Dear Shareholders,
I would like to wish you all good health during these difficult times.
That's paramount.
COVID has had a deep and lasting impact on human life and it has
presented unprecedented challenges to many, many businesses, including ours.
KAL's strong growth momentum in 19/20 came to a grinding halt in 20/21
because of COVID. KAL India business declined 26% with our Health Service (HS) Business
down 53% due to cancellations of bookings. The drop in our higher margin HS business in
particular hurt the company and KAL suffered a significant loss in 20/21 (Consolidated PAT
loss of ? 484 lacs vs PAT profit of ?405 lacs in 19/20).
The Company reacted quickly to the crisis. In Aug 2020 we embarked on
the following strategies
> Q1/ Q2: Survive. Manage cash flow. Convert Fixed to Variable costs
> Q3/Q4: Re-imagine / Reconstruct the business
We focused on transforming the company towards becoming a digitally led
business and we focused on the promising high margin US business. The results were
striking. We cut costs while investing in the future - Digital and US business - Consumer
focused Product innovation
> India overall 20/21 costs reduced by 28% vs 19/20
> India HS business costs reduced 54% vs 19/20
> Digital / E-commerce business more than doubled
> US business despite a severe COVID impact climbed 17% in 20/21
We are building a resilient company which can withstand further COVID
waves and indeed other such shocks. We have suffered a second COVID and there is talk of a
third wave.
In 21/22 we are projecting a strong recovery for our business by
continued focus on optimising cost structure by re-engineering the financial spine and
selective investments behind US, Digital and Consumer centric product and channel
innovation.
Q1 21/22 results have been encouraging with the Company turning around
with Consolidated Sales up 55 pct (vs 20/21) and up 15 % (vs 19/20) despite the second
COVID wave. Importantly, Q1 21/22 consolidated profit was an encouraging of ?1.16 crore
after 5 quarters of losses because of COVID. Our focus on US and Digital is giving us good
results and will continue to invest in 21/22 and look forward to reaping the results in
22/23 and beyond
What is most satisfying is to see the recognition we are getting in the
Digital domain and a fresh focus on the high value Global markets
> KAL received an Amazon award for the 'Most Innovative Store' in
September 2020.
> KAL won the Silver medal from the prestigious Indian Digital
Marketing Awards (IDMA) in July 21 for Search Engine Optimisation.
> KAL launched a Webinar Series (KALPAM TALKS) which has been very
successful. The first had over 4000 Doctors registered with an attendance of over 1500.
> In Q3/4 we will focus our efforts on expanding to Amazon UK,
Germany and building out our Joint venture with EBay, globally.
> To fuel this we have just made available over 150 innovative
products for sale in the US, Europe. These products are a combination of high value OTC,
personal care range and OTX products which have been carefully tailored to meet USFDA and
importantly California Prop 65 standards which are amongst the most stringent in the
world.
Finally, I would like to salute the KAL team who have marvellously
pulled together despite many of our staff being personally impacted by COVID to help KAL's
transformation! We begin to see the 'green shoots' emerging for a shock proof new KAL
which can drive business with sustainability in the years to come. We look forward to the
future with excitement. We are at an early stage but we are very optimistic. Take care.