha Kapoor 6,250 12.50%

Ms. Ekta Kapoor 6,250 12.50%

Mr. Ravi (Jeetendra) Kapoor 6,250 12.50%

Mr.Tushar Kapoor 6,250 12.50%

Mr. M.P. Ramachandran onbehalf of Jyothy Laboratories Limited 9,000 18%

Mr. K. Ullas Kamath on behalf of Jyothy Laboratories Limited 8,000 16%

Ms. M.R.Jyothy on behalf of Jyothy Laboratories Limited

Total 50,000 100%


13

The financial performance of the Balaji Telebrands as on May 31, 2007 is as follows:

Table 7




(Rs. in million except per share data)

Total Income 10.53 – –

Profit/(Loss) after tax 0.59 – –

Reserves and Surplus (excluding revaluation reserves) 0.59 – –

Debit balance of Profit and Loss Account – – –

Equity share capital (paid up) 0.50 – –

Earnings/(Loss) per share (diluted) (Rs.) 11.82 – –

Book Value (Rs./share) 15.94 – –


Divestments

On May 31st 2007, JLL filed a notice (under the Industrial Disputes Act, 1947) to close down its unit located at Pannissery, Kerala with effect from August 1, 2007. The key reason for the unit’s closure is that it made huge losses earlier. This unit used to basically deal with the manufacture of an oil-based soap, which was marketed only in Kerala. As a result, JLL had to terminate the services of 71 workmen.

The Issue

On March 15, 2007, the board of JLL passed a resolution in the meeting to transfer a part of shares from the existing share holders to eligible NRIs, FIIS, foreign venture capital investors registered with SEBI and multilateral and bilateral development financial institutions on a repatriation basis. The selling shareholders Canzone Limited, ICICI Bank Canada, ICICI Bank UK, South Asia Regional Fund and CDC Investment Holdings Limited have authorized the offer for sale. On November 22, 2007, JLL went for the public issue of 4, 430, 260 shares with a face value of Rs.5 and a price band of Rs.620-690. While Qualified Institutional Buyers (QIBs) offered 2,215,130 equity shares, the Non-Institutional Portion offered was 6,64,540 equity shares and Retail portion offered was 15,50,590 equity shares. The main object of the issue is to get the advantages of listing its Equity Shares on the Stock Exchanges and to carry out the divestment of 4,430,260 Equity Shares by its Selling Shareholders. It also intends to enhance its brand name and provide liquidity to its existing shareholders. Equity shares of the company are traded in the public markets through this issue.

Share Capital History

JLL has an authorized capital Rs.2,000,000 comprising of 400 equity shares with a face value of Rs.5,000 each. On July 24, 1993, it was increased to Rs.5,000,000 comprising 1,000 equity shares of Rs.5,000 each. On March 27, 1995, it was again increased to Rs.10,000,000 comprising 2,000 equity shares of Rs. 5,000 each. On March 26, 1997, it was reclassified as Rs.45,000,000 equity capital comprising of 4,500,000 Equity Shares with a face value of Rs.10 each and Rs.5,000,000 preferred capital comprising 50,000 Preference Shares with a face value of Rs.100 each. On December 24, 1997, the authorized capital was increased to Rs.60,000,000 comprising Rs.55,000,000 Equity Share capital and Rs.5,000,000 preference share capital. It was again raised to Rs.65,000,000 comprising Rs.60,000,000 equity share capital and Rs.5,000,000 preference share capital on February 1, 2000. Again on September 29, 2001, it was increased to Rs.100,000,000 comprising Rs.95,000,000 equity share capital and Rs.5,000,000 preference share capital. On September 7, 2002, the authorized capital of Rs.100,000,000 comprising 9,500,000 Equity Shares and 50,000 Preference Shares was reclassified into 10,000,000 Equity Shares. On June 9, 2007, the equity shares of 10,000,000 of Rs.10 each were converted as 20,000,000 Equity Shares of Rs.5 each.

