Good day, and welcome to the Bajaj Consumer Care Q2 FY 2021 earnings conference call hosted by ICICI Securities Limited. 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 on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Manoj Menon from ICICI Securities Limited. Thank you, and over to you, sir.
Hi. Good morning, everyone. It's our absolute pleasure to host the Q2 FY 2021 results conference call of Bajaj Consumer Care. The consumer sector results get kicked off with Bajaj being the first result. It's a stock business which we like, and we are firm believers in the turnaround piloted under Mr. Jaideep Nandi, the Managing Director, who's here on the call today. Mr. D.K. Maloo, the Chief Financial Officer, and Mr. Kushal Maheshwari, Head of Treasury and IR. Over to the management for the initial remarks, and then we'll open the floor for questions and answers after that. Over to you, sir.
Good morning, everyone, and thank you, Manoj and Vishnu, for hosting this call. My name is Jaideep Nandi, and I am joined by my colleagues, Mr. D.K. Maloo, the CFO, and Mr. Kushal Maheshwari, who's our head of treasury and investor relations, as well as some of my colleagues from our management committee. With the lifting of the lockdown restrictions in phases across India, we see signs of recovery of both economic activity as well as consumer sentiment. I think it's a sign of adapting to the new normal. While the quarter saw proliferation of COVID-19, the FMCG business showed signs of recovery in the second half of the quarter. As you can see from the results of the hair oil growth, July, August was pretty good as far as Nielsen data is concerned. The logistics and distributions were back to nearly pre-COVID levels.
Those sporadic disruptions still remain due to localized lockdown restrictions. We think that this will continue for the next one or two quarters. The company reported a sales turnover of INR 221.76 crores for the quarter, with a growth of 5% over the same quarter of previous year. The EBITDA for the quarter was at INR 63.99 crores, which is a marginal growth of 0.6% over the previous quarter. Previous year, sorry. Previous year, same quarter. The EBITDA to sales ratio was at 28.9%. The gross margin was at 65.8% as against 66.2% in quarter two of 2020. The marginal drop was due to change in the product mix, with little higher contribution of Bajaj Amla Hair Oil and Sanitizers, both put together contributing to about 5% for the quarter sales.
The PAT for the company was at INR 57.25 crores against INR 57.29 crores, which is basically flat during the corresponding quarter of the previous year. The commodity prices remained inflationary during the quarter, with LLP prices showing a gradual rising trend. Refined mustard oil prices have also been increasing, with supply constraint and rise in global edible oil demand. During the quarter, the benefit of LLP prices was partially offset with increase in RMO prices and other packaging material, thereby contributing to a marginal gain in gross margins as compared to previous years. This is specific to only raw material and packaging material costs. There has been a recovery in hair oil category in the months of July and August, with 0.5% value growth and a 2.7% volume growth after a Q1 decline of 25%.
The year-to-date August hair oil market decline remains a decline of 15% by value and a decline of 12% by volume. Clearly, the consumer downgrading can be seen from the difference in the value volume decline of 3%. Rural India continues to perform better than the urban markets, aided by government relief packages, agricultural boost, and reverse migration of labor. Urban markets declined at a lower rate of 6.4% for July and August as per Nielsen, while rural growth continues, and it is worth 9.7% for the same period. Positive 9.7%. For the company, the approach has been to maximize the available growth opportunities by driving our distribution and penetration into rural markets. The van operations have been scaled up steadily during the quarter.
The urban markets continue to be under stress due to partial lockdowns in some of the markets, with wholesale showing signs of recovery, but retail still struggling. As a result, the rural markets have been outperforming, and there has been an increase of our rural contribution to about 52% from 44% earlier. The company continues with its policy of completely nil credit to distributors and super stockist upstream general trade, with invoicing continuing only against advanced payment. It's a wary country with an uncertain economic outlook. The consumers are clearly displaying value-for-money purchase behavior. To keep pace with this changing consumer sentiment, we have launched new SKUs in both ADHO as well as Amla, with adequate promotional offers to both trade and consumer. We'll continue to monitor the same and react appropriately as we see the market move forward.
Modern trade channel has been under severe stress post-COVID-19 due to entry restrictions and closure of malls in most cities and towns. The pressure on this channel has not eased much in Q2. It continues to decline for us as well in the quarter. With the festive season around and the relative easing of urban markets, we believe mordern trade channel will do better in the coming quarters, which we need to see how it pans out. E-commerce has shown promising growth figures in the quarter, albeit on a very small base. We see potential in online retail, which is gaining consumer preference across cities and big towns, and we intend to make this one of our future growth drivers. There has been a significant ramp-up in digital marketing in the second quarter, which has also helped drive the e-commerce business.
International business has recovered in this quarter across markets, wiping the deficit of the first quarter as markets continue to ease up. We will continue to approach these markets tactically for the current year. During the quarter, the company upped the investments in marketing through sustained TV, print, digital media, and as a result, the advertising and sales promotions are back to the pre-COVID-19 levels of about 18% to sales. The media spend strategy was rural-focused in July and August to capitalize on the rural market uptick. ADHO has been restaged in quarter two with new improved formulation, the benefit of 6X vitamin E and enhanced nourishment to reduce hair fall. The launch is being supported with integrated marketing campaigns across TV, print, digital and on-ground visibility from September onwards.
During the quarter, we introduced three new pack sizes in Bajaj Amla Hair Oil, the 3 ml sachet, the 300 ml and the 500 ml over our existing three SKUs of 37.4, 80 and 160 ml, so that now we have a complete range in Amla at different price points. Amla has also been a focus in rural markets, which is being supported with the VAN initiative. Bajaj Anti-Grey Hair Oil, a digital-first brand, has been listed on all major e-commerce chains in this quarter. Sales remain low currently. We remain committed towards investing behind the brand, primarily through digital. Nomarks hand sanitizer has shown good response during the initial periods of lockdown. The sales have slowed down due to crowding of the market, with numerous players offering high trade discounts.
It makes me very proud to announce that the Ponda plant has also got the Golden Peacock National Quality Award for the year 2020. As a company, we have been increasing our usage of automation and technology, which is being planned and implemented across various functions in the organization. The management committee of the company has also been working on to upgrade the systems and processes in order to improve operational efficiency and make the organization future-ready. 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. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets when 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 Prakash Kapadia from Anived Portfolio Managers. Please go ahead.
Thank you for taking my question. I have two questions.
Mr. Kapadia, can you speak closer to the handset, please?
Yeah. Now is it audible?
Yes, sir.
Yeah. I have two questions. One on sanitizer sales. What is the contribution to H1 and what kind of demand trends are we currently seeing? Secondly, on urban markets, do we see migrants coming back and with festive season, what's the outlook on urban demand?
