Bajaj Consumer Care Limited (BOM:533229)

Q4 20/21

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Apr 20, 2021

Ladies and gentlemen, good day and welcome to the Bajaj Consumer Q4 FY 'twenty one Earnings Conference Call hosted by ICICI Securities Limited. As a reminder, all participant lines will be in a listen only mode, and there will be an opportunity for you to ask questions after presentation concludes. Please note that this conference is being recorded. I now hand the conference over to Mr. Manoj Menon from ICICI Securities. Thank SME. And over to you, sir. Hi, everyone. Good morning, good afternoon, good evening, depending on which part of the world you're dialing in from. At Ayesik, it's our absolute pleasure to host the management of Bajaj Consumer Care for the 4th year FY 'twenty one results conference call. The company is represented by Mr. J. D. Nandi, Managing Director Mr. Dileep Kumar Mallu, Chief Financial Officer Merrill. Mr. Rohit Sarodi, AVP Finance Mr. Vishal Maheshwari, Head Treasury and IAR. Before I pass on to the management, Just wanted to take 30 seconds to quickly comment about our views on Bajaj Consumer at ICL and what do we think for the company in the middle of the year. In our view, Abhijaz Consumer is on an improving trajectory. It appears to be a clear case of a trapped value story, not really a value trap, which was probably perceived as in the last few years. We like the renewed trust on product relaunches, new SKUs, trust on digital, improving brand visibility, trust on e commerce. So when I think about it as an analyst, there are multiple actions on sales trend, marketing trend, HR trend. Even if you look at the presentation, there ICSF, besides on Bajaj being a great place to work, etcetera. So without further ado, over to Jaydeep and team for the presentation and the Q and A. Good morning, everyone. And as Manoj said, good afternoon, good evening to others from the rest of the world. So firstly, thank you, Manoj, for hosting this call, and a warm welcome to all of you for attending our conference call. As Manoj said, I'm joined by Mr. Malu CFO, Rohit Sarawgi, our Assistant Vice President, Finance Kushal, who is our Head of Treasury and Investor Relations as as well as some of my colleagues from our management committee. I hope all of you are and your families are safe and taking due care and precautions. I mean, this 2nd wave of the pandemic that is sweeping over India now. While we have got used to this idea of working from home in the last 1 year, This is the very first time we are attending this call from the comfort and safety of our homes. So still some first thing attended to now. So let me take you through the quarter four performance and the full year highlights of the company before we open the house for questions. Q4 was a robust quarter continuing its momentum from Q3 with improved economic growth and positivity around the COVID vaccination rollout for the country. Google continued its growth momentum, whereas Urban started showing signs of recovery. On the other hand, recent inflation in global commodity prices after a benign run-in H1 has started posing pressure on margins across most industries, not only in consumer, but other industries as well. The company reported a sales turnover of INR 241.9 crores for the quarter with a growth of 43.5 over the same quarter of the previous year, albeit on a lower base. This is very similar to what we had delivered in the quarter 3. The EBITDA for the quarter was at INR 62.14 crores against INR 25 crores in quarter 4 last year and the margin for the quarter was at 25.68 percent. The PAD for the company was at INR 53.9 crores against INR 24.5 against previous year's quarter 4. The company has delivered a healthy growth of 9.8 percent top line growth in FY 2021 and a path of INR223.57 crores with a growth of 17.33% over the previous year. The Board of Directors of the company has proposed a final dividend of INR 4 per share, subject to approval by the shareholders. This is in back of an interim dividend of INR 6 per share declared in February this year. The gross margin of the company was at 60.6% as against 63.46% sequentially in Q3 202167 percent in Q4 20 19 2020. That is a year back. The drop in gross margin is led mainly by increase in prices of key raw materials and packing materials. And as we will discuss, it is not only on LLP and RMO, but across the full range of ICHS in the raw materials and packing materials where the price increase has been seen, mainly for the first time. Also because of change in product mix This is where we have higher sales for Bajaj Amlah Air Oil. And also we have taken a provision for our non moving raw materials at the year end as a conservative measure. Whatever non moving raw materials and packing material inventory we had of sanitizers as a prudent accounting practice, we have taken a provision for that as We have taken price increases in the months of February March to the effect of about 2.5% overall to partially offset the impact of inflation. As the full impact of the price increases is not yet seen, but will be visible in the coming quarters. We are closely monitoring the price trends of pre raw materials as well as the competitive landscape. Going forward, we may take appropriate pricing decisions again and optimize sales promotion expenses if required to to protect our margins. Advertising costs at this stage is also not being contemplated to be lowered at this stage. The hair all category as per Nielsen data revenue to recover with a value growth of 0.9% and a volume growth of 3% in Jan Feb 2021. The volume growth continues to outweigh value growth as we still see the value for money brands leading the category growth. The rural markets continued their momentum with a 6% growth as a new firm, while other markets have recovered sequentially with a decline of 3% in handset. As Stated in the last quarter, we still feel that the Nielsen numbers are a little under indexed for the hair oils market. As per Nielsen data, there has been a sequential increase in the market share for BCCL with a market share of 11.1% in Jan Feb 2021 and February 2021, MAX market share of 10.4% in total headwinds as against 10.1% of MAX March 2020 with both the ATHO as well as AHA, both our brands gaining share, both in their respective categories as well as in total During the year FY 2021, the company delivered a strong single digit growth in hair oil as well, led by and the investments in driving distribution and reaching closer to the consumer. Urban retail initiatives, which has been started in select metros from Q3, has helped recover business in some metro cities, while WAN sales continue to power the growth in new markets. Currently, we are working to optimize our WAN routes to drive efficiency and effectiveness. Our bond business grew by 24% In Q4, albeit on a fast subgroup base with retail leading the growth. Wholesale continues to lag as larger wholesalers in metro cities are yet to recover completely. Rural, on the other hand, continued its growth momentum with an over 60% growth in the quarter and 28% for the year. As for Nielsen, our products are now available in 43.6 lakh retail outlets as against 40 lakh retail outlets for the last year, Growing an increase in distribution for the company. Clearly, the WAN initiatives to strengthen rural outreach combined with a where better product assortment is helping build distribution for the company. Modern Trade continued its recovery in Q4 ICHS. We have dialed up our investments at various national chains with an Increased visibility of our product other brands as well, 0 Grey, Cool Almond Rock, Sami Amla, to have increased shelf space as well as a stock in stock in June. E commerce continues to show good progress with our 4x growth during the quarter on the back of social digital marketing and content optimization on e commerce platforms. We have been aggressively participating in big events on Amazon, Flipkart, Grocers, etcetera to increase our digital footprint. We are also revamping our e commerce team as well develop our e commerce portfolio to fulfill our aspirations in this business. International business has grown by 10.2% for the year. The business still remains relatively small and the focus of the company would be to remain profitable across various markets where we operate During the quarter, we continued to invest in our flagship ADHO brand across all mediums. The new commercial on TV is doing well on message communication and other Key parameters of likability, relevance and purchase intent. Digital marketing for ADHO is being continuously dialed up and has been leveraged to reach out to new age consumers through various social media platforms such as YouTube, Facebook, Instagram, and this will continue to dial up further. In Q4, we also restaged Bajaj Amla hair oil as Bajaj Amla Aloe vera hair oil with improved formulation as an Aloe vera with claims of ICHF. Your product and packaging has been innovated with superior efficacy and consumer study on softness and moisturization. The product is now available in more than 388,000 outlets across major Amida markets. Currently, the brand has been ICHS, supported by Consumer Office and Print Media Advertising. Baja's 0 Grain Hair Oil, our digital first brand continues to gain consumer traction ICHS. Good reviews from the market, consumers with a steady increase in sales in Q4 as well. The brand is supported with social media campaign across ICHS. We'll continue to invest in our brands while strengthening our innovation capability as well as innovating our existing products while building our future portfolio in the mid to long term. Investments will continue to be scaled up in digital marketing, while the investments in traditional media will continue as usual. The inflationary trend in key raw materials, LLC and RMO continued in this quarter. As I said, it has also been seen across all other categories, like packing material costs due to inflation in polymers and paper. The