Ladies and gentlemen, good day and welcome to the Relaxo Footwears Q2 FY2026 earnings conference call hosted by IIFL Capital. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero, or on your touch-tone phone. I now hand the conference over to Mr. Sameer Gupta from IIFL Capital. Thank you, and over to you, sir.
Thanks, Sudha. Good evening, everyone. At IIFL Capital, it is our pleasure to host the management of Relaxo Footwears. From the management, we have Mr. Ramesh Kumar Dua, Chairman and MD, Mr. Gaurav Kumar Dua, Whole Time Director, Mr. Prince Jain, CFO, Mr. Ritesh Dua, Executive VP Finance, and Mr. Ankit Jain, Company Secretary and Compliance Officer. Without taking more time, let me hand it over to Mr. Prince Jain for their opening remarks.
Thank you, Sameer. Good evening, everyone, and thank you for joining us on our Q2 and H1 FY2026 earnings call. We appreciate your continued interest in our company, and are pleased to walk you through our operational and financial performance for the quarter and half-year ended 30th September 2025. The earnings release and investor presentations are already available on the stock exchange and on our website for your reference. Before we move into the Q&A session, I would like to highlight some key performance metrics for Q2 and H1 FY2026. Revenue from operations stood at INR 629 crore in Q2 FY2026, as against INR 679 crore in Q2 FY2025. The moderation was primarily due to demand softness in the mass market segment and delayed purchases ahead of implementation of GST 2.2. However, we are now witnessing a gradual revival in demand following the rollout of the new GST framework.
EBITDA for the quarter stood at INR 81 crore. EBITDA margin remained stable at 12.9%, supported by continued operational efficiencies and prudent cost management. Profit after tax for Q2 FY2026 stood at INR 36 crore, as compared to INR 37 crore in Q2 FY2025. PAT margins improved by 35 basis points year-on-year to 5.8%, reflecting disciplined, cost-controlled, and stable pricing despite muted top-line growth. During the quarter, we witnessed recovery across channels, with general trade continuing to contribute the highest share to overall sales. The rollout of GST 2.2, which reduced the tax rate on footwear priced below INR 2,500 to 5%, has strengthened our competitiveness versus the unorganized sector and improved affordability in the mass and mid-market segments. Our continued focus on cost control, operational efficiency, and back-end optimization helped maintain healthy profitability levels despite a challenging demand environment.
For the first half of FY2026, revenue from operations stood at INR 1,283 crore, as compared to INR 1,428 crore in H1 FY2025. EBITDA for H1 FY2026 stood at INR 181 crore versus INR 187 crore in H1 FY2025. However, EBITDA margin expanded by 101 basis points to 14.1%, reflecting the success of our cost rationalization measure and efficiency initiative. Profit after tax for H1 FY2026 stood at INR 85 crore, compared to INR 81 crore in H1 FY2025, an increase of 4.9% year-on-year, with PAT margin improving by 95 basis points to 6.6%. Looking ahead, we remain optimistic about the recovery trajectory and expect momentum to strengthen in the coming quarter, supported by festival demand, GST benefits, and our ongoing sales transformation initiative. Our strategic focus remains on driving volume-led growth, expanding market share, and ensuring sustainable, profitable performance, supported by a portfolio of affordable and high-quality products. Thank you.
The floor is now open for questions.
Thank you very much. We will now begin with the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Devanshu Bansal from Emkay Global. Please go ahead.
Yes, sir. Hi. Thanks for the opportunity. Sir, you have stressed on tailwinds from GST reduction. There are a few things I wanted to understand. One is, currently, what is the anticipation for growth pickup? Because this is a very big step, and the industry was sort of making vouching the government for reduction. That is one. Secondly, currently, the high-price inventory is in the channel. What time period do you foresee it will take to sort of flush out the entire high-price inventory so that we see a round of timely bookings again? Thirdly, sir, the industry checks also suggest that for certain categories, the industry has entered into an inverted duty structure. Do you foresee any sort of margin issues because of that? These are the three questions that I wanted to understand.
This is Gaurav Dua. I'll answer your first two questions, and the third will be answered by our CFO. Your first question was regarding the GST. It is well appreciated by the footwear industry that GST has reduction of price from 12% to 5%. This will definitely help us to grow as we will be more competitive in the market, and we will be able to face the unorganized competition. Secondly, regarding the stocks, we ourselves carry roughly around 30-35 days inventory, and the channel, which is distributor, also carries around 45 days inventory. The real effect we'll start seeing from December end and January onwards. Right now, distributors are more focusing on liquidating the old MRP, which is a little higher, and doing a little correction in their inventory. Regarding inverted duty structure, Mr. CFO.