14

Selling Shareholders

The details of the Equity Shares being offered by each of the Selling Shareholders as part of the Offer are as follows:

Table 8

Selling Shareholders No. of Equity Shares Offered

Canzone Limited 782.130

ICICI Bank Canada 1,451,200

ICICI Bank UK PLC 1,414,800

South Asia Regional Fund 391,066

CDC Investment Holdings Limited 391,064

Total 4,430,260


The following table shows the shareholding pattern in JLL before and after the offer.

Share holding pattern in JLL before and after the offer

Table 9

Shareholder Category Equity shares before the offer Equity shares after the Offer

Number % Number %

A. Promoter and Promoter Group

(1) Promoter

Mr. M.P. Ramakrishnan 7,001,960 48.24% 700,1960 48.24%

Sub Total (1) 7,001,960 48.24% 700,1960 48.24%

(2) Promoter Group

Individuals 2,479,140 17.08% 2,479,140 17.08%

HUF’s 602,400 4.15% 602,400 4.15%

Sub Total (2) 3,081,540 21.23% 3,081,540 21.23%

Sub Total A = (1) + (2) 10,081,500 69.48% 10,083,500 69.48%

B. Institutional Shareholders

Canzone Limited 782,130 5.39% Nil Nil

ICICI bank Canada 1,451,200 10.00% Nil Nil

ICICI Bank UK PLC 1,414,800 9.75% Nil Nil

South Asia Regional Fund 391,066 2.69% Nil Nil

CDC Investment Holdings Limited 391,064 2.69% Nil Nil

Sub Total B 4,430,260 30.52% Nil Nil

C. Public Nil Nil 4,430,260 30.52%

TOTAL SHARE CAPITAL (A+B+C) 14,513,760 100.00% 14,513,760 100.00%

* Viz. the M.P. Ramachandran HUF, the M.P. Divakaran HUF and the M.P. Sidharthan HUF.


Dividend PolicyJyothy Laboratories Limited declares and pays dividends based on the recommendations its Board makes and which the shareholders approve, at their discretion. Their recommendations basically depend on the company’s earnings, capital requirements and overall financial positions. It does not

15

have a stated dividend policy. The dividends declared and paid to the equity shareholders in the last five financial years are as follows:

Table 10

Nine months ended March

31, 2007

FY 2006

FY 2005

FY 2004

FY 2003

Face value of equity shares (Rs. per share) 10 10 10 10 10

Dividend (Rs. in million) 72.57 90.71 21.78 Nil 14

Dividend tax (Rs. in million) 10.18 12.73 2.94 Nil 1.79

Dividend per equity share (Rs.) 10 12.50 3.00 Nil 2.50

Dividend rate (%) 100% 125% 30% Nil 25%

* Interim dividend declared by the JLL Board on March 15, 2007.


16

Annexure – ISummary Statement of Assets and Liabilities, as Restated

(Amount INR Million)

ParticularsAs at

March 31,2007

As atJune 30,

2006

As atJune 30,

2005

As atJune 30,

2004

As atMarch 31,

2003

As atMarch 31,

2002

A. FIXED ASSETSGross Block 1,218.78 1,064.08 942.33 740.19 644.49 376.68

Less: Accumulated depreciation and impairment

(274.67) (240.02) (193.96) (112.54) (66.16) (42.78)

Net Block 944.11 824.06 748.37 627.65 578.33 333.90Capital work in progress (including capital advances)

547.46 75.29 85.63 195.88 135.29 235.40

Total 1,491.57 899.35 834.00 823.53 713.62 569.30B. INTANGIBLE ASSETS 8.58 9.79 11.06 13.34 17.15 —C. INVESTMENTS 17.31 17.06 26.06 30.96 34.21 101.30D. CURRENT ASSETS, LOANS