overall inflation in the material costs in Q4 has been in high single digits And we expect in Q1 the trend not to soften. We continue to invest in and build in our capability in terms of our team. This is a It's an important area that we see for ourselves. While learning and engagement has been significantly dialed up in the year, it is with great pleasure that I want to inform that we have been awarded the Great Place to Work certificate for the 3rd consecutive year with steady improvement on various parameters. Dimensions like trust, Credibility pride have also shown significant positive shift in the year and this will remain a key thrust area for the company going forward. We are working with a renowned consultant to redesign the organizational structure to make it future ready and also support our business and beyond. During these difficult times of COVID-nineteen pandemic research, the company continues to support its employees with various policies and initiatives. The situation on the ground is extremely fluid and we are taking countermeasures to minimize the impact of lockdown on our business, by ensuring adequacy of stocks across factories, depots, distribution points by coordinating and polarizing with our channel and business partners. In fact, on a billing basis, we are now in call with our key sales force to see where and how lockdowns are impacting and how we can mitigate the issues. At this stage, we will keep reacting to the market conditions tactically, while maintaining our mid to long term aspirations of delivering sustainable growth through innovation, Restaging our brands, improved execution excellence, which is an important area, investing in people and augmenting infrastructure to strengthen capability, systems, ICHF. So with that, I end my opening remarks and open the session for questions. Thank you very much. We will now begin the question and answer session. ICHS handsets while asking questions. The first question is from the line of Mr. Manoj Menon from ICSS Securities. Please go ahead. Jerry, I think just I got a couple For clarifications, I'll ask you upfront. So one, one of the important investor feedback has been on dividend over the last 12 months, which I'm pretty happy to see that there's a 10.1 k dividend this year at 6.0 €0.04 So that's kind of somewhat addressed, I would say. The reason I'm listening somewhat is because there is still a consensus opportunity that obviously, the dividend is good. There is probably still potential to be a much higher payout. So just wanted to understand the debates or processes Question, Manu. So let me take that upfront. As you can see last year, there were lots Questions regarding what has happened to dividend, etcetera, from that INR 14 to INR 14 high, we have gone down to INR 2 and I had, I think multiple times explained as to why and how we are to take those corrective actions. While I'll not say anything about normal fees being resumed, etcetera, If you look at the last 10 years average, the dividend payout has been close to about INR 8.5 rupees per year. I mean, you can obviously look at the Particular 5 years before last year, there is a specific block and fee that the number is lower than that. But overall, if you look at the last 10 years, the average has been about ICSF 890. Now leaving that aside, the way you see dividend is basically on the cash utilization on the free cash that you have for the company. And so hence going forward, while as a policy, while we will always have a back end policy of somewhere about, let's say, tentatively about 1 third of dividend being issued of our profits being issued as dividends. You'll always look at what kind of investments you might be wanting to do in the mid to long term, even short medium to long term and hence also convert cash accordingly. So the various investments, I mean, I don't need to go through that, but I'll still ICSF. Sorry, please go ahead. Hello. Manoj, am I audible? Sir? Am I audible? Yes. Yes. So continuing from where I was staying, so the way basically the way you look at utilization of cash, One is obviously while we have last made the acquisition in 2013, we continue to keep actively looking for these options and I would still write to detailed cash in the books to ensure that at least some part of the investment, if we have to look for an NMA, comes out of our own reserves itself. The other is investments in terms of looking at all the safety environment as well as in terms of general ICHS. We are now in the process of looking at our manufacturing footprint Looking at the overall manufacturing footprint just to strengthen the overall manufacturing or basics of the company itself. So there, there will be some investments which will be standard over the next maybe 5 years, but that is also somewhere we would like to have Cash results call. The 3rd area is obviously in the sense in brands, etcetera, while this year as you would be aware and I'm sure all of you would be wanting to know what is happening as far as our launches, etcetera, are concerned, and I'll also respond to that. But some cash will also be required for building our brands, etcetera, which we will again standard over the period of time. So these three, four areas anyway we like to conserve cash. If you look at this year, We have given about, let's say, INR147 crores of dividend from a profit about 2.20, of course, also about 2 thirds of the profit has already been given us, I think. So this already is somewhere the benchmark or maybe the plus minus where it will remain. So while I cannot give a guidance on what the dividends Can be of the future, but this is where the new normal would be or plusminus year depending upon how each year the cash expires. 2nd, one one trajectory change in terms of disclosures of Someone like I've been tracking company for 10 years. So the market shares within the segment, now it appears that the focus is actually on the market So what I just want to understand is The thought process is fairly loud and clear in your presentation and the communication. But should we just talk a little bit more about how the internal ICS. Are you still linked incentive to a segment market share? Or is everything the denominator for ICHS. So very quickly, now that you have asked this question, very quickly, I'll just share with you the market shares as Historically, it was shown. So for example, the market share as far as MAT March 2020 as far as the ADHO in the LHL segment is concerned. Light hair oil was about 60.8%, this is news from data. January, February was peaked at about 63.7%, again, Nielsen data. And the max February 2021 market share is at 62.1 because it has been consistently from Q1 onwards right up to Q3 has been going up to fixed at for 64%. It's now at 63.7% Janset, 62.5% is there. So, ADHO clearly has gained in the LHL segment and Because all the actions that he has taken and seen the growth in the renewal as far as HDH is concerned, and that is what I was alluding to in my Q3 call as well, one of our most heartening fact is the kind of growth we have been seeing ADHO itself. So ADHO in the quarter grew by about 40%. Both value and volume in spite of the price increases because the larger packs have done well in ADHO. Obviously, as you can understand, the sachet and the INR10 packs are not as strongly being across category itself, even for us. So there has been really good growth as far as ADHO in this quarter. Not only in this quarter, overall for the year, if you look at ADHO has now recovered Sapiens is at 6% growth overall, so both value as well as volume. So pretty good performance. If you're talking about the incentive structure, yes, we have now redesigned our incentive structure. We are now, as you are aware, we have put up a trade marketing as well as a sales and analytics team. So a lot of work has been done tweaking in terms of looking at specific rather than give just on overall value and volume now it is based on lot of parameters that they need to deliver both in terms of the total lines sold, in terms of the distribution coverage, in terms of product level sales, the targets that we have for So there is a lot of tweaking which has been done for the incentive commission of the frontline sales forces. Very clear, sir. So we've got a long queue. I have actually one more question, but I just want to leave the question and say we could move on, we may address during the course of the call. Some thoughts on the international business ramp up in the medium term thought process would also be very helpful. Okay. So very quickly, international, as I had Right, maybe 5 quarters back or 4 quarters back is clearly an area which is to me a low hanging It's a hanging fruit. I don't think it's a low hanging fruit at this stage, but it's clearly an area which is there at the corner of my mind at all points of time. It's a question of when. It is definitely not a question of whether or not. It's always a question of when. My point is we want to stabilize our India business a little more rather than stabilize, I'll use the word, strengthen the India business a little more. And once we have done that, I think international is clearly one of the areas to focus on. So on the midterm, international will be taken, but it's clear the thing is where we can make money. So some of the markets where traditionally you don't really make money will not be our focus area. But in the places where we see there is a possibility of both top line and making a decent bottom line, those are the markets we'll be So limited focused approach in international, maybe from next year onwards is what we should expect. ICSF. Thank you, sir. Yes, Raymond, we should get back to the queue. Yes, thank you. We take the next question from the line of Prasif Mandeke from IIFL. Please go ahead. Hi, Jaydeep. Congrats on a good set of numbers. My I have two questions. My first question is on the price increases versus the cost inflation you have seen. So your gross margin is down 700 bps Y o Y. If I don't