Hi. This is Prince here. Inverted duty structure, yes. With the GST 2.2 implementation, our outward duty is now 5%, and most of our input remains at 18%. Yes, we'll fall into inverted duty structure. We have done broad-level estimation, which suggests that while the refund formula from which GST allows will take care of bulk part of our inverted duty structure, some part of the duty, which will not be refunded, would still remain. We are waiting and watching another two to three months how this pans out, and then planning to take actions. As of now, we don't expect GST 2.2 implementation to have impact on our margins.
Just small follow-ups, Gaurav and Prince. Obviously, Q3 may be impacted because of this, but starting Q4 and maybe for FY 2027, what is a reasonable growth expectation from your business? Right? We have seen very muted trends over the last few quarters, years. What is a reasonable expectation of growth from Relaxo? To Prince, have you sort of taken this impact, the impact that is remaining after the refund formula, through lower price cuts? Have you sort of baked in this impact through lower transfer of pricing cuts so that our margins remain intact? If you could just confirm on that.
Sure, sure. Let me take the second question first, and then I will let MD answer the first one. Regarding the price corrections, we have taken full price corrections to the extent of GST cut. We have not retained anything right now. Hence, that is why there is no impact, neither positive nor negative, as of now on our margins. As I mentioned, how inverted duty structure pans out, we will have to wait for the next two to three months. Very early to say, but we feel it is manageable.
Sir, on the growth expectations.
Yeah. Carry on.
Yeah. On the growth expectations.
Yeah. On the growth expectations, sir.
Yeah, yeah.
Yeah, I got it. I'm Ramesh Kumar Dua, this side. First of all, in the first quarter, we were - 12%. Second quarter, we were - 8%. And in the third quarter, we are expecting this either we will be the same or minus 3-4%. That I'm expecting. In the fourth quarter, that is January to March, I think we will have some growth, but that we cannot say we have to wait and watch the condition. We must appreciate still consumer sentiments still are muted. Because the economy, because that is why the government is doing so many things to push the economy. We have to wait and see. One thing is sure, that now since we have become very competitive, the way the industry performs, we will also perform a similar way or maybe better way.
Let us see how the things shape up. Next year is definitely going to be a much better growth.
Sure, sir. Sure, Mr. Dua. Thanks for taking my questions. I have a few more questions. I'll get back in the queue.
Thank you. A reminder to all participants, if you may press star and one to ask a question. The next question is from the line of Shraddha from SMIFS. Please go ahead.
Hello. Am I audible?
Yes, yes.
Yes. Yeah. I just wanted to understand that the other income for this quarter has gone up considerably. Is there any one-off item in that?
Hi. This is Prince here. No, actually, there are no one-off items. Our treasury base versus last year has been higher, and that has led to our other income being higher. The minor impact is because of the hedging gain that we have got because of the dollar rupee depreciation.
This would be a similar number, which we can expect for the future, right?
Similar number, yes, we can expect. In the future, we are also expecting given the inflation numbers are coming down, the government may reduce the interest rates, which can boost our other income in the subsequent quarters.
Sure. Okay. That was helpful. Also, sir, if you could help me with the closed footwear contribution in terms of volume and sales. Also, do we have any plans for increasing the capacity in the closed footwear?
Shraddha, this is Gaurav Dua, this side. Our closed footwear contribution is roughly around 20%, and 80% is open footwear. Regarding capacity enhancement, we already have a good capacity. It is not there right now.
Not required.
Not required, yeah.
Okay, sir. Okay, sir. Just one last question from my side. If you could help with the advertisement spends for the current quarter.
Advertisement spend for the coming quarter and for the first year is expected to be around 4% of the revenue.
Okay. Sure. That was quite helpful. Thank you, and all the best for the future.
Thank you.
Thank you. The next question is from the line of Sameer Gupta from IIFL Capital. Please go ahead.
Hi, sir. Thanks for taking my question. First question, sir, is that this quarter has multiple moving parts. There is early festive. There has been a rationalization of distributor's exercise that we have been doing since the past few quarters. General trade would have destocked following announcement of GST rate cuts. Probably some restocking towards the last week of September. If you can tell us, normalized for these events in your assessment, what would be the actual volume and sales growth or decline this quarter?