If you look at sanitizers, clearly the sentiments that were displayed in the first quarter, clearly, definitely by us and I think quite a few of many companies, not only across FMCG, but across many other companies. Clearly, that way it has not panned out. As a result, while if you look at H1, where the contributions were close to mid-single digit, that contribution has nearly halved in this quarter. Now it is basically a tactical thing where we will look and see how the market pans out. At this stage, it is extremely crowded. The discounts that are being offered in the market, there is not really money to be made. If you really want to establish the brand, the kind of spends that you would require to put in behind the brand, really speaking, may not be the best way forward at this stage.
We'll keep watching this space. At this moment, it's not one of our key focus areas. We wanted to take it as a tactical opportunity. We took advantage of it. At this stage, we are going easy on it. It's more of now clearing how do we clear our inventory and we remain more or less safe. That's as far as sanitizers are concerned.
Right.
As far as urban demand is concerned, clearly we see an uptick coming up. While retail is still struggling, one good thing that we see in wholesale is come back quite substantially back, especially in the months of August and more so in September. That's a pretty good sign so that we see that more distribution is happening, the markets are really opening up. Retail, while it is still struggling, wholesale we see some positive early signs coming up. We are doing our bit to see how we can get into the larger urban markets. We have ramped up our usage of digital media, not only for our media spend strategy, but also to look at how we can tap the urban market, even where the urban, let's say, the newer, new consumers, the younger consumers, et cetera.
We are also changing a bit of tack there. It's mainly, again, ADHO driven, but also supports some of the lower brands like ADHO, et cetera, which is our anti-dandruff hair oil, et cetera. That's what we see. Our thinking is that given the festive season coming up and given that government is also making it the best way to open up these markets, we see urban in quarter three to be doing much better than it has been in the last quarter.
Right. Lastly, from my side, if I look at staff costs, they are looking at a flattish kind of trend on a first half basis. Is there some variable which is performance linked, which is not coming through, that is why this flattish trend? Would this trend in employee cost continue for the rest of the year?
The employee cost will continue because what we have done is, we have done two things. During the middle of last year, we had done a round of employee rationalization. Those costs still sat on the back of the number, if you look at the P&L of last year. That's why you have seen a flattish trend of a base this year. We have already factored in. We have actually announced our increments this year that is payable right from April. That has gone through, and those are all factored in. I mean, those were all provided for in the costs. There will be no impact, obviously, on the P&L. That is what you will see. Structurally, not too much changes you will see as far as employee cost is concerned.
A bit of restructuring is happening across the little bit at senior management level. In terms of basis points, you will not see too much.
Understood. Thank you.
All the best. Thank you.
Thank you. The next question is from the line of Saurabh Patwa from HDFC Mutual Fund. Please go ahead.
Good morning, sir, thanks for taking my question, sir. I was just wondering, have you seen any trend in terms of SKUs in terms of size, like the larger size getting sold more because people would want to come out more frequently? Any similar or any other specific trend that you would want to highlight?
See, clearly what we have been seeing, and this is not a quarter phenomena, but for the last maybe three, four quarters, and obviously accentuated in the last two quarters clearly, is the movement towards the larger packs. Even before that, it was a little different as a region. Before, let's say just if you take two, three quarters before the lockdown, in fact, the urban demand was far outpacing the rural demand, right? Because rural was really struggling. We saw a gradual shift, at least for our SKUs sizes towards the larger packs. In the last two quarters, clearly there has been a movement. For example, if you look at ADHO, the 200 ml, 300 ml, 500 ml, there has been a nearly about a 6% basis point change that has happened from, let's say quarter two of last year versus quarter two of this year.
That is the kind of movement shifts that you are seeing. Clearly the answer to that is yes, hence we are also ensuring that we back these SKUs accordingly.
Does this make any impact in the kind of promotional expenditure planning which you would do, as in, the target audience would be slightly different, right?
Yeah. Obviously you play that tactically and actually you increase your consumer offers accordingly for the larger packs, et cetera. Notwithstanding the fact that we are also very, very cognizant of what is happening at the lower end. For example, if you see that we have just launched our 35 ml, which is a INR 20 pack, which clearly was a gap as far as our portfolio is concerned. If you look at, we had a INR 1, we had a INR 10, and then straightaway we went into the INR 35 with our 50 ml. There was a clear gap as far as the INR 20 is concerned, which is what we have now just filled up that gap.
We are also cognizant of what is happening at the lower end, but yes, at the top end, the customer base is different and we have been trying to support that with consumer offers, yes.
Understood, sir. Thanks a lot, sir, and all the best.
Thank you.
Thank you. The next question is from the line of Percy Panthaki from IIFL Securities. Please go ahead.
Hi, Jaideep. Congrats on a good set of numbers in this difficult times. I just wanted some information on your sales breakup. The overall sales growth is 5%, but can you tell me what it was for ADHO and what it was for Nomarks please?
Nomarks continued to decline. Let me start from there. Nomarks continued to decline, but for the first time in the last two quarters, at least, or three quarters, if I can say, ADHO has shown a growth. That's a good sign. ADHO is at a 2% growth at this stage, and the secondary of ADHO has grown at 5%. That's a good thing, where we are not building up inventory, but at least there has been a good growth that is coming up. ADHO has grown. Amla, obviously, very small base, that's grown. Overall, hair oils have grown at a decent clip, but we have obviously had setback from our Nomarks range clearly so, yes.
Sanitizer contribution to overall sales would be how much?
Like I said, 5% is both Amla and Sanitizer put together, and Sanitizer is lower than Amla.
Okay. Amla is there in the base also, right? Why is it a contribution?
As you can understand, Percy, last year Amla was not one of the large focus areas. It's not a large focus area even today. Clearly, because we had the advantage of the rural distribution through vans, obviously we wanted to do a bit of range selling. That's where we have gone in as well as we see some of the urban markets like you see Rajasthan, Punjab, MP, some of these larger Amla markets where even in the rural large packs sell. We have also introduced our 300 ml , 500 ml, and we see a tactical opportunity as far as the INR 1 pack is concerned. Those three packs have got introduced in Amla and hence you see Again, it's a very similar situation as the e-commerce numbers as far as we are concerned. The bases are small, so the numbers look high.
Anyway, we need to see how the future pans out.
Sure. Can you tell me what were your distributor days as of 30th June and what they were as of 30th of September?
Actually, if you look at the non-sanitizer, and I would like to spread out, obviously, sanitizer, we have some distributor days, so I'll clearly say that. That is something we are seeing how we can liquidate that. If you take out the non-sanitizer, everything put together, Nomarks and the entire hair oil category, it is exactly at 30 days. It was 30 days in June and 30 days now.
