Bajaj Consumer Care Limited (BOM:533229)

Q4 19/20

← View all transcripts

Jun 19, 2020

Ladies and gentlemen, good day, and welcome to the Bajaj Consumer Q4 FY 'twenty Earnings Conference Call hosted by ICICI Securities. As a reminder, all participants' lines will be in a listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to Mr. Vismeya Radwai of ICSA Securities Limited. Thank you, and over to you, sir. Thank you, Ayesha. Good morning, everyone. It is a pleasure to host the Q4 FY 'twenty conference call of Bidaj Consumer Care. We have with us today from the management, Mr. Sumit Malhotra, Managing Director Mr. Jareep Nandi, Chief Executive Officer Mr. D. K. Malu, Chief Financial Officer and Mr. Kushal Maheshwari, Head, Treasury and IR. Now over to the management for the opening remarks, and we could get into Q and A post that. Over to you, sir. Thank you, and good morning to all, and welcome to the conference call for the declaration of the quarter four results of the last financial year. With me are Mr. Jadeep Nandi, who you all know will be taking over as the Managing Director from the July 1. We also have Mr. D. K. Malu, who's the CFO and has been with us for the last thirty two years and Kushal Maheshwari, who's the Head of Treasury and also looks after the Investor Relations. As you all know, we have been operating under lockdown since the March 22, which was imposed to contain the COVID-nineteen virus from setting across the country. The quarter four performance of our company was hugely impacted due to disruption in sales as a result of this lockdown. Consecutively, this also impacted the full financial year performance to a great extent. The company closed the quarter with operating income of crores. The operating income has declined by 28.6% vis a vis quarter four of the last financial year. The volumes have also declined by 30%. On a YTD Feb twenty twenty basis, our sales were in line with the same period in the last financial year. The sudden lockdown in the March resulted in the sales falling by INR 63 crores in March versus March. This hurt the overall performance of the fourth quarter and also the financial year. Keeping in mind the uncertain economic scenario and lack of visibility of fair oil demand going forward, the Board has recommended a final dividend of 200% or INR 2 per share. Prior to the lockdown, the hair oil industry was under strain, with volumes growing at a tepid 0.9% on a YTD basis. This was driven by a 2% volume growth in the urban sector and a decline of 0.5% in the rural sector of the hair oil market. We don't have the news and figures post Feb, but indications are clear that the hair oil market has slowed down even further. Our strategy of micro marketing of hair oils was well underway until the first March, in which we had developed plans to launch this in the entire Hindi speaking market of India. While the plan was to implement these across the markets from the 04/01/2020, this was stalled when the entire country was put under lockdown. As a part of our strategy to gain market share in Herol segment, we had already committed large investments in advertising and sales promotion and our go to market initiatives. The sudden lockdown stalled all of our efforts, and by the time we could roll back these investments, it was well past mid March twenty. This resulted in the advertising and sales promotion to sales ratio in the fourth quarter to rise to 28.6% from a normal ratio of around 14%. This was the largest reason why EBITDA was pushed down to an unnaturally low level. The EBITDA for the quarter was just INR 25 crores, which is a decline of 68% versus the EBITDA shown in the last year for the same quarter. EBITDA to sales ratio is at 14.85%, and PAT and PBT are at INR24.5 crores and INR29.7 crores, respectively. The fourth quarter saw sales in all our channels decline, while lockdown forced all the retail and wholesale outlets to stay shut. Even the modern trade outlets that were open worked with constraints and ordering significantly less quantities of our brands. This resulted in a 12% decline in revenues of the alternate channel. Army canteens continue to remain unpredictable and the strain on finances passed by the Ministry of Defense saw collections of our hold outstandings also slow down considerably. While on the international front, The Gulf the orders from The Gulf continued, Nepal and Bangladesh completely shut their borders, and hence, international business also saw a steep decline of 52% in revenues. Since hair oil was not declared as an essential commodity by the Government of India and all the circulars from the Ministry of Home Affairs did not put hair oil as an essential commodity, we were not able to open our depots, transport our stocks and help our channel partners to resume operations. From March 22 to mid April, our operations were under complete shutdown, and all our employees were working from home. Though most of the retailers and wholesale outlets were closed, there were some demands from the smaller retail outlets, especially in the rural areas, which were opening for a limited period every day. To cater to this demand, our operation team lies with the municipal authorities to start opening our depots in the April. Simultaneously, all employees started tele calling our channel partners and collecting orders over the phone. This was then transmitted to the distributors and depots who serviced these orders. Slowly, business got back onto track, and the number of calls that were me being made every day rose to a staggering 43,000 a day. Not only did we get business, through this initiative, but this also helped our team remain in touch with our channel partners, all of whom appreciated this gesture. After several rounds of lockdown extensions, all our depots, factory, distributors opened for business in the May. Nearly all our sales team members are now in the market collecting