It's very difficult to right now assume because just October has ended. Definitely, in some parts of India, the distributors are carrying a lot of stocks with them. How long will it take to clear the stocks and new MRP hitting the market? It's very difficult to give exact numbers. Yeah.
We are hoping the.
I was actually asking the September quarter normalized growth rate in your assessment. The end level, consumer level growth or decline in your assessment?
The number that we have reported for quarter two is -7.5. As Gaurav mentioned, it is very difficult to estimate because we do not have full visibility on the distributor level of stock and how much they have downstocked. Very difficult to estimate and say without the impact of downstocking how much would have been the quarter two growth. I think it would have been better at least 200-300 basis points, but that is a ballpark estimate.
Estimate, yeah. It's an estimate.
Okay. For my understanding, sir, just trying to understand this, why would the distributor not start purchasing now? Typically, footwear is not on an MRP regime. You can just lower the price and sell it, and the tax rate is adjusted already. Why should this impact overall primary sales?
Basically, distributors are a little worried about input. They are worried that will they get how they have to adjust this GST input. They have bought stock at 12%. Now they'll buy at 5%. Whatever the remaining stock they have, how they will be able to adjust it. That's why they are preferring to clear the older stock first and then buy the new inventory and sell in the market.
Just to build on that, sir, sorry, just to build on that. When GST 2.2 was implemented while rationalization was on the cards, we were also anticipated government to provide some relief to the retailer and distributor and to the companies where inverted duty structure is coming into play. That would have sorted some sort of the problem for the distributor and retail. As of now, government has not provided relief to the footwear industry or not to any other industry. As of now, every business and our distributors have to deal with the closing stock or the stock they purchased prior to 22nd September in their own way. As of now, our distributors, the way they are managing, they are trying to reduce purchases. Same is what our retailers are also doing.
They are trying to liquidate their pre-GST, old GST stock, and then once their inventory comes to a reasonable level, the purchases will start coming up. That is the broad level answer is what we can tell.
Secondary is good.
If we say about secondary.
Yeah, yeah.
Continue, if you want.
No, no, sir. Go ahead.
Yeah. What we are seeing is at secondary level, the stocks are moving. That is more important that the consumer offtake is happening. I think they will be easily clearing their stock, what they have. Consumers are excited to listen that the new prices are happening in the market and it's lower than before. Footfall has increased.
Got it, sir. Just another one on the same point. The announcement happened on 3rd September. I would assume the distributors and retailers would have stopped buying at that point. You mentioned 45 days channel inventory. It has been a reasonable time now that the old price inventory would have got cleared. Your thought?
Yeah. We are supplying across India. There are some distributors who keep a lot of stock with them. In some places like North India, where they keep less stock, we are seeing the result. They are buying the newer stock and selling in the market. For all India to be covered completely, we are seeing in December, mid of December, it is starting to impact.
You still expect a primary decline in third quarter?
As of now, no. It could be better than what it is in this quarter. Very insignificant loss, if at all, it will be there. Maybe we'll be at the same level last year, we may achieve that or not. We have to wait and see.
Okay. Because in the first question, you mentioned - 4 or something. Did I hear it correctly?
Yeah. No, no. It was 8% this quarter. Next quarter could be - 4%. Maybe even better results may be there.
Okay. Okay. Fair, sir. Second question, sir, percentage of portfolio which is below INR 1,000 and between 1,000 and 2,500, if you can help me with that.
Only 5%.
Yeah. It is majority below INR 1,000. You can say more than 90% is less than INR 1,000. Even more also. We have to check.
Yeah. This is Prince here. Now, with the revised limit of INR 2,500, more than 98% of our portfolio is priced below INR 2,500.
Yeah. I think 5%.
Got it. That's fair. Fair enough, sir. I'll come back in the queue for follow-ups.
Thank you. The next question is from the line of Prerna from Elara Securities. Please go ahead.
Thank you for the opportunity. Just wanted to understand your product strategy in terms of open footwear versus closed footwear. In these challenging times, how are you thinking of increasing the share of closed footwear when this open footwear is facing challenges to sell or whatever challenges we are having at the macro level? Could you help us understand how this strategy is moving? Because you were planning to increase the share of closed footwear, and that is not happening since a few years now.
Our focus remains. We have to handle all the categories of footwear what we are having. Not that only one category. Because all categories are important. If you see the share of our closed footwear is 20%. 80% still is open footwear. We can't neglect open footwear also. If you go brand-wise, Sparx is 40%. Our main Relaxo combined is 25%. Flite is around 38 or something. All channels require, and all categories do require focus. We can't afford to neglect any. We have to focus on all.