Understood. Lastly, on ad spend, in this kind of an environment where ad rates are only down and even the intensity, although it has come very close to pre-COVID levels, there might be some gaps there. In such kind of a situation, there's 8% ad spend growth. Can you just break it up a little bit in terms of, is it focused on Amla more because you're pushing that or is the growth in ADHO itself the same at around 8%?
I'll just make a technical correction. It's not only ASP growth that you see, it's ASP growth, which is sales promotion as well. As you will recall, there is a large amount of brand selling that we are doing. Large part of the brand sales, that sits in sales promotion. There's a bit of sales promotion that comes in. Ad spend really remains more or less similar. The other correction I would, and it's a minor correction, is that ad rates have started going up. It was low, absolutely, you are right in Q1. That has started going up. This is point two. There has been an increase in ad rates as such. Third point is we have also been spending on digital. We have gone into digital.
If you look at absolute to absolute, ad spends have remained more or less similar. Both because sales have remained similar, ad spends as a percentage to sale also remain similar. The growth that you see comes out of sales promotion, which is those VAN operations that we have got in, which itself is returning decent double-digit EBITDA for us.
Understood. Just one general question on the lockdowns, et cetera, if I might be permitted.
Please.
The urban growth is lower than rural growth, I understand that. Although there have been local lockdowns now, it is nowhere similar to the initial lockdown we had, and I don't think there is any shortage of goods in the supply chain or availability at a retail front. That is my perception. I don't know if I'm wrong. Is it really true to say that urban growth has been affected by lockdowns, or is it just that there is a demand erosion in urban, which is showing through in the numbers?
I think both, if you ask me. I really will not be able to comment absolutely whether there is a demand erosion or not, because that is something that you will have to give one or two more quarters to see whether there is a structural change in the market dynamics itself or not. That's a little large statement to make. We can all speculate, but that's a little difficult. At this stage, clearly what you're saying is correct. Urban demand is definitely on the upswing. September clearly showed even better than what we saw even July, August, and April to June, anyway, was a disaster. The other side is if you look at internally, from our perspective, we have been also very rural-focused till August, if I were to be specific, not even July, till August.
We are very rural specific, both in terms of the way we approach the market, the way we approached our TV spends, which we have tweaked to ensure that we get higher GRPs in the rural markets of UP, Bihar, Jharkhand, Rajasthan, MP, all of these markets. Obviously, we have performed much better than what we see as far as the market difference is concerned between urban and rural. The other side to look at it is maybe there is more scope for us in the urban markets, because if rural has grown so much and urban not that much, maybe there is scope for urban markets, which is where maybe we'll focus, which is where we have shifted our focus from September onwards, where we are also spending some there as well.
Right, sir. That's all. Thanks, and all the best.
Thank you, Percy.
Thank you. The next question is from the line of Shalini Gupta from Quantum Securities. Please go ahead.
Yeah, good morning, sir. I just had a couple of questions. Our raw material prices, basically, our mustard oil prices have started moving up. Have you taken any kind of price increase during the quarter?
At this moment, if you look at the LLP prices have clearly going up, the prices have gone up from, I think INR 57 Just give me the numbers. One second. Give me one minute. The LLP prices have gone up from INR 50.79, which we have reported in the investor presentation. At this moment, it is sitting at INR 52, right? You are right, absolutely, there as RMO. RMO prices is now at about INR 108 from where it was in Q2. At this stage, given the market demand, et cetera, we would rather tweak with the other components of the expense numbers. More on the overheads that we will be looking at whether to tweak to ensure that we protect our EBITDA margins, not really looking at an increase in prices.
At this moment, we would rather wait for the demand to come back rather than look at it. As you are aware, only 1/3 of our cost is raw material cost, that has a 1/3 impact as far as gross margins are concerned, accordingly. Every 3% increase to the material cost has an 1% impact on the EBITDA margin. We would rather wait rather than jump so quickly to our decision-making. RMO and LLP are not the only contributors. The two put together, the increase, let's say, the average increase is 4% in these two put together, the total RMC plus PMC, that is material cost increase, will be about 2%. Anyway, that will be half. If you look at, that is a 1/6 impact on the EBITDA margin, et cetera.
We would rather not so hurry so fast, and we'll also monitor the market. We'll see what the other bigger players are doing and accordingly react.
Yes, sir. Correct me if I'm wrong, you said that the focus for Bajaj Consumer will be on the larger packs, but actually, the consumer is more and more value-seeking now. Would you not want to focus on the smaller packs because that is what the average consumer wants?
Interesting question, Shalini. The point is the consumer is value-seeking. They're not looking for a lower value pack. Value-seeking is more value for money, whereby you're looking for higher ml per rupee spent. That's where the clear shift is happening. The shift is happening, according to me, for two reasons. One is obviously they are value-seeking, so they are looking for larger packs which give a larger ml for the pack size that is there. The other is obviously for the COVID situation itself, where you would make lesser trips to the marketplace. Not everything is bought online. When you're physically going to the shops, you would want to buy a bigger pack so that you have to make fewer trips to the market. Obviously we see that trend happening and hence we have been tactically looking at that.
As you rightly said, it's also, and I just touched upon the initial listing itself, that we are also very cognizant of what is happening at the lower end. That INR 1 pack is already there. You have the INR 10, which is not really a large selling SKU. The INR 20 is coming out from Nielsen as one of the large categories itself. INR 20 is the highest growing category as far as hair oil purchase is concerned. That is why we have also introduced, also because of the fact that there was a large gap between the INR 10 and INR 35. That is something that is very clearly in our focus. Just because the fact that contribution of these larger packs are going up doesn't mean that we have lost focus. For us, ADHO is bread and butter. We look at all the SKUs.
We do all the cuts at all levels, whether be it at state level, whether be it at channel level, retail, wholesale, at the channel level, retail level, as well as SKU level. We do all the cuts and look at where we are going wrong or what corrections need to be done, and we keep reacting accordingly. Yeah.
Okay. Sir, like ADHO at one point of time, not too far back, used to grow at 8%, 10%, 12%. Do we see that kind of growth returning this quarter? Things have done well as in that we've grown, I think, 32% of ADHO. Do you think that in the third quarter and fourth quarter, do you see growth returning?
There are three factors, if I would say as to how ADHO can grow. One is obviously gain market share. Gaining market share within the category itself, where you have a 60% plus market share, if you categorize something within quotes, a light hair oil category, which from last year we have stopped calling ourselves a light hair oil player. If you do not have a larger share and if you reach a 60%, 65%, that kind of a market share, it's very really difficult to really keep on growing market share. The only other two ways is you gain share from other categories, or you basically grow the market itself, and you grow that market itself within the sub-market, so to say. These are the two things that anyway we'll keep pushing.