look at Y o Y because of whatever high base, etcetera or low base for gross margin, Even if I look at Q4 FY 2019, that is 2 years ago, the gross margin is still down about 4.50 basis points. In context of this, your price increases in February March have been about 2%, 2.5%. So just wanted to understand the thought process here. Are we saying that the gross margins that we have seen In FY 2019 2020 are clearly not repeatable going ahead and we are okay to take Sort of material hit to the gross margin and that will be the new normal. Is that what the thought process is? Okay. So this is a nuanced question. So it will have some multiple layered answers, if that's okay with you, Priti. Sure. So first and foremost, if you look at a very, very broad based approach? Yes, there might be some dilution on the percentage EBITDA, which has been continuously being leading to because If we dial up our entire business and ADHO, I mean, and if our top line keeps growing, which cannot be only fueled by ADHO and we start building our portfolio around, not all of them will have the ICHF. Not all of them will have the kind of margins that ADHO have, a classic ADHO. If I might just interrupt 1 minute just to clarify My question was on gross margin more than the EBITDA margin. Yes, yes. So gross margin, I mean, in this particular case, gross margin itself. So let me revise the I mean, the statement remains same except you can replace EBITDA with gross margin. So the kind of gross margins that you make in ADHO, so products like Amla, etcetera, ICHS, which is obviously a little more competitive, will not make it. The idea is that is always, as I said, and this is where EBITDA will come in. Is that As long as A. H. O. Gives us a positive EBITDA, which is what we will drive and then percentage EBITDA will obviously keep climbing up as we as the business grows and the cost of sales promotion advertising on the brand itself go down accordingly. So as far as Amlai's such a concern, that is the approach. Because if you are trying to build a portfolio over time, then the kind of gross margins that we have seen DHO will not be rest level. If you look at across all FMCG companies, etcetera, we will be at one of the highest gross margins. Now this is all possible if you retain and remain only with 1 brand. But then whether this brand alone can sustain itself, whether you would want to ring fence this brand with other products, Etcetera is a call that we have taken. And the answer to that we have taken is yes, we need to reinvent. ADHO will remain a flagship run for any time foreseeable future, We would also want to put some more products in the portfolio. As I said, we would like to build this 100 crore brands over a period of 3 to 5 years, some more banks which may or may not have that kind of margins, so to say. Having said that, this particular quarter has been a little peculiar. So really speaking, taking this particular quarter out and seeing whether this is a long term trend, I would like to think and know. Because if you think if you see, I mean, while we are one of the first ones in the FMC companies to come up with our results, I would expect the kind of Inflation that we have seen in terms of raw material prices versus the price increases that I see in the marketplace. I mean, In the almond category, obviously, you are the only ones who have taken pricing to. And across most categories other than coconut, etcetera, there is no long ICHS. Broad based pricing figures that we have seen from any of the Heron's peers, right? So managing the and I would like to assume that the kind of ICHF. That we have seen most of the other companies would see a similar kind of a gross margin, while product assortment, etcetera, may be different, but they will also be seeing a similar pressure on their gross margins. So obviously, we'll monitor the competitive landscape. We have taken a price increase, definitely not as much as the raw material pricing season happened in this quarter. We are again contemplating and seeing How we want to see it and maybe in this quarter we might have stated ICTs we have not yet decided something. Maybe we will. So we'll try and mitigate some of the assets, but We will not be passing on the complete impact of the price increases that we have seen in terms of raw material and tachymetro prices onto the marketplace because The reversal is not so easy in a FMCG kind of a setup. I mean, I can't increase the price and then go back and release the price of FMCG. It's possible, but not something that we don't. So hence, you might see some event that has happened in Q4 as well as in Q1, but I think by Q2, etcetera, you should see normalizing of the gross margin. Understood, sir. 2nd question is on the top line itself. See, from a COVID point of view, ICHS? Out of the 4 quarters of FY 2021, Q4 has been the most normal. And actually as we go into Q1 of FY 2022, etcetera, it is again deteriorating. So Q4 is the best quarter if you look at the last 3, 4 quarters as well as the next couple of quarters. And in this relatively sort of good quarter, Although the Y o Y growth is very robust, on a 2 year figure, we have basically grown at just around 1% or so. So just wanted to understand, you said your market shares are increasing. So that means actually that the hair oil category on a 2 year CAGR has not really seen any material growth. And if that is the case, how do we think about modeling in our next year numbers? ICSI. In the best quarter, if we have seen close to a 0% growth and things are deteriorating, is that really a big risk to the FY 2022 top line growth? Okay. So again, Luan's question. So, 1st and foremost, we have not set the market share growth. I mean, these are Nielsen data. So, I mean, they are under indexed, As I said, but these are what Nielsen is reporting. Second thing is, I think we'll have to look at the year that has gone by in a little more structured manner, so to say. For example, Q3, if we look at, Q3 happened in Q3 this year. So one thing that happened in Q3 was that the Diwali fell in November. So the sale of Bhiyanshan and many other places where we have some spikes in Diwali happened in the month of October this year. So that's why we have seen a 20% growth in October this year on while last year ICHS. October was also a renewed space, but we had grown by 20% in Q3. So that is one part. And the other part that happened was Q1, Q2, there was a lag of demand. I don't think there is enough fulfillment that had happened of our both our distributors as well as our wholesalers, etcetera. So A bit of pipelining also happened in Q3 this year. If you compare to Q3 to Q4, I think the sales has been pretty robust. Now if you look at 2019, 8 quarters back, I think there were some specific incentives that we had taken. I think That time we had mentioned that also, the specific program that we had taken to boost our sales in the quarter itself. So we had taken a huge spike in quarter 4 of 2019 itself, as well as there was all these new marks, etcetera, that we had also taken up in this image. We had to take some of it back in Q1 of 2019 2020. Yes, that's right, 2019, 2020. So there was some impact in Q4 itself. So it might be a little more balanced if you were to not look at a specific Quarter and compare, but maybe look at the trends for our overall period and see how the numbers are. So this is how I would like to say This performance of this particular Q4. So Q4 may not have been the best quarter as far as sales is concerned in this particular way. In my mind, Q3 was definitely the this quarter. That's what I said. So this is one side of it. The other is going forward as far as 2021, 2022 is concerned, are we seeing very, very robust plans as far as 21, 2022 is concerned. Now all of it is being revisited and revised based on what we see. So at this stage, if you say how do we model For 2021, 2022, really speaking, it's a difficult question to answer because we don't know we had seen pretty decent sales starting in the month of April. So it was going very, very strong. And in the last 7 days, we have been seeing sporadic disturbances in Madhya Pradesh, in Chhattisgarh, In Delhi now, in Rajasthan, it started Maharashtra, which was always there, UP, 5 cities, whether they'll go under lockdown or not, and every day we are visiting. So really speaking, modeling based on what is going to be expected, etcetera, we don't know. We had originally planned to have double digit growth, yes. ICHF. Got you. So just a small sub question for Q4, do we have Secondary sales growth higher than primary or roughly they are in line? No. Secondary sales growth, in fact, if you look at primary and secondary, both are actually Similar. So that's not the problem. But no, but that is again in terms of base correction. So last year, for example, Sir, primary for us was very, very low, right? But secondary was still okay. Secondary was still okay. So secondary growth as such is lower, But primary and secondary is same for this year. So there is no buildup of inventory as of now. In fact, we have basically ensured consciously that year end we don't build up an inventory. ICSF. Got you, sir. Got you. That's all from me. Thanks and all the best. Thank you, Pankaj. Thank you. The next question is from the line of Prakash Kapadia from Honeywell Portfolio Managers. Please go ahead. Yes, thanks for the opportunity. I had two questions. We tried to get employed for this year at around INR 83 crores. Yes. You could give us some sense on the variable component in this and on a going forward basis, JT. Is it fair to assume this will be more or less in line with the top line growth for 2020 beyond? And secondly, You did mention about rural demand in your opening remarks. So even what has happened in the last few weeks. The second wave is spread across India unlike metro cities earlier. So Currently what is happening on the rural side, because that has been a big growth driver last year. So are we seeing some Demand tapering off? Are we seeing