ANDADVANCESInventories 290.91 236.02 180.39 193.12 186.51 118.57

Sundry debtors 629.71 320.99 334.10 261.10 570.88 257.49

Cash and bank balances 689.10 1,277.23 891.59 599.33 752.33 258.63

Other current assets – Sales promotion items

2.90 3.25 2.85 2.89 2.83 13.74

Loans and advances 208.21 137.87 238.72 237.04 240.03 179.25

Total 1,820.83 1,975.36 1,647.65 1,293.48 1,752.58 827.68E. LIABILITIES AND PROVISIONS

Secured loans 0.01 0.01 0.01 33.65 1,027.43 67.80

Unsecured loans 1.66 1.17 0.33 — — —

Current liabilities 391.94 229.18 270.27 201.55 250.81 281.72

Provisions 49.68 69.47 40.24 20.23 36.55 24.64

Deferred tax liability, net 58.45 57.37 27.04 — 33.23 12.93

Total 501.74 357.20 337.89 255.43 1,348.02 387.09Net worth (A + B + C + D – E) 2,836.55 2,544.36 2,180.88 1,905.88 1,169.54 1,111.19Net worth represented by

F. Share capital 72.57 72.57 72.57 72.57 56.00 56.00

G. Reserves and surplus 2,763.98 2,471.79 2,108.31 1,833.31 1,113.54 1,055.19

Net worth (F+G) 2,836.55 2,544.36 2,180.88 1,905.88 1,169.54 1,111.19


17

Annexure – IISummary Statement of Profits and Losses, as Restated


ParticularsNine months

ended March 31, 2007

Year ended June 30,

2006

Year ended June 30,

2005

Fifteen months ended June 30,

2004

Year ended March 31,

2003

Year ended March 31,

2002INCOMESales (gross 3,295.10 3,661.53 3,175.51 3,463.34 3,140.22 2,571.36

Less: Sales tax recovered (173.75) (194.44) (203.50) (206.27) (160.39) (76.24)Less: Excise duty recovered (58.30) (58.65) (45.40) (70.26) (54.13) –Less: Trade discount (refer note no. 5(b) of annexure IV) (286.70) (389.15) (273.13) (242.86) (99.24) –

Net sales (refer note no. 8 of annexure IV) 2,776.35 3,019.29 2,653.48 2,943.95 2,826.46 2,495.12Other income 102.80 121.14 60.29 57.10 31.96 21.72Total Income (A) 2,879.15 3,140.43 2,713.77 3,001.05 2,858.42 2,516.84EXPENDITUREMaterials consumed 1,501.35 1,458.61 1,394.10 1,675.42 1,465.38 947.99(Increase)/Decrease in finished goods/work inProgress (9.62) 1.39 16.05 (41.05) (6.55) (10.15)Employee costs 296.57 336.26 271.00 249.85 179.97 156.24Operating and administrative expenses 326.20 404.80 302.86 417.85 320.27 270.22Advertisement and publicity 225.48 266.91 292.34 487.54 519.08 487.60Sales promotion and schemes 48.70 18.28 13.38 298.06 115.31 348.29Provision for doubtful debts / Bad debts written off 0.53 75.66 31.09 3.49 1.22 —Total Expenditure (B) 2,389.21 2,561.91 2,320.82 3,091.16 2,594.68 2,200.19PROFIT BEFORE PRIOR PERIOD ITEM,EXCEPTIONAL ITEM, INTEREST,DEPRECIATION AND TAX (A-B) 489.94 578.52 392.95 (90.11) 263.74 316.65Prior period item-Advertisement expenses — (28.50) — (24.94) — —Prior period item-Trade discount expenses — (6.85) — — — —Exceptional item-Provision for dimunition in Investments — — (60.00) — — —PROFIT BEFORE INTEREST, DEPRECIATION AND TAX 489.94 543.17 332.95 (115.05) 263.74 316.65Interest and finance charges 2.07 1.44 0.79 20.07 21.69 8.93Depreciation / amortisation 42.45 51.71 45.19 52.12 25.25 15.54TOTAL 44.52 53.15 45.98 72.19 46.94 24.47PROFIT BEFORE TAX 445.42 490.02 286.97 (187.24) 216.80 292.18Provision for tax– Current tax (including short/excess provision for current tax of earlier years) 44.00 53.50 29.50 0.89 14.50 25.00– Deferred tax 1.08 30.33 40.17 (33.23) 20.30 —– Fringe benefit tax 7.00 5.70 1.80 — — —– Wealth tax 0.27 0.42 0.11 0.13 0.14 —TOTAL 52.35 89.95 71.58 (32.21) 34.94 25.00NET PROFIT BEFORE ADJUSTMENTS 393.07 400.07 215.39 (155.03) 181.86 267.18ADJUSTMENTS (18.13) 63.40 109.14 (72.67) (75.85) (7.57)(refer note no. 2 of annexure IV)NET PROFIT, AS RESTATED 374.94 463.47 324.53 (227.70) 106.01 259.61Profit and loss amount at the beginning of the year/Period 99.11 39.08 (10.73) 216.97 286.75 202.81Balance available for appropriation, as restated 474.05 502.55 313.80 (10.73) 392.76 462.42APPROPRIATIONSInterim dividend on equity shares 72.57 72.57 10.89 — — 14.00Tax on interim dividend 10.18 10.18 1.42 — — 1.43Proposed dividend on equity shares — 18.14 10.89 — 14.00 —Tax on proposed dividend — 2.55 1.52 — 1.79 —Dividend on preference shares — — — — — 0.22Tax on dividend on preference shares — — — — — 0.02Transfer to general reserve — 300.00 250.00 — 160.00 160.00TOTAL 82.75 403.44 274.72 — 175.79 175.67BALANCE CARRIED FORWARD, ASRESTATED 391.30 99.11 39.08 (10.73) 216.97 286.75