ADHO, as you are aware, we have just re-staged. A lot of advertisements, the new advertisement has just been shot. In fact, it was just shot yesterday. It will be coming up in the next two, three weeks on TV, you'll be able to see. Plus integrated marketing, as I talked about. A lot of things we are anyway doing. As far as ADHO is concerned, we are doing whatever is possible, but we will also be looking at our other hair oil portfolio, our hair oil portfolio and looking at other brands as well. It will not be only ADHO. While obviously all our entire thrust, effort, et cetera, will go on to back ADHO, but we'll also be keeping a watch on the other portfolio as well.
Okay. Sir, last question from my end. Sir, like modern trade obviously has declined for everybody. Last quarter, that is first quarter, you had put out a figure that it declined by 23%. Sir, I think Indians do not want to go into supermarkets because of the air conditioning and whatever else. Would you say that the decline is similar in this quarter, 20% upwards?
In fact, if you do a simple math and you look at where e-commerce is part of that alternate trade, and if e-commerce itself has grown by 300%, that is four times, obviously modern trade would have grown lower. Obviously, there's a CSD component as well. Both of them have had declines which are higher than the number that is reported for modern trade. That's pretty obvious. Clearly that's an area where the country is struggling as far as Nielsen numbers are concerned. The numbers are lower, as well as we have also not done any better than the market rate. The only good solace is that we have not done worse than what the Nielsen numbers coming out are. That in itself is not good enough. We need to do our own effort to ensure that we grow. Our market shares are too low.
Really speaking, we should not worry about what Nielsen growth numbers are. There's enough and more for us to be done. That's what we should focus on.
Modern trade for you would be what percentage of sales, sir?
Shalini, can you come back in the queue, please?
Yes, sir. Okay. Thank you.
Thank you. The next question is from the line of Tejas Shah from Spark Capital. Please go ahead.
Good morning, sir. Thanks for the opportunity. Sir, first question pertains to your opening commentary about rural recovery. Across categories, across industries also we are hearing the same. Now when we look at the numbers in auto and NBFCs recovery or even microfinance, the numbers are very sharp from rural recovery perspective. Even after calling out all the factors of rural recovery, our numbers are in general FMCG also, or Hair Oil in particular, the recovery has not that been sharp. Any insights on here?
See, I don't know how you see those numbers. Obviously I can only speak for what we see in our hair oil industry and related consumer goods industry. Because all markets, all different segments operate very differently. The triggers for them are very different. As far as our market is concerned, clearly, as I was saying, we see also urban coming back. Earlier, the growth rates in urban was in double digits, now it is coming back, and it's nearly slowly hitting close to normal. I mean, normal as in the base. That's where I can go back from. From our own perspective, as we were saying, because we were so rural-focused, et cetera, our growth rate rural has been spectacular compared to urban. We have grown much higher than the numbers that we are seeing as far as news and reports are concerned.
Rural has really been the star for us. Urban more or less is where we are very similar to what numbers we are seeing as well today.
Okay. That comparison is on relative basis to urban. If you, let's say, compare rural two years back or three years back when it was relatively doing better, are you seeing traction versus those, let's say, if you index it to a particular point two years back? Are you seeing recovery versus that point as well? Is it largely urban and rural comparison is actually leading us to believe rural recovery?
No. See, if I look at. Are you talking of our business?
No, your business, sorry.
If you look at our business, as I said, urban used to be higher than rural, as you are aware. Urban was 55%, rural was about 45%. Or maybe 47%, 48% to 52%, kind of a thing. That numbers have got reversed for us at this stage. That is for both reasons. One is the rural markets, I don't want to get into that because we have heard that enough, which is rural markets are far more open, et cetera. That's all. The other is we have taken a specific drive to drive rural for the last four, five months. SKUs, interviews, all the van operations, plus other, all the trade, et cetera, that whatever we have done. Rural clearly is something that we wanted to, again, another tactical opportunity that opened up for us. We wanted to take advantage of it.
A lot of learnings have come up from those markets where we will continue to drive forward. Coming back from September onwards, we have realized that urban is also coming back. We need to focus back on urban. A bit of shift has happened towards urban, and now we are focusing on urban. My thought is that now you will see rural growth maybe tempering or remaining there. If we can. Those are stellar growths, I don't know whether we can remain at those levels, but we would obviously attempt to. Clearly, urban growth is something that we'll focus on, and I hope in Q3 we should be reporting good numbers as far as urban is concerned.
Great, sir. Sir, just last question from my side. Sir, this is now this September we completed ninth year of acquiring Uptown Leasing, which was supposed to be our head office, or we were supposed to consolidate our different offices in one place. Now that's INR 140 crore or INR 150 crore of non-growth capital sitting on our balance sheet for now almost a long period. Even now, I believe there is no visibility of next two, three years. Any comment on that? How do we see, because even group's aspiration in terms of, because we had a plan to consolidate group entities also in that office. Group aspirations also would have changed in last nine years. Any comment on that?
Continuity on that point, how should we see now dividend policy considering that half year has gone by, and there is much more better visibility in terms of cash flow generation and crisis ahead and pertaining to pandemic particularly?
Interesting point there. Yes. One question, but really two questions, completely different. Let me handle one at a time. Start with our Uptown investment. Uptown investment, as you are aware, you have covered that in a complete detail as to why it was done, et cetera. I have nothing further to add on to that. But clearly, as years go by and as market dynamics and situation changes, we will also keep reviewing, et cetera. At this stage, the thought process of exactly what you said remains. Uptown investment is there. We have been getting our licenses, et cetera. But the kind of pace that we had put up to set up the building and do all the investment, get our licenses, we have slowed down because of the current situations, et cetera.
At this moment, immediately if you ask for the next one or two years, whether some big amount construction, et cetera, are going, et cetera, I think that is unlikely. Really speaking, it's not in my the thing immediately to take a call on that because we'll keep seeing as things improve and we'll take a call on that. At this moment it is at status quo, unlikely that it will change in the next few quarters, immediate future. Going forward midterm, et cetera, I am really not able to speak at this moment. What will happen after a year, whether we'll get fast scale into construction or not, really speaking at this moment. In the next two, three quarters, unlikely any movement will happen there.
Coming to the dividend policy, et cetera, we have gone through that in detail as to how we have taken the dividend policy. This policy that we had discussed that this was an aberration year, and it is not something that we'll continue to follow year on year. That stance remains. While it is the Board's call to decide as to what the dividend policy is. A lot of the points that all of you guys had said, I have put it in front of the Board, et cetera. They have taken cognizance of your points, and this is something that we hope will get corrected in time to come. Really speaking, nothing to worry about on that front.