department of purchases? Are we seeing downgrading? Give some color on these Group Point? Yes. Okay. So, let's look at the employee costs first. Now as far as employee costs are concerned, it's been looked at in 2, 3 areas. One is in terms of I think the The corrections we wanted to do as far as the management team is concerned, I think we have done most of it. There might be A few more corrections which are required, but most of the corrections have been done as far as the management team is concerned. We wanted to have it a little more robust team as such. On the other hand, we have also we are now engaged with one of the leading consultants looking at entire reorganization of the structure, looking at manpower capability, Cost wise, the kind of output that will deliver, we are doing a complete benchmarking in the installed companies, etcetera. And In the next 2, 3 months, we might do some restructuring based on that as well, which will basically push our costs a little downward in terms of more of rationalization of cost. So we would like to invest only in the areas where as far as manpower is concerned, where we are seeing growth, etcetera. Now looking at the second part of your question, which is basically what were you doing about variable pay and fixed pay, yes, we are now continuously dialing up the variable ICHF. And grade wise, we are making it different. As you go senior right up to my level, the variable pay itself goes far higher based on the year's performance, while the fixed pay remains much more muted. So it is graded and for the senior management team. There is a far more emphasis on the performance of the company and the team as far as the pay structure is concerned. So this is what we are doing. So going forward, My thought would be that going forward, we would like to even with inflation, that is basically increments that we'll keep rolling out year on year. I would like to see the employee cost as a trend going down on a continuous basis, mainly supported by the sales being higher than higher in terms of percentage than the implied cost. That should be the direction that we want to take and that's a target that we have taken for itself and I think that is decently achievable. I don't know what will happen this year. We'll have to see how the year pans out, but I still am confident that we should be able to do it even in the year 2021, 2022. That is right. This is as far as the employee cost part is concerned. As far as the rural markets are concerned, frankly, this is too early to say. As of now, even in the beginning of April, We will continue to boom and have been doing well. Even today, if you ask me exactly like last year, where the lockdowns, etcetera, happened, the impact of the lockdown is Still you are in the rural. So while we are hearing all these news, etcetera, about rural also being impacted, people are getting infected there, But I think the rural markets are still pretty much open. We are still I mean like yesterday when we are talking to all the SOs, like our sales head was talking to all the SOs and he was briefing me. Most of the rural markets still he is not struggling. That's why whether it be in the van sales or whether the ISR has been to the marketplace, not really. So we still don't see the impact. But yes, we'll have to keep monitoring it. It's very difficult to say what will happen 15 days later. Thanks. All the best. ICSF. Thank you. The next question is from the line of Nejesh Shah from Spark Capital. Hi, Vedit. Thanks for the opportunity and hope the team is keeping safe. Eric, you spoke about gross margin in the beginning in detail and you mentioned about some write off and sanitizer inventory. So Would it be possible to share that number in Quantrum? What was that number? In terms of Quantrum, if you look at sanitizers, we have written off about a percentage point. So about that is what so it is not a right of view, we have just taken a provision on that. It's basically all the fracking material, etcetera, that we had accumulated in the month of May June because we were over aggressive as far as sanitizer testing and I think most companies So that time whatever we had left off, we had thought that it is prudent that we take a provision on the books In case later we just reverse the deal. Okay. So percentage point in terms of gross margin is because of that? As far as the sanitizer Sanitizer inventory write off is concerned. Also, we have done a little bit of our SG, whatever balance SG sale that We had done a bucket deal of that, right, as I said. So that has also impacted a bit on the margin, but that will be less than percentage point. So these are the 2 things that I can't comment on. Sure. 2nd, now when we look back our See, last 10 years when we were pegging ourselves versus all the light hair oil companies, our pricing power was very, very dominant because we used to compare ourselves with all the relatively premium header companies. Now when we are We have redefined our target audience as a broader hair oil market. We have to compete with raw material like Kopra also and Amla also, which are relatively low priced products also. So does it mean that now that the kind of pricing power that we witnessed earlier to protect gross margin may not be the same? And in that line, how would you like to play this whole gross margin and EBITDA margin dynamics? Because you have been vocal about that it has been relatively higher versus SMCT standards. So you have opportunities and considering the long pipeline of products that you have talked about in the past you would like to support. So where do we see the margin profile evolving because of all these factors from here on? Okay. So Tejas, again, 2 parts to answer. The first part is ATHO in isolation. Now ATHO in isolation means The only thing that we have been dialing up is continuously the premiumness of the brand. So if you look at our entire approach this year is basically to look at the new trend customers and look at how ADHO can be priced at absolute the premium. So here, if you see, Compared to the compact rates in the ADHO category, in the LHL and whatever almond category, etcetera, we are just keeping on pricing also further and further So our premiumness on ADH is going further and further up as we take price increases and as we go forward. So really speaking, ADHO is not where we would look at margin dilution at all. So the way that we are looking at is in the portfolio play that we will do. There overall, if you look at the margins, etcetera, obviously, because it will not have the kind of margins that AAVI has, it will have Some reduction in gross margins, but that should end up with the overall gross margin, which is higher as well as an EBITDA, which is much higher As an absolute term. And that is what we have been focusing. So, ADHO's premiumness will not be dialed down. It is in fact being dialed up. So all our investments so that's why I was saying our monies in terms of advertising and whatever brand building as far as ADHD is concerned, That is not going to be confirmed. That's the last course that we would like to capture. Sure. But any visibility or guidance on margins? As far as the full year quarter, As Q1 is concerned, I think the margin pressures will remain. As you are aware, there has been continuous inflationary spend on raw material has not really subsided. And this is something so LLP has not subsided. RMO is at its all time high. Pet is high. Polymers are high as a result of that, that is high. Paper is high, so polyglated cartons etcetera are high. So every cost is absolutely at its peak and we still don't see downward movement. So as I said, we will be concentrating a price increase, but we're also keeping On the other side, we are also looking at what competition is doing and where they are taking their increase. But most likely, we will see a tightening pressure. So quarter 1, you will ICSF. So My question is exactly the same. So when you say a normal level, it means 30, it means 28, it means. So where would you like business to operate from here on considering the diversification agenda you have? If you look at, I would like to benchmark myself against most of the other top FMCG players and keep our EBITDA margins are little higher than that. So as you see, if I were to without moving this, I look at the EBITDA margins of 2022 and 2023 of 2 of my competition and somebody who is much larger, we would like to keep it at about that 25% kind of an EBITDA margin going forward with launches of brands And with sales growth, etcetera. So obviously, it comes with riders. So with those kind of business. So as I said, my focus If you keep it at 25% plus, hovering between 25% to 28%, but more focus is to ensure that EBITDA as an absolute keep expanding. So that will be the focus. That's where we will be focusing on. So keeping the EBITDA on a positive on a continuous basis for that Whatever needs to be done, yes. Very helpful. And last one, no marks is missing from discussion today. So any plan there? Okay. So this is a subject we have kept on discussing in and on within the company. Now there are only 2 options as far as Lumox concern. I will dial it up through what we had done about 2 years back or basically look at an exit. But at this stage exit doesn't make too much of ICSF. Because there's not too much of money to be made out of the brand. There are not too many takers of the brand and we are not in a desperate situation. So we have revamped 1 or 2 products in Category like the cleans etcetera, but beyond that there is not too much that we are focusing on Nomax. We'll keep it as business as usual, not Too much of focus as far as NUMA itself is concerned. There are a lot of other products that we wanted to launch in the e commerce pipeline and some are from the GT channel itself. That's where we'll ICICI. This does not include no more. Great. Thanks and all the best. Thank you. Thank you. The next question is from the line of Aditya Gondarwal from GST Investment. Please