orders and supplying our products. With the launch of Bajaj Nomax hand sanitizers, the turnover has picked up, but uncertainty associated with sudden declaration of containment zones across the country persists. Among all this mayhem, the silver lining was the implementation of SAP HANA 1809. This was done with all the teams working from home and interacting with the implementation partner through digital means only. The team met the targeted go live date of fourth April. In addition to this, our HR automation software success factor as well as our artificial intelligence application, Selena, was also implemented during these troubled times. The last three months have shown us that with a committed team like we have in Bajaj, you can overcome almost all odds. The entire organization has ensured that the positivity does not flag, and we continue to do business that we and the senior manager did not think management did not think it was possible when the first lockdown was enforced. I would like to end my part of the introduction and open the floor to questions. Thank you. 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 your touch tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Manoj Manon. Please go ahead. Hi, Sumit and Jaydeep. You know, first of all, thank you. It's a good presentation, and congratulations to Jaydeep, you know, as you take on the responsibilities from July 1, and all the best. My first question is actually on the dividend policy and the philosophy underlying it. You know? And thanks for the comment, Sumit, which you made in the opening remark on, you know, the the the EBITDA being very low, and I think there was and you're alluding to, you know, the reason for a lower dividend, if I understood it correctly. But still, you know, when I look at the balance sheet, 450 crores of cash, US is a negative working capital, low CapEx business, which is essentially means that all points in time is cash positive. So just trying to understand the underlying philosophy for, you know, the lowest dividend in ten years. That's course number one. Yes. Thanks, Manoj. I think even though you congratulated Jadip, you should have also congratulated me for hanging up my boots, but speak yourself back. In terms of the dividend, we had a long discussion, not only in this Board meeting, but also in the previous Board meeting because as you remember that we normally give an interim dividend year by year. And therefore, mostly, at least, as far as I remember, we declared the dividend in the Jan Board meeting. At that time, the economic scenario was bad. But the main reason at that point of time for parking the thought of dividend was that we had a new strategy in place, and we really didn't know how much money and where the money would go. You're right that we have a negative working capital, so you don't actually need to take money from treasury to launch a new product or implement this strategy. But this strategy was thus not about advertising and going to the market, but also a differentiated product strategy that we are thinking of. I think it's quite fortunate that we did not give a large dividend at that point of time because now the scenario is even worsened. And at this point of time, we really don't know how the demand for hair oils are going to pan out and therefore, what should be our strategy going forward. And the Board thought it prudent, at least this time, to conserve cash in the treasury rather than give it back to the shareholders at this point of time. And that's the only reason behind giving a lower dividend or a marked lower dividend this quarter or this year, financially. Okay. Sumit, I have some follow-up, which I'll come back on this later. And before that, I'm sorry, actually, sorry for just missing out on that. The best to you as we move ahead after the next year. Manu, do you know me? I'm joking. Yeah. No. No. I was not, actually. So I just meant it seriously. Sorry for that. Second question is on on the revenue side of it. You know, two questions there. If you could comment about the primary and secondary, that's one. Second is, you know, given the, you know, the 28, 30% sort of decline which we have seen in in one quarter because of few days or a few weeks of disruption, is it fair to assume that given that your consumption doesn't really the tertiary consumption doesn't really have this level of variability, you know, as the pipelines gets filled up, etcetera, etcetera, let's say, I took cumulatively March, June, and, let's say, September, which is nine months put together, would it be fair to say that it will be, let's say, an index of 100? I'm not really saying plus 5% or minus 5%, which is the consumption part of it. Adjusting for the consumption changes, you know, primary, secondary, on a nine months period, can we say that it will it will normalize? Yeah. I would say it normalize it would normalize. But remember, this disruption has also caused quite a few outlets to downstock. So, yes, ideally, and secondary over a nine month period is equal. But this these are difficult times, and you'll find that a lot of outlets, especially the wholesale outlets, are actually dropping their stocking. And therefore, this translates back into distributors dropping their stocks and so on and so forth. And therefore, you could have a minor difference between the primary and secondary. But theoretically, over a nine month period, you can't play around with primary, secondary too much. Understood. That's why the queue is very long. I'll come back in the queue. Thank you. Thank you. The next question is from the line of Parsi Pantaki from IIFL. Please go ahead. Hi. Good morning, team. My first question is on the lockdown impact on sales. So I don't know if this is the right way to look at it, but if I see the number of days that you have lost is approximately one ninth of the quarter. The number of sales that the amount of