Thanks.
Thanks.
Thanks a lot.
Thanks, Rajesh.
Thank you. The next question is from the line of Amit Doshi from Care PMS. Please go ahead.
Yeah, thank you. Sir, on the Vistaar strategy, of course, because of COVID, we had put on hold and our original target or vision of doubling our market share from 10%-20%, rather than only light hair oil to the hair oil. With this clarity that you have now, any thoughts on that point? I think last quarter you had mentioned that it's currently put on hold. We'll see how things pan out.
I'll correct myself once again. I realize that my communication, I think it was my maybe shortcoming, that my communication did not come out well in the last quarter. I actually did not mean that it has been put on hold. What I tried to say is that at this moment, all the aspects of Vistaar strategy, which was a 360 approach towards all markets, et cetera, that had been put on hold, and we were reacting based on what all is required for the marketplace tactically. That strategy continues, and as the quarter is stocked, et cetera, a lot of the things that have come out of the strategy as well as our own internal understanding, we have actually been proliferating across markets. As I had said last time itself, by March, we had completed all our Hindi-speaking markets, wherever are of interest.
Those markets we have already got a full-fledged strategy as to what to do, how to do, et cetera. All of it is getting implemented and something more as we understand the market as the market dynamics are changing. Obviously at that time, rural focus, et cetera, was not that strong. Those are also we are incorporating that. That strategy is very much there with us, and we are implementing part of it. I mean, part and all of it as and when how we deem fit, as well as we adding on to whatever our knowledge and experience of the last six months have been, adding on to it and making a complete plan. That is something that will keep going on. The focus on hair oils, whether we get into some other portfolio or not is a separate point.
The absolute focus on ADHO and then some of the hair oils, et cetera, is not something that is going to go. 20% or not, we have to see how the market pans out. I mean, you will have aspiration, visions, et cetera, all of that, but really our job is to ensure we have our strategies right and ensure operational excellence to an absolute as best as we can put it. I mean, that is the clear focus. As I said, the clear focus has to be that we need to get our value growth back. That is something that we continue to strive for.
Okay. On the ad spend, why, of course, June quarter, the Q1 quarter, of course, had a very reduced expense and now it has increased. However, we have been able to maintain margins. I remember that in the original Vistaar strategy, which we just discussed, Vistaar, that you are ready to compromise on the margin by increasing the ad spend, et cetera. What's your thought of trajectory towards our margin and our ad spend? If you can give some guidance on that.
Obviously, I'll not be able to give you guidance on that. Clearly speaking, if you look at ad spend is something that is not going to be compromised. That is the last cost item that will get compromised. We'll look at material costs, we'll look at, let's say, admin expenses, operating expenses of, let's say, employee costs, et cetera, all other costs. Even sales and sales promotion costs. Ad spend is the last cost that we will cut because that's the easiest to cut, but the impact of it is long-term. That is not something that we would like to touch increase. Ad and sales promotion which remains at 18%, will remain thereabout. In fact, going forward, in case in future, if you were to look at something else going forward, it might go up by a few percentage points.
I mean few hundred basis points going forward later. That obviously needs to ensure that we also have a top-line growth commensurate against that.
Okay.
If I just finish that, if you look at the strategy going forward much later, and this is not a guidance, just a listing, we would look at ensuring that our EBITDA continues to grow, not as a percentage, but definitely as an absolute. I mean, that is clear program. That is something that we would want to do. Obviously that would mean that the top line needs to commensurately grow if you are to grow your EBITDA as a absolute and the cost goes up. Yeah.
Right. My point was only that one because initially 18%-22% ad spend target was there and at the cost of EBITDA margin, that was what was indicated. I got the answer. The last question is what I understand about the sanitizer business you are not kind of focusing on because of crowded market or margins, et cetera. Any particular reason with Amla oil? I mean, why is that you mentioned in your initial participating response that Amla is not the focus area. I mean, any specific thing that you would want to highlight? Considering that now you want to move from light hair oil to a hair oil company, I mean, especially in that light.
I am sorry. That must be again my miscommunication or my tendency to say things which are not represented correctly by me itself. I did not mean that Amla is not a focus area. What I meant was ADHO will remain our absolute focus area, but we will also be strengthening some part of our other portfolios. At this stage, as we go forward in the next one or two quarters, it will be the hair oils space that we'll continue to work on and some of the other brands will also come into play. Yes. Sorry. Please ignore that other part if I meant that Amla will not be a focus. All the products other than ADHO where we feel we have some rights to win of some kind, we will continue to play on those as well.
Okay. Thank you so much. Wish you all the very best.
Thank you.
Thank you. The next question is from the line of Krishna Nagpal from Latin Manharlal Securities. Please go ahead.
I saw great numbers. I have one question, is that, what are your views on any M&A which might take place because of the cash which we have?
See, Krishna, that's an important question. This is something that we take it pretty seriously. In my view, there are two sides to the M&A which I personally look at. One is look at domestic M&A, which is within the country. History says, at least in my mind, whatever history shows, most of the consumer goods companies, whichever M&As have been done, at the valuations that they have been acquired, really speaking, not money is there to be made after that, is how I personally see it, and I may be absolutely wrong, but that's how I personally see it. M&As within India, valuations look too high. This is something that we will treat cautiously and tactically. If opportunities arise, definitely, yes. Outside the country, we look at specific pockets, and I don't want to get into which pockets.
If opportunities are there, this is something that we would be interested in. At this stage, if you look at specifically this year, this financial year, our focus will be we need to get our house even stronger in order. Going forward, maybe next year onwards, that is also a market. The international market is something that we may be wanting to focus on. At this stage, I'm not giving any guidance on that, nor are we saying it as a part of our strategy.
Okay, sir. Thank you, sir.
Yeah.
Thank you. The next question is from the line of Shirish Pardeshi from Centrum Broking. Please go ahead.
Hi, Jaideep. Congratulations for good setting. I think I've got three questions. The first question is purely on the channels. As I say that you mentioned that modern trade has not come up to the expectation. Is there anything you will call out, any specific geography you are facing this issue? I mean, what we understand, Maharashtra has the biggest lockdown, which has continued. Any particular thing which you would like to highlight?
Modern trade, I think, two, three factors. Clearly the metro cities have really shrunk for us. Bombay, Delhi, larger cities have really not done well for us. That clearly is an indication that is coming out. The other thing that we see is, not specifically geographically, I don't think it is much of a geography issue, but these larger cities are clearly one issue. The second thing that we see is one of the larger chains really had liquidity issues, and where we had a large exposure. As far as credit is concerned, it's no more a concern, obviously. That has obviously, which was sitting on our base, has not come back this year. That also has had an impact on our business.