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Annexure – IIISummary Statement of Cash Flows, as Restated

(Amount INR Million)Nine months

endedMarch 31,

2007

Year endedJune 30,

2006

Year ended

June 30,2005

Fifteen months ended

June 30,2004

Year endedMarch 31,

2003

Year endedMarch 31,

2002

A. Cash flows provided by/(used in)Operating activities:Net profit / (loss) before taxation 418.91 559.42 397.58 (260.80) 136.86 292.18Adjustments for:Depreciation 42.45 51.71 45.19 52.12 25.25 15.54(Profit) / Loss on discarded/sale of fixed assets, net 4.67 3.25 (0.82) (0.24) 0.02 (0.07)(Profit) / Loss on sale of investment — (4.52) — — 0.97 0.01Provision for dimunition in the value ofInvestments — — 5.00 3.24 55.00 —Dividend received (0.08) (0.09) (0.12) (0.10) (0.15) (5.15)Interest expense 2.07 1.44 0.79 20.07 21.69 8.93Sundry advances written off (net of provision) — 4.86 0.76 8.36 0.78 —Interest income (61.89) (72.25) (37.63) (49.95) (28.66) (13.60)Provision for doubtful debts / Bad debts written off 0.53 49.15 31.09 3.49 1.22 —Excess provision written back — (0.48) (0.25) (3.16) — —Provision for doubtful advances 2.81 — 3.59 28.55 — —Operating profit before working capital Changes 409.47 592.49 445.18 (198.42) 212.98 297.84(Increase) / Decrease in current assets, loans and advancesInventories (including sales promotion items) (54.54) (56.03) 12.77 (6.67) (57.03) (36.40)Trade receivables (309.25) (36.04) (104.09) 306.29 (314.61) (114.59)Loans and advances (67.67) 93.08 (33.97) (14.14) (50.01) (89.85)Increase / (Decrease) in current liabilities / provisions 179.54 (35.29) 74.55 (46.62) (32.82) 158.98Cash provided by / (used in) operations 157.55 558.21 394.44 40.44 (241.49) 215.98Taxes paid (64.25) (47.05) (3.18) (19.89) (28.78) (26.16)Net cash provided by / (used in) operating activities 93.30 511.16 391.26 20.55 (270.27) 189.82B. Cash flows provided by/(used in)Investing activities:Purchase of fixed assets (including capitalwork-in-progress and capital advances) (639.08) (121.97) (94.85) (160.82) (188.27) (240.06)Receipt of investment subsidy — 3.45 1.06 — 1.00 —Proceeds from sale of fixed assets 0.94 2.91 3.55 2.83 1.54 0.28Proceeds from sale of investments — 13.52 — — 11.12 —Purchase of investments (0.25) — (0.10) — — (0.04)Interest received 61.89 72.25 37.63 49.95 28.66 13.60Dividend received 0.08 0.09 0.12 0.10 0.15 5.15Net cash used in investing activities (576.42) (29.75) (52.59) (107.94) (145.80) (221.07)C. Cash flows provided by/(used in)Financing activities:Borrowing / (Repayment) of loan funds — — (33.64) (28.78) 959.63 2.74Repayment of preference shares — — — — — (1.85)Debenture issue expenses — — — (0.97) (35.67) —Deferred sales tax loans 0.49 0.84 0.33 — — —Interest paid (2.07) (1.44) (0.79) (20.07) (14.19) (8.93)Dividend paid (90.71) (83.45) (10.90) (14.00) — (28.42)Dividend tax paid (12.72) (11.72) (1.41) (1.79) — (2.90)Net cash provided by / (used in) financing activities (105.01) (95.77) (46.41) (65.61) 909.77 (39.36)Net increase/(decrease) in cash and cash equivalents (A + B + C)