go ahead. Hi, sir. So last quarter you said that In the next 2, 3 quarters, we are going to see more of e commerce and digital only brands. So I just wanted color on the kind of products or the product extensions that you're looking at. And number 2, what is the e commerce contribution to the total revenue? Thank you. So e commerce has now brought up to about 3% of our turnover. So it's Continuously going up on a quarter to quarter basis and that's a very good sign because this is somewhere we would like to go to about 5% in as quick time as possible and maybe take it even beyond if we can. So that's the aim and I think e commerce has been doing pretty well. ADHO itself has been doing very well on the e commerce platform as is 0 grade, which has started showing now some traction And so and so forth. So really speaking, overall, we are well placed, the B2C and very clear our focus is on the B2C only, not so much on the B2B part of the e commerce. So while it adds up to the numbers, it clearly is not e commerce the way you would want to look at e commerce, right? So there is a quality part to it as So this is e commerce as well. As far as the launches are concerned, both e commerce as well as our GT launches, So the product extension, which is basically Amundroff extensions, etcetera, there is a remote for the GT channel. And e commerce, which is the premium end, so Our branding work is over, the products are all ready. Now it's basically an opportune time. Because these are high end portfolios, these are not essential. We would also monitor how the pandemic goes. We had originally said that it will be end Q2 stroke beginning Q3 when we would like to launch this product. Our back end work continues, whether be it in terms of designing the products, naming them, branding them, getting the packing material, etcetera, all to standardize everything is already there, where we make it, what can publish and what kind of claim. Most of it is already the back end work continues without interruption. It's just that when we would launch, we will also tactically play it because not being essential, we would like to launch it when we think that is the best time to launch a new product. So whether it is Q3, whether it is Q2 end or whether it So that's pushed by a few months is something that we will take calls later to closer to the date rather than that. Sure. That helps. That's all. Thank you. Thank you. The next question is from Shirish Bandeshi from Central Capital. Please go Sohil. Yes. Hi, good afternoon, Jaydeep and team. Happy congratulations from my side. I just have a few questions. The first question is that on FY 2020, the full year growth is in the range of about 9.5%, 9.8% in the precise. Could you please break up what is the price and the volume overall? If you look at the volume growth, Again, because our assortments have quite a bit changed, the volume growth are quite different. So our value growth rate 9.8% on basic sales and sales of goods that is, while our volume growth is close to about 15%, 1.5%. So that's what that has come up and that is mainly because of 2 product categories. 1 is obviously the Amla, which has got scaled up. The other is also sanitizers, which is at a lower price that we have sold. So these two products actually help grow the ICSF. Growth of volume more than the value. As I said, Amundroff had a 6% growth and growth on both sides, value and volume. So this is where Okay. On a base of, say, 10% growth in FY 2021, it's just an observation what I came to know from the presentation. You have said that your AML penetration is roughly about 3808000, While your overall penetration is much larger, maybe 2.5, 3 times. So I just have one question that if you assume that your WAN operation and you are now trying to rationalize the WAN operation, and I think if there is a scale at which you are So can we assume more than 8%, 9% volume growth for FY 2021 FY 2022? I would have been very comfortable giving this answer maybe about 15 days back. But given the way the pandemic is going on, is really a little futile to give I can give you my plan number. And the answer to that is yes, you could have factored that in your plans, etcetera. And I think We had a pretty robust plan and pretty confident that we would be able to execute that. But given the way things are panning out, I still hope that we will be able to achieve that because we have There's enough buffers in our system to be able to manage those kind of numbers. But I really don't know what is going to happen in May, June, etcetera. April seems to be still okay. It is still still true is what it looks like. But May, June, July, I really don't know. So we'll have to wait on this. I think every company will be impacted similarly. I think we have A pretty good network. And I think one of our advantages because we are very focused in only hair oils in our category, etcetera. I think in time for pandemic, etcetera, we have been able to react a little better because the larger the assortment, I think Going and reaching out has been a little difficult or more difficult. I mean, I'm not getting into this entire discussion between Accenture's comments. At least in a category wise, it has been easier for I mean, we found it easier to bounce back in Q2 when the market really opened. So we are still finding it pretty clear to be able to operate in the Businesses that we are in and the kind of initiatives that we are taking in land, Tamla, ADHO in terms of rural growth, tax, etcetera, Still doing well, but we'll have to see how it goes. Follow-up on that, Jaydeep, you already had a Amla product and you also added alloys that are Amla franchise to that. And when I look at the market leader is trying to play the value game at the Amla end of the pyramid. So do you think you have a merit and I'm counting on the distribution part and penetration, which is up north and middle India. Do you think Amla will surprise or rather Amla is surprising you in terms of growth rates and what you have estimated That new product what you have launched will have a much more bigger scope and play in your revenue contribution? So other than the surprise part, everything answer to your entire question is yes. I think there is an upside to Amla. Will it contribute to a different significant portion? The answer to that is also yes. Are we surprised? I would say no, really no, because this is exactly what we have and going forward, this year also we have a pretty strong plan in Amla and I think we should be COVID or no COVID, we should be able to execute and achieve those plans, etcetera. So we had some more plans as well as going a little heavy on in terms of communication, etcetera, that we will see when and How to launch, we will take it out based on how the market places. As I said even last time, it's a ICHS. What you'll have to remember is that 2,200 crore market dominated at one end by 1 player and Lower end by the other player. Really speaking, not too much else other than the variance of various products. And if you see, that's exactly what the other two players are also doing. They are It's not variance to cut each other in those marketplaces. We see there is enough and more space for us. If you want to have an aspiration of a 100 crores brand, which is about 5% market share. That in itself given Amla is a category where traditionally the markets where we have strong distribution, is a Hindi speaking event and that is exactly nicely fits in to where we want to sell. Really speaking, I don't see that as too much of a difficult exercise. And that's how the market is also reacting, so yes. Okay. If I'm not too much pressurizing on margin, I have one question on margin. No, no, please. The way I look at it, I think What you have done and in your presentation, again, I'm picking up, the saliency for rigid packs like bottles has gone up significantly and that has also reflected into the volume growth. Assume that the pandemic is elongated for a little longer time and consumer would upgrade ICHF from SMASHES small pack to be borne. I think in your numbers, I think you have been trying to be super conservative in terms of margin performance on ADHO. Given that you have already taken a risk of taking a price increase and if the material prices are going to go up, you can take another round of price increase. So tell me something is if I'm missing something in this? No, I don't think you are missing anything on that. I mean, I think there is no point Overpromising something unless you are completely confident of what you are going to deliver. So what I can vividly see is all I can state. So yes, you're absolutely right. We have clearly seen the larger packs doing very, very well last year, all the larger packs, right, from the newer launch of 160 ml, which we launched, which is the INR 99 pack in the instant markets that we launched, right up to INR 200, INR 300, INR 500 as well as the 6 15 modern rigs, all of them are showing good traction. The 3 ml, the 2.5 ml, that is the chassis is not doing well, 19 ml is not doing well, the INR 10. But again, we have launched a 20 rupee, which was a gap last year. If you I mean, we have been continuously saying that the largest growing pack Hi, I'm in beauty category and we are not present in that. Now that is showing good traction and we are spending ICHF some sales promotion money to ensure that that pack is also catching up. So I think we are well covered as far as W2 on both sides. And as far as metal cost is concerned, yes, most likely we might take a price increase this quarter. It's most likely. Let's see, sooner the better. So yes, we will mitigate some part of it. But as you can see, the kind of unprecedented price increases that Happened in raw material and packing material. This is the first time we are seeing an all rounded price increase. So whether it is LLP or RMO, whether Tacking material, whether it is in terms of glass, paint, cardboard, CFC, everywhere the pricing is It is not only in single most years if you