Other than that, more or less, I don't see fundamentally we have anything wrong as far as the business is concerned. That is something that we hope in quarter three, quarter four will revive, and our focus also remains in that area. Yeah.
If I may ask specifically how much exposure or contribution we had from Future Group?
I would rather not get.
Okay. You touched upon the wholesale recovery. Will you be able to quantify a little more, where we see Tier 3, Tier 4, what kind of contribution the wholesale is now come back? What is the future you're looking in wholesale?
Wholesale, in fact in the quarter actually was flat. As I said, urban markets were down, but wholesale has been flat in the year. In the quarter, sorry. This is against July, which was negative. That's a good sign that wholesale is now coming back. Retail is where we still have some more work to do. That is what wholesale is concerned. Sorry, you had another question on that. A side question on that.
No, what I was asking, that what is the wholesale contribution is now settling?
See, I would rather not get into the exact numbers. As I said, urban to rural divide is what I am just at this moment I can share with you, which is 44% to 52% to 48% from earlier. As I said, from 56% urban and 44% rural, it has now moved to 48% urban and 52% rural. That's what it has been.
Okay.
As you can understand, wholesale has been done a little better than rural markets. I think I'll leave it at that at this stage.
Okay. Just related on the international front, you have shown a significant growth. Is there anything that you would like to call out, say that, are we expanding the footprint or in the similar geographies we are seeing the growth? What could be the reason of growth?
The growth numbers, again, these are all so low bases. Really speaking, I would not get too hung up on the growth numbers itself. One thing that we have done is we are obviously tactically. First and foremost, we are not increasing our footprint as far as international markets are concerned. As I said earlier, international market is not one of our large focus areas in this year. Operationally, obviously, we would like to tighten every single area that we operate in. Obviously, some basic work has been happening in each of the markets that we operate in, which is UAE, Bangladesh, Nepal, and rest of world is separate thing. Some bit of growth that you see, but the bases are so low, really speaking, nothing to talk about. Maybe going forward, we will see what to do in these markets.
Okay. Just last question on Amla.
Come back in the line.
No, let him finish this question. Yeah, finish that question. You can go ahead. Amla, you wanted, yeah.
In case of Amla, you have seen that we have restaged the focus. Is it that will expand our franchise and footprint as one of our stronger markets of ADHO likes of UP, Bihar, Rajasthan? Is that the strategy which you are banking on from the distribution point of view, or you're really trying to expand the value for many down trading, which is happening in the market?
Not really. Amla, all products, you will treat it based on the product itself. Amla specifically, if you look at, all this data is available somewhere, at least with us. For example, if you look at the Nielsen data for the market itself, the INR 1,600 crore market, where the main markets are. Those are those seven, eight markets. Fortunately for us, it is the same markets where we are stronger. That's a big advantage for us. It's not the south or eastern part of the country where Amla is very strong. Most of the markets, other than maybe Maharashtra, we have a good presence itself. The fact that it is also a rural-driven brand other than Dabur Amla, which is obviously more urban. Most of the other Amla is sold rural-based, which is where we are focused on.
Tactically, it has been an advantage for us, and strategically we think really there is some space for us to play. That's where we continue to see how it moves.
All right. Thank you and all the best.
Thanks, Shirish.
Thank you. The next question is from the line of Dixit Doshi from Whitestone Financial Advisors. Please go ahead.
Yeah, thanks for the opportunity. Most of the questions have been answered. Just two small questions. One is, these growth numbers of 5% in Q2 and 6% negative in H1. These are value. Can you just give us the volume numbers for Q2 and H1? My second question is, obviously you mentioned that we are going slow on the sanitizer market. Apart from sanitizer, are we planning any new products other than the oil category?
Okay. As far as the volume growth is concerned, it's actually same as the value growth. It is at 5%, I think. From this year, we have started calculating the volume numbers in kiloliters, because earlier we used to report that in cases. We are also looking at numbers as far as kiloliters is concerned, and basically liters is concerned, that's absolutely at the same level as the value growth, which is at 5%. If that answers your question. Hello.
Yeah.
As far as the new products are concerned.
Yeah
If you look at this moment, in the next two quarters, you will not see any new products coming out. It's more of focus on the brands that we have. As you are aware, Anti-Grey hair oil was launched two quarters back. That is something that we will focus on the digital, they think. Amla is obviously a range that we have started doing a bit of focus on, and as well as ADHO will remain key focus. We really don't want to dilute too much before we have our strategy as to where we want to go, and that is not something that you will see in the next two quarters at least. This is where our main focus will be at this moment.
Nothing on the cards other than the oil, right? Is that understanding right?
Not in the next one or two quarters, no.
Okay. Okay. That's it from my end.
Thank you.
Thank you. The next question is from the line of Umang Shah from Asian Market Securities. Please go ahead.
Hi, sir. Thank you for taking my question. Sir, could you tell me historically, what is it that stops us from breaking into the South Indian market?
There is nothing that stops us from breaking into the South Indian market. It's mainly, as you are aware, the nature of the market itself and the nature of the products that we sell. Our portfolio is, as you are aware, over 90% of it comes from Almond Drops Hair Oil. Badam as a product does not really sink in in the southern market itself. It doesn't have too much of salience as far as the southern markets are concerned, which is obviously a large coconut market. As well as even if you have some of the VACO, which is value-added coconuts, it's more or less restricted to that. Having said that, yes, there have been, because of our rural drive and some of our efforts as well, we have been looking at the South, and let's see how the future pans out.
At this moment, I would rather keep that open and let's see how the market pans out. At this moment, we have not focused. Till now, we have not focused on South, mainly because Almond Drops is not something that has a large salience, or badam. Almond itself doesn't have much salience in the South. That's the reason we have not focused.
Right, sir. This is very helpful, sir. Sir, the second question is, sir, the CSD trouble started, I think, with the name change. After that our sales have never really recovered there. This also coincided with them reducing their own procurement overall. Going forward, do we see the sales coming back to the previous level or for us, CSD is no longer the place at which it was earlier?
If you look at the name change that happened and after that, we actually lost sale last year, first quarter. Right? That's where the sale has actually gone off.
Which means?
H1. Not the quarter, but H1. Quarter again, we declined. Yes, you are absolutely right. If you look at half year, the CSD numbers are flat. It's actually flat. Because first quarter, because there was low base, near zero base, we had grown from that. Having said that, one of the key things that we need to do as far as CSD is concerned is monitor our own accounts a little better. I think that is something that we can clearly do much better on. Going forward, I think we need to do a little bit more focus on CSD. CSD is not something that will go away. While because of the regulations, et cetera, CSD demand has come down, I think there is a lot of work that we need to do from our end, which is something that we would want to focus on.