(588.13) 385.64 292.26 (153.00) 493.70 (70.61)

Cash and cash equivalents at beginning of year/period

1,277.23 891.59 599.33 752.33 258.63 329.24

Cash and cash equivalents at end of year/period 689.10 1,277.23 891.59 599.33 752.33 258.63Components of cash and cash equivalentsCash in hand 1.01 1.17 0.92 1.98 2.47 5.86Balance with scheduled banks – Current account 89.00 81.38 43.38 72.59 108.69 159.48

– Deposit account 599.09 1,194.68 847.29 524.76 641.17 93.29689.10 1,277.23 891.59 599.33 752.33 258.63

Source: Adopted from Company’s Financial Report.Annexure – IV

The Offer

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The following table summarizes the Offer details

Equity Shares offered by:The Selling Shareholders of which 4,430,260 Equity SharesQualified Institutional Buyers (QIBs) Portion** up to 2,215,130 Equity Shares*of whichAvailable for Mutual Funds only*** 110,760 Equity Shares*Balance of QIB Portion (available for QIBs including Mutual Funds)

2,104,370 Equity Shares*

Non-Institutional Portion** 664,540 Equity Shares*Retail Portion** 1,550,590 Equity Shares*Pre and post-Offer Equity SharesEquity Shares prior to the Offer 14,513,760 Equity SharesEquity Shares after the Offer**** 14,513,760 Equity Shares

* In the event of over-subcription, allocation shall be made on a proportionate basis.

** In the event of under-subscription in any of these categories, the unsubscribed portion may be added to one of the other categories at the sole discretion of our Company, the Selling Shareholders and the BRLMs.

*** In the event of under-subscription in the Mutual Fund Portion only, the unsubscribed portion would be added to the balance of the QIB Portion to be allocated on a proportionate basis to QIB Bidders.

**** As this Offer is through an Offer for Sale, there will be no change in the number of Equity Shares our Company has in issue as a result of the Offer.


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Annexure – VCapital Structure

The share capital of the company before the offer and after giving effect to the offer is as follows:

Aggregate value at face value of Rs. 5each

(Rs.)

Aggregate value at Offer Price

(Rs.)

A. Authorized share capital

20,000,000 Equity Shares 100,000,000

B. Issued, subscribed and paid-up capital before the Offer

14,513,760 Equity Shares 72,568,800

C. Offer in accordance with this Draft Red Herring Prospectus Equity Shares offered by The Selling Shareholders 4,430,260 Equity Shares

22,151,300[]

D. Issued, subscribed and paid-up capital after the Offer14,513,760 Equity Shares 72,568,800

E. Share premium account

Before the Offer 1,065,312,325

After the Offer 1,065,312,325


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Annexure – VIBASIS FOR OFFER PRICE

Quantitative Factors

Earning Per Share (EPS)