see if LLP has gone down, our repo has remained stable, has gone down otherwise, etcetera. Now it is completely inflationary all across. So it is very difficult to pass on the complete thing to the consumer, especially in this kind of time. Okay. My last question is you spent a lot of I'm giving us some note that you have hired a consultant and you're looking for a management structure. So if you can give some more Understanding what exactly you're looking at, what's the management structure? Is it more leaner or it is more compact or is it going to be more Larger in terms of area of operation? No, we are not looking at the management structure. We are looking at the entire organization structure. So basically what we are trying to do is we are looking at mapping of our structure, both in terms of capability, people, their job scope, relevance And basically doing a map across the industry as well as what our aspirations are, what we need to do. So basically obviously, one of the This is easy to optimize, but this is also to try and make it future ready. So where we see there is a fat or there is some fat to be skinned, we will skim it And where there is requirement to do dial up, we will dial up. So as far as the management structure is concerned, I don't think even as we see from the consultant, what we have done ICHF. So at the top, you may not see too many changes over and above what we have done. But overall in the Structurally, you might have some restructuring. It's not that we will let go of people or something, but yes, some structural changes will keep happening over a 2, 3 year period, We make it a little leaner, yes, and far more accountable as people are concerned. Accountability of people and jobs, salaries, All being commensurated with the kind of work they are doing designation, so that there is aspiration as well as suitability across the company. That is very, very important. That's what we are trying to tell you. Yes, I completely agree your thought. But in In the analyst world, what it means essentially? Are you or have you given a target to a consultant for a cost reduction or job optimization. That is a target given to our HR guy. So the more the consultants' objective has to be to Optimize the thing, the target of reduction of cost, etcetera, is more for the HR way to do. Yes, there is a difference, But more than just looking at what absolute number of costs is to be reduced, we have a target So where we want to see the HR employee costs expenses to go. We are looking at how competition is operating everybody else is at and we want to benchmark ourselves. Being a smaller company, obviously, the cost structures are a little higher. So that as it gets adding up, I think the cost itself is at neutralized. But it's so yes, so costs are expected to go down over time, both as a result of rationalization as well as in terms of increased sales, which should bring down the percentage of. There will be not too many additions to manpower per share. Wonderful. And thank you, Jaydeep. That was a wonderful commentary. And all the best from my side. ICICI. The next question is from Dixin Doshi from Enterprises Private Limited. Please provide. Yes. Thanks for the opportunity. Sir, you mentioned about the new product launches in the later part of Q2 or Q3. So I understand this is also in other than the heroic setting. So, yes, Vishit, so basically, as I said, as far as e commerce is concerned, we'll not only restrict ourselves to AirCoils for getting to the newer formats in fair care as well as very adjacent personal care, if at all. Because we have been doing continuously on consumer research, consumer insight and we have a consultant who has been working with us for the last 3, 4 months on that, looking at branding, what works with the customer, etcetera. So the only areas that we will get into is premium, hair care, other formats Or very, very interesting personnel here for mine, nothing beyond that this stage. And so that will be predominantly for e commerce market only, not The traditional market? No. So as far as the hair care premium end is concerned, yes, The premium end, yes, that will be traditionally only for the e commerce market. But for the personal care extensions that we are looking at, Some of the extensions, yes, they will be for the January as well. But that launches might be about Q4 actually. Okay. And just wanted to understand your thought process in other than the oil market. So wanted to understand that this will be kind of one of the products we will be trying or this will be new normal like every year or a Couple of years, we'll be adding 3 more products other than the oil segment. That's absolutely correct. That's what we would Aspire TV, but we will also keep reacting and continue to keep our sales flexible. Aspiration wise, that's what we would want to do, to develop an e commerce portfolio, which is This is more robust, which is a little multiple branded under maybe a single brand umbrella or 2 brand umbrella, in different formats going to the customer, so that there is enough choices for the customer, etcetera, which is under the e commerce umbrella. As far as Regular brands are concerned, traditional channel as we put it. There may be 1 launch at a year or 2 launches based on how much we can absorbed both in terms of cost, cost margins as well as EBITDA. So we'll have to keep a watch on that as well. Okay, okay. That's it from my side. Thanks. Thank you. Thank you. The next question is from Navan Kumar, who is an individual investor. Please go ahead. Hello. Thank you for the opportunity. And just A feedback to the management on what I'm observing on the ground. So I live in a small town in Himachal Pradesh and in the last few months I've been seeing the push of Bajaj Amla in the shops, like even the small shops, I could see Bajaj Amla hair oil on the shelf. So, Yes. So that's interesting to observe like whatever initiatives you are taking that we are able to see on the ground. But from question perspective, I have I'm not sure if you will have the answer. It's kind of an abstract question. Like would we know what is the demographic of our consumer in ADHO category? And the reason I'm asking is because Personal care products are sticky in nature, right. So someone has used it, they'll continue to use it in for their life most of the time. But are we able to capture the younger generation who are becoming independent or like who are starting their own new life? Are we able to capture them in with our portfolio of ADHO? Yes, that's an absolutely fantastic ICHF. I mean, why I say conducted is exactly the question that we had been asking after the last 1 year and our entire approach towards the ADHO has also changed. So while you look at ADHO being a flagship brand, etcetera, our consumer market research continues to keep saying that Brand is not offering anything new to us. There is nothing much else happening as far as the brand is concerned and there is a ICHS, etcetera, and especially the new generation. So, entirely to track our entire approach towards digital marketing, looking at the new age, I touched upon it a bit in the presentation, but there is elaborate work that the marketing team is doing exactly to Try and touch base with the medium customers because if you're talking of premiumness, it also needs to be viewed as a premium brand, not only a nice brand as far as packaging is concerned sitting at the great shop, but also kind of user content that you are generating The brand is concerned, influencers that they're talking about in Instagram. Peter, I mean, it should be a happening brand. I mean, one of the Great feedback. I mean, a lot of consumer work that we have been doing in the last 1 year. So one of the consumer insight that we got last year was that while the The CCA customer of let's say, Urbane Bombay, maybe South Bombay, what they are saying about the product as far as aspiration etcetera is concerned is no more Then that we see in a middle class household in Indore or in India too, because they have equal aspirations. It is not that they have a lesser aspiration, Because they are maybe not so much urban, so to say, as far as people are concerned. And that is our approach clearly, it has Mira's thinking and our approach towards it is that ADH needs to be seen as a very, very strong happening brand, much more connected to the unit, etcetera. And that's how our entire digital strategy, digital portfolio, where you have seen that we have dialed up heavily on digital spend this year It's addressed to that. So you're absolutely right and this is exactly what we want to do, so that the newer aged customers are not lost for us. Okay, makes sense. By any chance, is there a plan to change or modify the packaging a bit just to appeal to the younger generation. So to give you an example, right, so Bajaj 0 grade like the packaging appeals may appeal to the younger generation, but the Target customer are people who are in their 3040s. But if you see ADH show packaging, it looks Okay for people who are in 30s, 40s, but if you see from your Android generation perspective, it still does, whereas Bajaj 0 Grail looks very appealing to a younger generation. So is there any planning just to change the packaging just to target the younger generation? Again, a very interesting question, but unfortunately, that's a double edged sword. So because whatever Bajaj Amundroff You'll have to remember that it is still 800 odd crores brand. And the kind of clientele that It has across the length and breadth of India. That is not something that you so easily play with. So that entire approach of the shape of the bottle, The glass of the bottle itself, which is I mean, there has been a lot of hue and pride that why can't we at least get the 200 ml of the larger packs 200 ml, 300 ml 200 ml basically into fed bottle, etcetera. So that 3 of the blast for the 50 ml, 100 ml, 50 ml, 100 ml, 200 ml, 200 ml is something Not something that we want to risk doing this. So I completely