I completely agree, sir. The whole point is that the closed footwear share improvement could also bring in improvement of margins. That is what we were assuming that this should happen. The share is not improving. If you could help us understand what is the growth rate in open footwear versus closed footwear, that would really help us to understand the company better.
Even last year, full year, it was 80/20 only. Now also it is 80/20.
Okay. So the decline is uniform?
Yes, yes. Decline is uniform. Oh, yeah. Right.
Okay. Okay. Sir, also please help us understand how are the new launches in the company and which segments are you focusing? Are you focusing on sneakers and other categories as well, which are higher value? Now that GST is at 5% up to INR 2,500, will you be launching in a higher price inventory, etc.? Some thoughts on premiumization would help.
Definitely. As we have told you before also that we are focusing on athleisure and sneakers. That is continued. The effort is there on that. We are launching product accordingly. Secondly, we are going to launch premium PU, which comes under Flite. Our objective is how we can increase the ASP and provide the relevant product to the consumer. Efforts are being put in. Like Flite, last year we launched Urban Basic. Again, it was a premium range. Every year we try to, if we get the opportunity to launch a new category, we definitely do.
Okay. Her question is on competition. Is the competition still fierce after GST implementation, or is it the subdued demand, or is it both?
Competition is always active. When the GST was 5% and raised to 12%, there was influx of a lot of unbranded and smaller players. The prices of raw material also came down that time. Now, after GST being again rationalized from 12% to 5%, we are more competitive in the market. We will gain market share.
Okay. Prices continue to remain stable from that period?
Yes, yes.
Okay.
Yes, yes.
Understood, sir. Thank you, sir. All the best.
Thank you. A reminder to all participants, you may press star and one to ask a question. The next question is from the line of Akhil Parekh from B&K Securities. Please go ahead.
Yeah. Thanks for the opportunity. My first question is on the BIS front. Has the implementation been done, and where do we stand? Has the Chinese imports now dramatically reduced since the imposition of BIS?
No, we have already implemented QCO a long back. We are continuing with that. It is a government policy that we have to do. We have done already.
No, but has the Chinese imports reduced because of the BIS implementation?
It is very insignificant. The category we are playing in, like our main Relaxo, Flite brand, it was insignificant. And the category that we are making in our Sparx brand also, that kind of a thing, I do not think we had any impact on it. It was a government decision to do that, although we had registered for that also. Rather, I was in favor of some import must happen. That gives the company industry on the edge, and its competition is only which makes the industry strong. By avoiding competition, nobody becomes strong. If the government decides to do that, then that is okay.
Okay. So when you say that we will become more competitive against the unorganized players, does that mean we are just manufacturing it domestically and not the imported players?
No. When we say getting competitive in this, because of GST coming 12% to 5% and also 18% to 5%, that makes us more competitive.
Sir, second question on the current capacity, what we have, is it enough for us to grow for the next two, three years?
Yeah. Presently, we have enough capacity.
The third and last question in terms of the general trade transformation, which we had highlighted last quarter on the last phone call that will focus more from primary to secondary, how has the feedback been on that front?
Sir, last call, we have discussed a few points. I would like to repeat. We are working on addition of distributors. Second point was last month's connectivity, that is logistics. Third was the focus will be more on secondary sales. We have introduced RPA, which is Relaxo Parivar app, and we are seeing there is a 20% growth happening at secondary level. The contribution of app in terms of sale is around 50% last year, which has come to 60% this year. Regarding product innovation, we are definitely in lookout for the gaps in the market and launching product accordingly.
Okay. So this is helpful and best wishes for coming quarters. Thank you so much.
Thank you. The next question is from the line of Devanshu Bansal from Emkay Global. Please go ahead. As there is no response, I take the next question from the line of Sameer Gupta from IIFL Capital. Please go ahead.
Hey. Hi. Thanks for giving the opportunity again. Sir, just wanted a more strategic kind of a question. Last four years, including this one, we have seen persistent weakness in top line. I understand the GST rates had a lot increased. If you have analyzed data over these years, just wanted to nitpick which are the areas where there are bigger pain points. Is it metro towns? Is it younger consumers, lower price points, higher price points? Any kind of color you can give regarding any analysis that you would have done on where the weakness was?
It is all categories. Taxation has only played a role. Since January 2022, when the government implemented this new tax from 5% to 12%, that became actually one of the main causes. 90% causes that only.
