Honasa Consumer, the parent company of Mamaearth, has clarified that its distribution value chain carried a total inventory of Rs 40.69 crore, against the quoted figure of Rs 300 crore of near-expiry inventory by the All India Consumer Products Distributors Federation.
In an exchange filing, the beauty and personal care retailer said it has received returns worth Rs 41.21 crore out of the total returns of Rs 63.52 crore. It is in the process of picking up the balanced returns of Rs 21.32 crore from the distributors concerned.
This comes after the All India Consumer Products Distributors Federation (AICPDF) made allegations that distributors and retailers are facing a crisis with unsold stocks nearing expiry, resulting in an estimated financial burden of around Rs 300 crore.
Varun Alagh-led Honasa Consumer launched its general trade distribution transition under Project Neev during the first quarter. It removed the two-layered channel partner structure of super-stockists and sub-distributors from the top 50 cities, and set up a single-layered distributor structure across 70% of the targeted cities.
“We have actively and transparently addressed our transition to a direct distribution model during our results for Q2FY25, proactively taking back inventory from discontinued distributors,” stated the filing.
Claims from general trade partners regarding market schemes that are pending with the company for settlement are only Rs 4.73 crore as on September 30, 2024 against the AICPDF quoted figure of Rs 50 crore, said the filing. Moreover, accounts receivables from general trade distributors have also reduced from Rs 46 crore as of March-end to Rs 25 cror by the end of September, it added.
Honasa, which is also the parent company of popular brands The Derma Co, Aqualogica, Dr Sheth’s, and BBlunt, saw its shares open about 1.5% lower at Rs 260 apiece on the NSE. Shares plummeted below its IPO issue price of Rs 324 apiece.
The stock has been taking a beating ever since the company reported a loss of Rs 18.71 crore in the July-September 2024 quarter from a profit of Rs 29.78 crore in the corresponding quarter in the previous year. During the same period, its operating revenue fell by 7% to Rs 461.82 crore.
