The distributors’ association had complained about large unsold inventory, leading to a Rs 300 crore financial burden to distributors
Mamaearth’s parent company Honasa Consumer has denied the accusations around its distribution practices by the All India Consumer Products Distributors Federation (AICPDF). It has termed the accusations regarding unsold inventories and unsettled credit notes as ‘misinformation’ by sharing a detailed clarification.
The distributors’ association had complained about large unsold inventory, leading to a Rs 300 crore financial burden to distributors. The company stated that as of 31 October 2024, as per data from the distribution management system, 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).
The company stated that it is setting up a single-layered distribution structure and has implemented it across 70 per cent of the top 50 cities, through the appointment of new direct distributors. “We have actively and transparently addressed our transition to a direct distribution model during our results for the second quarter of the current financial year (Q2FY25), proactively taking back inventory from discontinued distributors,” as stated by the company in its statement.
As far as the charge of unsettled credit notes worth Rs 50 crore are concerned, the company denied the charges by stating that only Rs 4.37 crore worth of claims were pending for settlement. “Claims from our general trade channel partners pertaining to market schemes, pending with the company for settlement, is only Rs 4.73 Cr as on 30 September 2024,” highlighted the company in its statement.
The company added that accounts receivables from General Trade distributors have also reduced from Rs 46 crore as on 31 March 2024 to Rs 25 crore as on 30 September 2024. The amount collected from distributors over the past six quarters has been consistently healthy and stands at 94 per cent of sales (inclusive of the goods and service tax).