I don't know when we'll be able to do that, but that is something that we need to come back to. That's not a channel we can ignore or would want to ignore.
Right, sir. Just a small part, what was the peak level of CSD that you were doing? Can we reach there in percentage of sales?
I really don't know. These are very speculative questions because in terms of absolute number, if you want to reach, the percentage will depend upon how you are doing in general trade, modern trade, e-commerce, et cetera.
Okay. Even actual number is fine. Like any actual number also, if you give us guide in crores, what is the sale that you could be reaching?
At this moment, if you ask me, I don't think we have got that kind of a clear strategy as far as the CSD is concerned, which I can tell you that clearly these are the numbers that we can reach at. This is something that is work in progress, and maybe by the next quarter, we'll have a little more story to tell on CSD. At this moment, I'm not able to say so.
Sure, sir. Thank you so much.
Welcome.
Thank you. The next question is from the line of V.P. Rajesh from Banyan Capital. Please go ahead.
Yeah. Hi. Thanks for the opportunity. Most of my questions have been answered. Just one question. The revenue in this quarter and the year over
Mr. Rajesh, your voice is breaking up. Can you speak a little closer to the device, please?
Yeah. Is it better now?
Yes, sir.
Yes. Okay. My question is just trying to understand the revenues from Nomarks in this particular quarter, and what was the decline year-over-year?
Nomarks has declined, and the decline has been about 30% as far as the business is concerned. About 30%.
Okay. What was the revenue this quarter?
Let's keep it at that. It's about 30%, and the revenues are not very substantial.
Okay
marginal revenue.
What I was trying to understand is if you exclude Nomarks and exclude sanitizers, what would have been the decline year-over-year? That's really what I'm trying to get at. Or growth. If you take out sanitizers from this quarter.
Yeah
If you take out Nomarks from this quarter, what is the year-over-year growth or decline, whatever it was?
There will be a marginal growth.
Yeah, marginal growth. Okay. That's helpful. Thank you.
No problem.
Thank you.
That's all.
The next question is from the line of Sunil Jain from Nirmal Bang Securities. Please go ahead, Sunil.
Yeah. Thank you very much to allow me to ask questions. I would like to know exactly how much is the contribution of new product or new SKUs in this quarter or maybe half year. Is there any strategy to push for new type of sales like new product or new SKU sales?
See, as far as the new SKUs, there are no new products which were introduced. As far as the new SKUs are concerned, the salience of these are marginal. Really speaking, we have just been launching them. In September, in August, actually 300 ml, 500 ml of amla came into being. The 35 ml, which is a INR 20 pack also came into being in the end of August. Really speaking, the numbers at this stage are marginal. We'll have to see how the numbers pan out in Q3.
Second question about this Nomarks, no doubt our sales are declining, and we are not focused, but the way it is declining, it looks like we may not have this brand in over a period of time. We already spent a lot of money on that, and this is somewhere there in the market. Don't you think you need to support a bit to this brand, at least to maintain the sales so whenever the opportunity comes, you can increase it?
Absolutely correct. Absolutely right. In terms of our effort and direction, ADHO remains a key focus area, some of the other hair oils as well. We are looking at Nomarks more as an experimental thing as to what we want to do about it, and where at a little lower cost, if we can come back in some other way. We are internally trying out certain things at this moment. I don't want to talk about it because there is not much to say at this stage, but hopefully some of the experiments we'll see how they pan out, and maybe by the next quarter, we'll be able to say something, if at all it works.
Okay, great, sir. Thank you very much. All the best for future.
Thank you. The next question is from the line of Harit Kapoor from Investec. Please go ahead.
Yeah. Hi, good afternoon. Just had one key question on the INR 20 pack that you spoke about, that Nielsen is saying is growing the fastest in the hair oil segment. In your opinion, is this to do with the fact that rural is growing faster than urban, which is probably the only relevant reason why it's growing so fast? Also, the second thing on that is, if this continues to be a faster-growing SKU, how does that impact mix and profitability for the segment?
The profitability will not get really impacted. Really speaking, if you look at the entire ADHO portfolio, the gross margins remain between 62%, 63%, right up to 72% or so. More or less, it plays between that as an average of 65%, 66%. These are the kind of numbers that you make. Really speaking, not too much worry as far as gross margins are concerned. The fact that you said, yes, is it for the rural market, et cetera, yes, rural market uptake clearly is backing this product. At this stage, INR 20 pack is going well in the rural market. I mean, very initial signs so. Going forward, as I said earlier, clearly, that was a gap in our portfolio itself.
Whether INR 20 would have come up from Nielsen as a gap or not, as a fastest-growing market or not, we would have anyway launched this INR 20 because there was a gap there, and we don't want, in ADHO, any gaps to be there. This was something that was anyway envisaged. It just hastened the launch because we saw this as a market which is growing. That's it.
Got it. Thank you for this. Thanks, and all the best.
Yeah.
Thank you. The next question is from the line of Sarvesh Gupta from Maximal Capital. Please go ahead.
Thanks, sir, for taking my question, and congratulations on a decent set of results. First of all, also like to thank you that this is probably the first time in the quarter where we've seen the conference call invite being posted on the BSE website. I hope these small incremental positive changes keep happening as you have taken over the company. Secondly, on the dividend side, I could not understand. You said that this was an aberration. The last year was an aberration. Does it mean that, from this financial year onwards, we will continue on the dividend policy that we had FY 2019 and before that?
Yeah, as I said, again, more than an aberration, it was an exception for an exceptional year. While I will not be able to give guidance on the dividend itself, because that's not a call that I take, that's a call that the board takes, but I would like to assume and think that that should not keep changing year on year. This was an exceptional year, and I would like to think that this was an exception, yes.
Okay. Secondly, now these days, we are seeing a lot of online-only brands as well as, even in the hair oil segment, you see plenty of new players trying to sort of enter into this area, especially at the premium end of the range, because now they are able to kind of bypass the traditional distribution route and sell their products via online-only medium. Given that, how do you look at this threat to us? Because there are a lot of healthy or premium sort of options which are available to the customers now, and they are also digitally advertising their brands and promoting it very heavily on some of the Amazons of the world, et cetera.
How do you see this threat, and what is going to be your strategy to kind of save the company or save our own brand from the potential fall in sales because of this?