Particulars EPS (Rs.) Weights

15 months ended June 30, 2004 (34.53) 1

FY 2005 44.72 2

FY 2006 63.87 3

WEIGHTED AVERAGE 41.09

Price/Earning (P/E) ratio in relation to Price Band

1. Based on the EPS of Rs. 63.87 for FY 2006, the P/E ratio is Rs. [] at the Floor Price and Rs. [] at the Cap Price

2. Based on the weighted average EPS of Rs. 41.09, the P/E ratio is Rs. [] at the Floor Price and Rs. [] at the Cap Price

3. P/E ratio for the industry is as follows:

Particulars Industry

Highest 34.1

Lowest —

Industry composite 29.1

Source: Capital Market-Vol XXII/07 June 04-17, 2007.

Return on Net Worth

Particulars Return on Net Worth (%) Weight

15 months ended June 30, 2004 (11.95) 1

FY 2005 14.88 2

FY 2006 18.22 3

WEIGHTED AVERAGE 12.08

Minimum Return on post-Offer Net Worth required to maintain pre-Offer EPS is []%.

Net Asset Value per Equity Share

1. Net Asset Value per Equity Share as of June 30, 2006 is Rs. 350.61.

2. Net Asset Value per Equity Share after the Offer is Rs. [].

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Comparison of Accounting Ratios

Face Value per share (Rs.)

EPS (Rs.)

P/E ratio []

Return onNet Worth

(%)

NAV per share (Rs.)

Jyothy Laboratories Limited 10 63.87 18.22 350.61

Peer Group:

Marico Limited 1 1.9 30.2 39.9 3.0

Godrej Consumer Products Limited 1 5.4 26.9 — 4.9

Dabur India Limited 1 2.9 34.1 48.1 4.7

Emami Limited 2 7.7 23.1 56.5 15.8

Source: Capital Market-Vol XXII/07 June 4-17, 2007.

Notes:

1. Jyothy Laboratories Limited – Figures are based on restated accounts for the year ended June 30, 2006. The Company has on June 9, 2007 split the face value of its equity shares fromRs. 10 to Rs.5 each.

2. Marico Limited – Figures are based on unaudited results for the year ended March 31, 2007 and market price as on May 28, 2007.

3. Godrej Consumer Products Limited – Figures are based on audited results for the year ended March 31, 2007 and market price as on May 28, 2007.

4. Dabur India Limited – Figures are based on audited results for the year ended March 31, 2006 and market price as on May 28, 2007.

5. Emami Limited – Figures are based on audited results for the year ended March 31, 2006 and market price as on May 28, 2007.

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Annexure VIIDetails of Rates of Dividend

The dividends declared by the company during the period ended March 31, 2007 and the last five financial years are presented below.


Particulars Face Value(Rs Share)

Nine months ended March

31, 2007

Year endedJune 30,

2006

Year endedJune 30,

2005

Fifteen months ended

June 30, 2004

Year endedMarch 31,

2003

Year endedMarch 31,

2002

Class of Shares Equity share capital 12% Cumulative Redeemable

10 72.57 72.57 72.57 72.57 56.00 56.00

Preference Shares 100 – – – – – –(Refer Note

3)

Dividend on Equity SharesInterim Dividend

– Rate 100.00% 100.00% 15.00% – – 25.00%

– Amount 72.57 72.57 10.89 – – 14.00

– Corporate Dividend Tax 10.18 10.18 1.42 – – 1.43

Final Dividend

– Rate – 25.00% 15.00% – 25.00% –

– Amount – 18.14 10.89 – 14.00 –

– Corporate Dividend Tax – 2.55 1.52 – 1.79 –

Dividend on 12%Cumulative RedeemablePreference Shares– Rate – – – – – 12.00%

– Amount – – – – – 0.22

– Corporate Dividend Tax – – – – – 0.02


Notes:

1. The amounts paid as dividend in the past is not indicative of the dividend policy in the future.

2. The figures disclosed above are based on the summary statement of assets and liabilities, as restated and summary statement of profits and losses, as restated of Jyothy Laboratories Limited.

3. 12% Redeemable cumulative preference shares of Rs.1.85 million were redeemed on March 27, 2002.

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