appreciate your point. And that's why in terms of visual appeal, etcetera, we have done as much as possible and dial up that Aman, drop, etcetera, that you see in the bottle and that itself has given good feedback, etcetera. But packaging itself, we don't want to do too much Because there is too much of a existing client deal to play with. Yes, I understand. And one last question is in the presentation, I see on one of the page With Bajaj Amla there with ADHOS soap as well. So is that a soap launch in the pipeline in the coming quarter? No, this is the one that you saw is typically what we this is an existing product. It is not for It is a product typically given to the Maharashtra customers during Adhyantan. We also use the product to give it to Some of the other consumer offers that we've had, that is it with this thing. At this moment, this is not a product which is for sale. Okay, got it. Thank you. Yes, thanks. Thank you. The next question is from the line of Avi Vetha from Macquarie. Please go ahead. Mr. Avi Vethra from Macquarie. You may go ahead with your question. Hi, am I audible now? Yes, sir. Yes, you are. Yes, hi, sir. Sir, I just had one question. You highlighted that demand trends are broadly similar as of now versus to the last lockdown with rural urban divergence in terms of that. I wanted to kind of just get your thoughts on how is the situation different when it comes to competition both organized and organized? And in terms of channel readiness, how the different channels are behave? Thank you. See, if you Tom, between the 1st and the 2nd lockdown, it is too early to say. I was saying that as of today, we don't see too much of a difference. Yes, there has been sporadic lockdowns that has impacted a bit of business in Madhya Pradesh and Shaktiskar and there in Maharashtra where our business is not that high as compared to others. The rest of the country still keeps chugging along in spite of so much of ASEAN cry. But that at no point of time saying that what will happen fortnight later. We really don't know. So as of now, I'm keeping my fingers crossed. We are there are some learnings that we learned from last year's pandemic. So those we are now activating as in terms of stocking up our distributors, trying to ensure that they don't get stocked out when If there is a if and when there is a lockdown because clearly distributors and wholesalers are much better placed to ensure that the supply pipeline remains while larger companies like us might It's kind of difficult. So that is something that we will continue to keep working and I don't see much of a Yes, as far as that is concerned, yes. And in terms of competition, sir, anything that is it going to be similar in your view? Or how would you see that? For the Q4. I would assume they would have also learned from their last year's experience. And I would not as of today, I don't see any competitor, whether it's in our field or it's a little larger SMC space. We're doing anything very differently. Everybody is trying to dial up the distribution, trying to ensure that material is available at The frontline retail shops as well as the wholesalers and distributors backing the pipeline. I mean pipeline is all they are focusing. So Sorry, I meant smaller players, just to clarify. But okay, I'll give you a smaller player. Smaller players, not much. So that's an interesting question because last year smaller players across categories saw getting really, really impacted during the quarter one and They took a real long time to bounce back. So not in our category for all other categories. So then they will struggle. So they have found means and methods to come back. And I would assume they will be a little better prepared than what they were last year. So, what the organized sector found so easy to basically acquire from The smaller players last year may not be that simple and easy in the categories that smaller players also operate. ICHS. That is my assumption. But really speaking, this is just because we don't know how the pandemic will play out. Sure, sir. Sure. I appreciate that. Thank you very much. That's all. Securities. Thank you. The next question is from the line of Aditya Marwani from Briantyne. Please go ahead. Yes. Hi, sir. Thank you so much for the opportunity. So just one question. So rural is one market and one segment where we have seen very strong growth in the last couple of quarters and even last quarter we see 3% plus growth. So I just wanted to understand Is it possible to bifurcate that how much of that growth came from our bank's operation or maybe from the focus on distribution What sense from the actual recovery or the strength of the rural market? Well, I would not like to exactly split the data and I'll tell you why not because I don't want to Here's the data. It's more because you see while so just to give you a rough cut kind of numbers that we are getting through Rand, let's say about 10% of our business comes to rands now 10% and maybe at times it goes to about 12% of them, number 10% to rands. Now this is This number is a little actually taken with a pinch of salt because there has been obviously a bit of cannibalization that already happened because existing wholesalers from the larger cities, existing subs that we had, sub stockings that we had, which now today are getting advantage because of the ramp sales, they would have been doing some kind of a business, right? So it is not that the entire thing would have been off If you have not had the answer. So yes, there has been a bit of cannibalization that would have happened, but that is expected anyway because we are in U. S. Servicing the Same channel. But if you look at the distribution numbers, clearly, I mean, our internal understanding was you still don't we still don't have this is automated as far as the land sales operations are concerned. I mean, we are installing all the software 1 by 1, so it will take some time. So there we clearly see our direct distribution numbers, which used to be about 5, if I turn to org, is now up to about 8, 8.5 in terms of including the Vans. So clearly, we see distribution reach much stronger and that Typical thumb rule that you take of 20% of indirect distribution should be direct. So that number I think we are now comfortably doing. So clearly that is happening. And going forward, our aim is to this year look at Urban distribution as well, which is basically direct urban retail distribution. That was the focus for this year, which we think we will still continue to do. Thank you, sir. Thank you very much. Okay. Thanks. Thank you. The next question is from the line of Rohan Samant from MultiAct. Please go ahead. Yes. Thanks. Hi, Jaydeep. So My question is more on the tax rate. So if you look at the tax rate, it's around 17%. When do we see it normalizing to around 25 at the same time. So when does the tax benefit expire for us? So Matt, this thing will continue for about another 3, 4 years, about 2,000 because now As you are aware, Dehradun bought out in May of 2019, Quanta Sai factory, which is a HP factory that bought out in March for 2020. And so this year, we have that's why you see that other income has fallen this year. So The only place where we see the net benefit intake in the budget is supported to 40, which we should continue 2027. So we have to go to go for another 4, 5 years. Okay. So for the next 4, 5 years also, we should have an effective tax rate of Similar to 2018? Yes, that's about right. Okay. Okay, sure. Thanks. Securities. The next question is from the line of Divanshu Sampath from ES Securities. Yes. Hi, sir. Good afternoon. Am I audible? Yes. Sure. You are. Yes. Hi, sir. So two broad questions from my side On the overall strategy, right, so many quarters ago, Mr. Sumit Malhotra had mentioned that it doesn't really make sense to play the hair oil only play, given that it gets difficult to differentiate and pricing itself cannot be the USP. And there are incumbent players who have already a stronghold and positioned in multiple categories. So it's Amla, coconut or cooling hair oil and such. So and basically, his view was that it will be tough to break into these segments while maintaining profitability. And of course, the strategy right now is to double market share in the overall hair oil space by entering such categories. So how has the thought changed, your view on this? So except your last segment, all of it is correct. The yes, ICHF. When Bain was engaged, the thought was to take the market share to 20% in the heroics category itself. I think my sense is I would rather tweak that just that point itself rather than say that The objective was to take it to 20% market share. I think the objective of the company is to double the revenue of the organization for that rather than double the market share, because moment you said double the revenue, then you are no longer restricted to only that hair oil shipment. Because if you Here both these statements in unison, there obviously seems to be a A bit of a distinct conflict, right? On one side, what you rightly said, what Sunit had said, saying that Some of these markets, it will be difficult to really be money spinners if you have to get into some of these categories, etcetera, which is correct. And on the other side, if you say that you want to go So 20% market share. Only ADSO cannot give you 20% market share. I mean, I would love to have that, but that's really possible. Looks like the more like aspiration rather than an expectation. So given that we would like to have a more reasonable mix where we see that we can have profitable, maybe not kind of profitability of ABHO, but profitable brands that we can establish, reasonably decent sized, brands that we can establish, definitely decent sized. We will play in the heroics market. Amlai is an area where we will play and we see profitability They are easily available, not profitable in the sense that we're making ATHO, but positive EBITDA coming in from there. And being a decent size in terms of