Honasa Consumer tumbled 7.66% to Rs 243.55 after the All India Consumer Products Distributors Federation (AICPDF) flagged the large unsold inventory of the company lying with distributors and retailers.
According to AICPDF, the unsold inventory is reportedly causing a financial burden of Rs 300 crore.
As per reports, the AICPDF said that besides the issue of unsold stocks nearing expiry, credit notes of about Rs 50 crore are unsettled, which is creating cash flow challenges and threatens the stability of the entire distribution network.
The distributors body alleged that Mamaearth has been offloading excessive stocks to distributors without considering market demand, which has caused damage to the distribution and the retail ecosystem and erosion of trust, the reports added.
In a regulatory filing made before market hours today, Honasa Consumer denied the issues raised by AICPDF around the companys practices with its distributors and distribution transition.
The company said it has been actively working with the channel partners for the last few months to clear the unsold stocks.
We strongly deny the allegations made by AICPDF. The figures mentioned are inconsistent with the sales driven through this channel, the company stated.
The company stated that as of 31st Oct 2024, as per data from the distribution management system implemented at Honasa distributors currently active and associated with the company, the distribution value-chain, carried a total inventory of Rs 40.69 crore, (as against the quoted figure of Rs 300 crore of near-expiry inventory by AICPDF).
As part of the general trade distribution transition under Project Neev, the company said that it has removed the 2-layered channel partner structure of super-stockists and sub-distributors from top-50 cities, and are setting up single-layered distributor structure.
Claims from the companys general trade channel partners pertaining to market schemes, pending with the company for settlement, is only Rs 4.73 crore as on 30 September 2024 (as against the quoted figure of Rs 50 crore of unsettled credit notes by AICPDF).
As per Nielsen RMS data, at retailers, the companys stock turnover ratio has improved from 35 to 27 days in the past year while the category still stands at 35 days in general trade.
"Given these efforts, the claims made are not reflective of the current reality, and are spreading misinformation about us, the company said in a statement.
Honasa Consumer is the largest digital-first beauty and personal care company with a diverse portfolio of six brands. Uniquely positioned to capture the growth trends shaping in the BPC market, the company is building brands through on trend data-based innovation and strong omnichannel distribution.
The company reported a consolidated net loss of Rs 18.57 crore in Q2 FY25 as against net profit Rs 29.43 crore recorded in Q2 FY24. Revenue from operations declined 6.90% YoY to Rs 461.82 crore in the quarter ended 30 September 2024.
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