Yeah, I don't see it as a threat. I rather see it as an opportunity. If you look at the price points are so different. I mean, we are looking at hair care products, which was INR 1,000 for 30 ml. I really don't see how whatever else we could do in ADHO, how that customer is the same customer. Really speaking, this is now talking of growing the market and basically hair care being the larger format rather than hair oils as such. The chances of losing to these customers, yes, obviously there'll be some losers and some winners from various areas. Really speaking, it's not a large set that we are really worried about that we will lose ADHO sales to a significant amount or even some percentage points. I do not see that happening. We'll keep monitoring this space, obviously.
I see this as an opportunity, and this is something that many companies would want to jump into the bandwagon. As traditional FMCG companies, most of us are not that well-equipped to handle this kind of change in consumer behavior, the way you reach to the consumer, et cetera, and that is something that whoever turns out the best will be the winners, and that is something that we'll have to keep focusing on.
Understood, sir. All the best.
Treat it as an alternate channel itself, not to do with your traditional. I mean, traditional, we don't see it going to go away very soon. Really speaking, not worried about the traditional channel.
Okay. Thank you, sir, and all the best for the coming quarters.
Thank you. The next question is from the line of Imran Khan from RatnaTraya Capital. Please go ahead.
Hi. Thanks for the opportunity. Am I audible?
Yes, Imran, you are.
Sure. Sir, just one question, this is maybe more on the brand side, not the operations and other things. Since we are also selling the other hair oils like Amla, et cetera, do you think that, I mean, this can have a negative impact on our brand equity, and hence for some people, some percentage of the customers may say now that this is also now an Amla brand, maybe I'll switch to some other premium hair oil or some percentage would say, "Why to buy the Almond Drops now? Let's buy the cheaper one, Amla wala." Do you think that this can also happen, and do you see any signs of this happening because we are already selling it?
You have actually introduced three things. One is the company, one is the brand, and the other is the category. Three things jumbled up in one question, and you have to ask as a consumer, what do you look for? Do you look for the brand? Do you look for the company? Do you look for the category? Actually, you look for all three. There is a really intermix between the three of them. In this particular case, Almond Drops Hair Oil clearly is a category leader. There are brands which are available in almond, whichever way you'd like to say that, at nearly half the price, at 60% of price, ADHO's selling still remains strong. That should tell us, as far as the category is concerned, how we stand.
As far as the company is concerned, really speaking, I'm not worried about how Because we are not getting into something which is really cheap or really something completely different. I am not very sure almond oil users really will shift to an Amla oil because the company, which was the parent company, launched that particular product. These products were always there. If you look at Brahmi Amla hair oil or Bajaj, or Sevashram was famous for in the earlier days. Brands get built, not really companies. Companies are obviously associated with brands. In this particular case, brands actually, as they say, in many consumer goods, you will know the brand rather than even the company. Really speaking, not too worried about Almond Drops customers downgrading to Amla.
Yes, some of it will get downgraded, some of it will be lost or some of it will be gainers from some other categories. At the end of it, if one plus one turns out to be three, that's good enough.
Sir, what about the other part? Let's say if somebody says, "Now Bajaj is also in Amla, so why not buy some other premium brand?" Can this happen?
No, sorry. Come again. Can you repeat that question, please?
Sir, my question is, since right now our large part of the focus was on ADHO, right?
Yeah.
If we start advertising, let's say, more Amla also. Some customers may feel that this is a cheaper hair oil or this is not a premium hair oil. Those premium customers may feel like, "Let's move on to some other premium hair oil.
I am not able to understand that. Most companies will have absolute ultra-premium range right to the absolute economy value for money range. In fact, most companies will have three, four, five category within their product categories. Really speaking, I don't see how brand interplays happen for a single company.
All right. Okay.
I'm actually not worried where a premium customer, because Bajaj has introduced something else, goes to that. Unlikely. The value of the company deteriorates because it has launched also another value brand.
All right.
It's not a big factor.
All right. Thank you, sir. Thanks.
Thank you. The next question is from the line of Naman Kumar, an individual investor. Please go ahead.
Hello. Thank you for the opportunity. My question is with respect to Uptown Properties, someone asked. What I understand is this is some land parcels in Mumbai, right? Can you please let me know what is the total size of land parcel and what could be the latest valuation of that?
Mr. Maloo, can you respond to this question? Mr. Maloo, are you there on the line?
Yeah. I am very much there on the line. I also can take this question. The total FSI is 85,000 sq ft available to us for building, and the market value is around INR 140 million.
Okay. Thank you. Other thing was, and I think it got discussed earlier as well, the plan is to build a corporate office and which will house the other Bajaj Group as well. I know the plan is not for the coming one year or two year. It may materialize in third year or maybe fourth year. I just wanted to know when other Bajaj Group companies come and set up their offices in the building which will be built, is there a plan to charge rental from them?
It will be at arm's length. Clearly, what legally you are required to do so, it will be absolutely at arm's length of market valuations. Yes, absolutely.
Okay. Got it. At any point in time, historically, has that analysis been done? How much is the cost involved in building these projects, and how much is the rental other group companies will be giving? Just to know how much capital will get used, and if the building gets built, and how much return or how much earnings one can expect from that capital deployment.
Yeah. Mr. Maloo, you want to answer that or I can take that if you want.
You can take that.
As far as rental returns are concerned, as I said, it will be based on the market valuations, et cetera. Really speaking, I don't think there are some massive calculations which have been done as to how much will be the rental return and hence the IRR calculations, et cetera. It was more to build the corporate office, more to build that image, et cetera, for the organization. Really speaking, an IRR calculation from that angle would not have been done. Clearly it can be done. We can look at the current rentals, et cetera, and try and extrapolate what would happen after three years and what kind of floor space you'll be giving to the various companies, et cetera. Those calculations can be done. At this stage, it will be theoretical and has not been done.
Yeah. Fair enough. Maybe when the time comes, then we may have more clarity on that.
Absolutely.
Okay. Thank you very much.
Yeah.
Thank you. As there are no further questions, I now hand the conference over to the management for closing comments.
I think thank you everyone for an extremely engaging interaction today. It gives us also a lot of introspection possibilities and also scope for us to improve as a company, because you all have so much of experience across various industries, et cetera, and whatever you say, we try and capture it in our system as long as it makes sense for us. We appreciate your valued advice and feedback, and we'll continue to seek them as we go forward, even beyond this conference also. From the entire team of Bajaj Consumer, I take this opportunity to wish you and your families a very, very happy festive season. Stay safe, stay healthy. While signing off, I wish that the economy and the businesses across the country recovers and revives in the second half of the year.
Best of luck to all of you, best of luck to us and everybody else. Thank you.
Thank you. Ladies and gentlemen, on behalf of ICICI Securities Limited, that concludes this conference. Thank you all for joining us and you may now disconnect your lines.