Now with that reversed, I mean, we should logically go back to the old growth trajectory of 10%+ . I mean, understand the disturbances in between. As things stabilize, it's logical to assume a 10%+ kind of growth is what we should expect for higher growth.
Yeah. It is just a matter of time. The company will be back on track the way it was before January 2022.
Got it, sir. You had indicated a rationalization exercise of distributors two quarters back. Are we done with it? Is it still ongoing? Anything you can share on the results of the exercise?
It is an ongoing process. We keep on adding distributor and rationalizing the distributor who are not performing. It is every month activity. It is not yearly activity. We are working on it, and we are getting good response.
We had indicated an exercise at that time. Of course, adding and deleting will continue. That pronounced deletion is over, or is it still ongoing?
No, it is a—I'm saying it is an ongoing process. That time, we have taken charge of appointing many distributors, which we have done it. This is a continuous exercise. Every year, we keep on adding distributors and rationalizing the non-performing distributor.
Okay. The decline that we have seen in the past four, five quarters is not because of this rationalization exercise. It was more of a performance of the company that has got impacted then.
Yes, yes. You're right.
Okay. Okay. Fair. That's all from me.
Thank you. The next question is from the line of Devanshu Bansal from Emkay Global. Please go ahead.
Yes. Sir, there is a lot of fake products being manufactured under branded logos in the North market. So while BIS and Ritesh imports, but does that part of industry also get impacted with this GST reduction? I'm talking about all these branded logos, fake copies of branded logos that are being manufactured in huge quantities.
It is always happening, and we are always taking action. Some police raids also. It is ongoing. It has been. It will continue, and we'll keep on acting accordingly.
Does that—why I'm asking, does this GST reduction also increase your competitiveness versus that market, or that will still continue to flourish?
No. We are taking our actions on that. Anybody who we came to know is using our brand name, copying the things, we will continue. I do not think this menace has increased in the past few quarters or so. It is under control. We keep on acting the way we get news. That is it.
You have been acting, but there are copies of other MNC brands also being manufactured, right? Why was the checking from that perspective?
No. From that point, why are we bothered about those brands?
They are available at your price point. They are acting as a competition, right? My concern was from that perspective.
The customer is different. The buying behavior, the customer expectation is different. People who buy Nike fake and people who buy Sparx is completely different.
Oh. So you're saying that the consumer profile is different? Okay.
Yes, yes.
Okay. You mentioned that liquidation will take time. This price reduction, has that started to reflect at retail level, or still the old prices only the retailers are selling to consumers as of now?
It depends upon market to market. Like northern market, new prices have already in the counter, and consumers are buying it. In eastern market, south, southern, or western market, still distributor, whoever is carrying more stock, they are trying to push the old inventory first. We are hopeful by December end, I think it will be cleared. All stocks will be cleared.
Who else, sir, was this in the North market, I'm checking? This liquidation happened at the old price, or it was enabled by the company that we will provide you some incentives, you liquidate the old stock. How does this typically work, this exercise?
We have not provided any extra discount to clear the old inventory. Only thing was when the price was reduced, automatically the margin increased for them to buy the high MRP stock. First, they have taken that stock where the margin was higher because there was a difference of 12% to 5%. They are focusing there and then clearing that stock. After that, they started buying the new MRP stock.
Understood.
Whoever has the less inventory with them, they will definitely buy the new MRP stock and sell in the market.
Understood. Understood. Last question. This MRP has reduced with the GST reduction. I wanted to check on the channel partner commission. Typically in the industry, these commissions are percentage of MRP terms. How are you sort of planning there? Does that still remain in percentage of MRP terms, or people are asking for a slight increase in incentives?
No. Our margins are similar to what it was before. There is no change in the margin.
No, no. The same trade discount, sir, whatever it is. It is not based on price. Whether it is price INR 2,500 or it is INR 200, our trade discount is same. It will remain same. No change after GST.
Okay. So don't you think that these trade partners are at a disadvantage because MRPs would have reduced, and now they will get lower absolute rupee amount if they sell the same product? How do you deal with that kind of a situation?
No, no. You know, ultimately, they say how much business they are doing. If the business grows, they have no issue at all.
Okay. Fair enough, sir. Yeah.
It will have a positive impact on the volume growth.
Understood. Understood.
They should get a beef on that front.
Sir, typically your retail level is MRP - 40%, and your distributors would be like, say, 10% of MRP. The ballpark, these are the commission rates. If you can confirm that.