top line. That is it. Maybe there are 1 or 2 heroes as well in Some premium highlights and some niche and maybe some of the others which I may not want to discuss at this stage. We are just in a contemplating stage of that. So that we will play. Along with that, wherever we see there are rights to win for us, this is what we have been talking about. We would like to play. So whether it be that hair care or the adjacent personal Again, looking at where we can make a positive EBITDA in 3 years' time and is there sustainable EBITDA that we can do? So with this put together should be the composite strategy as a company, so that at least we can look at doubling our turnover over a given period of time. Okay. Okay. And taking a previous participant's question, so there was on the non hair oil product launches. So from your perspective, What are the expectations in terms of how much they will contribute? And will it be will this be the area that you're largely looking at for acquisitions? ICHS. So acquisition, unfortunately, you cannot pick and choose. I mean, there are opportunities which will keep coming up And we'll have to evaluate the only way we would like to look at an opportunity, not whether that company can add value to us. It is the way I would like to look at an M and A opportunity is whether we can add value to that company rather than whether That value just adds on to my top line and bottom line because managing an acquired company also has its own nuances. If we see an opportunity which is At the right value, which obviously is an important point, then we will look at first thing we look at is whether we can add value to that Whether our strength of distribution, our marketing skills, etcetera, we can take that company further. Only then we will take it rather than look at. We might look at some acquisitions if they open up in some forays for us where we are not from, but in areas where we want to go and very, very closely associated with us in areas where we already have some kind of strength, not completely divest from us. So this is where we would Like to pick our acquisition options first. Okay. And sir, last question, any update or development on the Worley property? So the only property at this stage is all there. So we will relook at it now that the COVID times are going on. We'll keep releasing it in maybe in the coming quarters. We'll keep you an update as to where we are as far as the property is concerned. We have that aspiration to build that property, yes. So when, how, etcetera, is something that we'd like to see. Okay, sir. Thank you very much and I'll listen to all the very best. Thank you. Thank you. The next question is from the line of Sunil Jain from Nirmala Securities. Please go ahead. Yes, congratulations, sir. So good number. My question is with longer period, what's the game plan for the company? Like you're already there for over full year this year. How you think the company can be in next, say, 3 to 5 year? How much share of the total revenue this ADH will have and how much most of that will come in that particular period? If you look at, I think I have been stating what our action plan is. One of the action plan is obviously continue dialing up the premiumness of ABO, continue to get more new age customers in the ABO bracket and dial up ADHO in places where we are not that strong itself, which includes apparently high market share ICHF. There are enough pockets and more for us to be done. So, ADHA will be a complete 360 plan and we want to continue to focus on ADHA so that ADHA keeps having healthy growth. I mean, I don't think it's a no brainer as far as we are concerned the way we are structured. So, ATHO focus cannot be diluted. Its premiumness cannot be diluted, its pricing power cannot be diluted. So this is something that we'll keep dialing up. Along with that, we will keep building the brands that we have been about some of the hair oils which we want to grow to a little reasonable size where we see potential for us to have some size as well as make a positive EBITDA and the comfortable room. So those kind of products as well as some premium hair oils, premium hair care range in the e commerce that may not initially have large value basis, but as we keep adding more and more products into that portfolio, we want to create a brand over the next 3 to 5 years, which is recognized as a brand coming out of Bajaj in the e commerce portfolio. I mean, I would not like to say in the Mamaearth or the Mamaearth on the wall Because they are really have taken off really well, but that is the kind of direction where we would want to go as far as Language confirmed. And then also have some of the Aman Doss extensions or Nagaj extensions in some of the other fair care or That's another clear product where we think we have some rights to it. So that is roughly the portfolio that we will be doing. Yes. Okay. Thank you, sir. ICHF. Thank you. The next question is from the line of Rohan Sanath from MultiAct. Please go ahead. Yes. Thanks for the opportunity again. So My question is maybe on the Amla hair oil market. So can you kind of Quantify what is the size of that market and how much of it would be unorganized? And When we talk about Amla had already been gaining market share, would it be mainly from the unorganized here or we would be kind of taking away from the organized there? As I said, the market size, That's the easier part of the question. The market size is about INR 2,200 crores and that has been one of the highest crores markets, right? This year, If you look at this market, grew about 6% in the year itself. So that's a pretty good growth that We saw as far as the Amla market expense, 6% in Q4. So INR 2,200 crores. And As you can understand, these are Nielsen numbers. So these are on MRT, you have to discount it by 30% to get the net sales numbers as we report the numbers. If you want to has an equal to equal discount about INR 600 crores. So about INR 1600 crores is the net sales value. Yes. So this is the size of the Amgen market. Now if you're looking at how much we want to gain share out of Some of the regular competition, I think that's a very difficult question to answer. I don't think as a company you target where do you want To take market share from, you basically position your product. Basically, obviously, you have the competition in mind where you want to take it, but you don't to be stated upfront saying that, okay, this is where we want to take it. You position your product, you look at the markets you want to sell at, the kind of pricing and the promotion that you would want to place at and the kind of brand aspiration that you have, where you would want to take it, etcetera. And that, as we said, is where we would want to push this brand to about INR 100 crores Net sales numbers, that is on the 1600, 2016 hundred gross kind of a number, which is about a 6% market share, which I think is pretty doable over A reasonable period of 3 years from now. Okay, okay. But how big would be either an organized market within this or difficult to quantify? I mean, I don't have the numbers, I would assume. So Abhishek, do you have some numbers, if you can just type it out for me, I mean, on organic sector? I'll just respond back to you. I would assume it is about 30%, but let me just take the numbers. No, I don't think we have the exact numbers for the unorganized. But all I can tell you is that both the larger competitors have a range of products which come under this one. In the last few years, you have seen a plethora of launches in different variants of this, etcetera. So it's no longer the typical 2 dominant brands alone. They have also their variance, which has been doing well. So very interestingly, you might see and if you were to look at the data, some of the variants are actually cutting into the main brand itself of some of the things. So that's a very interesting analysis to see because the larger brand is getting for metabolized by the smaller launches, which obviously if you focus on 2 categories of Same brand, I mean, there has to be a vortex from there. So that's a very interesting observation is all I can say. Okay, thanks. Chen. Thank you very much. That was the last question in queue. I would now like to hand the conference back to the S. Management team for closing comments. Thank you, everyone, and thanks for patiently hearing us talk. I think As all of you have rightly pointed out, I think the work for us as well as I think for our country is cut out for the year going forward. While we have all our plans in place, both in terms of the marketing work, the sales work as well as in terms of lot of work has been happening on Supply Chain and Manufacturing as well as the HR. I think all of it will have to be continuously kept on going and in sales Particularly, we need to remain flexible. And on a day to day, as the ground situation keeps changing, we have to continue to Keep changing our strategy as well. In this time, flexibility is the only key, and we have to keep learning from what we have learned in I think for the 1st few months now, I think execution will be of prime importance rather than a strategy and that is what we will be focusing on. So while strategy is all there in place and we have a clear cut as to what we want to do in 2021, 2022. Some of it, as I said, in what we wanted to do in Q2, etcetera. We might want to revisit later ICSF. As of now, we are not changing any for our plans. We are doing ahead with what we wanted to do, but we will keep revisiting on a 15 day on Monday, please. So by Q2 end by Q1 end, when we have the call, maybe we'll have better life, maybe or maybe not, I don't know. So we'll see how it is. So as of now, April has started well. We'll see how the year goes. And thank you for all your interest. Thanks. Securities Securities Limited that concludes the conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines. Thank you very much. Thank you. Thanks.

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