Retailer, they 30%.
Retailer margin.
Retailer margin. Distributor, we give 9% trade discount.
9% of MRP, right?
Not MRP.
Of wholesale price, the rate at which he will sell to retailers.
On that 9% is his commission. Okay. Okay, sir.
Thank you. The next question is from the line of Prerna from Elara Securities. Please go ahead.
Thank you for the opportunity again, sir. Just wanted to understand, is the industry also going through the same decline in sales, or is it with few players like us?
You know, organized industry is very limited. The people who are other of our competitors or local players, we do not have data of it. We can only compare ourselves with ourselves. We know that our sale has gone down, and we are working on that because we have noticed that unorganized players are getting some share. The data is not always visible.
Okay. Okay. So, I mean, we cannot say with sure whether the industry is also going through the similar thing as of now.
The organized player must be suffering the way we are suffering. Even you will see what our results also got affected this quarter. All these players are definitely going through. Particularly the company who are serving middle segment or lower segments, they are more affected.
Okay. So this could be because of the B2C competition also, which is increasing in the open footwear as well as closed footwear. Both the categories, like new brand launches, etc., are happening. Do you think that is also one of the reasons, apart from unorganized smaller players, which is impacting growth for organized players?
No, no. You know, smaller players, they have made a tax difference. And that they had been manipulating. That is why they were able to get entry into them. After all, whether it's retailer or distributor, they always want to make more margin. Once they get this tax also advantage, so they generally try to push that. That was the reason our sales were getting a little bit affected.
Now that GST rate has come down, and you mentioned that we are now more competitive, have you also reduced some prices to compete with these organized players? Any price cuts taken? Going forward, do you plan to take any further price cuts to regain market share?
No, we already have done this exercise. After all, when the tax has gone down, new MRP, we have now done. Now we have made all our articles accordingly, and we have become quite competitive.
Okay. Okay. So then, sir, then as you mentioned earlier that there should be a 10% growth, you should return back to 10% growth, do you see that coming in next year?
I hope so. Next year? I hope so. Next year, I mean, but we will see some growth also in the fourth quarter of this year. Next year is naturally going to be the best, better than this year.
Okay. Understood, sir. Sir, any CapEx guidance for this year and next year?
Prince can tell that.
Hi, this is Prince here. CapEx will be in the range of INR 120 crore plus, which is similar to last year. Since we have enough capacity, this is more to do with operational efficiencies, warehouse modernization, and building RHO. Broadly in this range, about INR 100-INR 150 crore is the range that we are looking at for this year and next year.
Okay. This will be largely maintenance and mold-related CapEx?
Yes. As I said, operational, mold, modernization of our warehouses, some plant renovations, and building RHOs. Yes, broadly beyond these lines. We are not looking to expand capacities and CapEx at least in the next 18 months.
Understood, sir. And sir, last question on this competition only again. Do you think that with GST reductions and everything that is coming in, consumption as a whole should grow, and new launches should help you gaining some market share from next year? Because what we are trying to understand actually is not able to understand this degrowth over the last two quarters. This quarter is still okay that there were disruptions, but last, again, Q1 and Q2, and even Q3, there is degrowth. So what will really drive growth for the company and market share improvement, whether it is some strategy at the distributor level or some strategy at product innovation, which would turn around consumer minds towards our brand and seek the products? I mean, I'm just trying to understand what could go right for us.
No, you know, first quarter, second quarter, that GST was the main culprit. Now GST has been brought down. Now we will be very competitive, and that will make the thing happen. As a productive concern, that actually is always there, how to develop good products, market-relevant products. But pricing then becomes a limiting factor. That was the main reason retailer always wants to maximize his margin. So wherever he gets more margin, he starts pushing that. Now we will have a level playing field with all the other players also, whether they are local or others. That is why now things will happen better for us.
They can still give higher margins and still push retailers to push their products more? I mean, if distributor margin is a problem.
No, no. Margin is not an issue. The issue was our price versus local players. Those who were not paying any tax. So that advantage they had.
Okay. Okay. Understood, sir. Thank you once again, sir, and all the best. Thank you.
No, thank you.
Thank you.
Thank you. As a reminder to all participants, you may press star and one to ask a question. As there are no further questions from the participants, I now hand over the conference to the management for closing comments.
Thank you, everyone. This is all from our side. We thank you all for joining the call. Looking forward to joining you again. Thank you.
On behalf of IIFL Capital, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.