sales you have lost is about one third of the quarter. So in a sense, the last ten days of the quarter, the daily run rate of sales historically would be three times that of the rest of the quarter. So what is the reason for such a big sort of seasonality or whatever? I mean, this is not a seasonal product. So why should the last ten days of sales account for such a large part of the quarter sales? Good question. And I'll start by just warning you that you're looking at primary sales, where secondary sales don't move up and down in a nonseasonal product like Heroin, but primary, it does. And if you look at historically, the last quarter in Bajaj Consumer Care normally accounts between 28% to 30% of our yearly revenue. In this, it is a heavy skew towards March. And like most other FMCG, this is always back ended. And this is back ended during the month, especially in March because all the incentives, extra schemes that you want to give, the salesman awards and incentives always peak the demand to treat the primary demand. And please remember the word primary towards the end of the month. And therefore, you suddenly had a period which was very high. Normally, the last week or ten days of March gives us 60% of March. And March is typically over around 45% of the last quarter. Yeah. Right? So if you do those numbers, you'll see a different side of the whole thing. Yeah. Understood. So can you give us any idea? I mean, for the first two and a half months of the quarter, on a y o y basis, what was the growth that you clocked? We were flat. Okay. So second question is, as you said, this quarter, the lockdown was suddenly announced, you didn't have time to recalibrate ad spend. But for the June and for the rest of the year, what is your thought process or outlook for the ad spend? I mean, as a percentage of sales, do you think ad spends for the rest of the year would be lower on a Y o Y basis? I wouldn't have the visibility for the whole year because like you have seen that it's still a very choppy ocean that we are navigating in. And when the second wave happens, when which metro closes down, you really don't know. So rather than that, I think what we are looking at, we are actually living month by month at this point of time. And even though sales were not there in April and May, we were still evaluating whether to go back on air. We did not go back on air. We've only gone back on air in mid June. But this is something that will keep on the goalpost will keep on moving as they go forward. Okay. But any comments for June, whether ad spend as a percentage of sales can see any saving to sort of buffer the impact of negative operating leverage? I would avoid commenting on the first quarter of this financially, and I will only request you to wait for maximum a month when we announce the first quarter results. Sure, sir. That's all from me. Thanks and all the best. Thank you. Thank you. The next question is from the line of Sanjay Singh from Spinesbridge Investments. Please go ahead. Yes. Hi, sir. Hi, Sanjay. Good morning. Yes. I hope you're doing well. Thank you. I just want to know what is the ad spend for the quarter? You generally give the number, I think, in the presentation, but I couldn't see this time. Yeah. I said the ASP is around 28 and a half percent. Typically, it is half advertising and half sales promotion. But in the fourth quarter of this year, it was a much higher percentage of advertising. If you like to know the Rohit, what is the exact figure we can get in? Fourth quarter? Fourth quarter advertising only. Increase was about INR 13.22 crores. Right. Total increase was INR 13.22 crores, but that's advertising and sales promotion. A large part of this was advertising, Sanjay. So your advertising for sale will be more than just advertising, the ETL or whatever the the way advertising is now defined. Yeah. Would be more than 10%? Definitely. Yeah. Out of 28%, my I don't remember the exact figures. Maybe I'm getting old, but would be close to around seventeen eighteen percent at least. Okay. But that by that logic, shouldn't it be part of the statutory requirements to declare the expense? I mean, I think the rule is more than 10%? No. No. No. Not under the new LR rules. Okay. Okay. Earlier, think it was 10% rule. Right? Any You're right. Earlier, was. And earlier, you used to put advertising or any spend more than 10% separately, but now you put it in other expenses. The next question is from the line of Hardik Kapoor from Investec. Yes. Hi. Good morning. So I just had one question. Wanted to get a sense of the early trends that you would be seeing in June in terms of hair oil consumption. If you could just show some light on how the premium space is doing from a category perspective, any downgrading that you're witnessing? Anything that you can kind of talk about, maybe about smaller players, etcetera. Just wanted to get your sense on that. Harit, before I go, and I will try and answer this question to the best of my ability. Please, the statutory warning is that I can't talk figures, Right? Because we are talking about the fourth quarter of last financial year, and me talking about a a quarter that is underway is technically not right. I don't even want to get whether it's legally right or not. But what has happened is after the lockdown started opening in parts of the country, the first feedback that we got was that the wholesale market had collapsed in. And there were two reasons for it. One was that you would realize that all the wholesale markets are in the large cities and within the cities in very congested areas. And most of these, whether it be Khari Bavli or Majid Bhandar or Bada Bazaar, Khari Bavli for people who may not know is Delhi wholesale, Majid Bhandar is Bombay, Barabaza is Calcutta, Spencer's or is Chennai. All these places were actually under containment zones. So these guys couldn't open it. The second reason was that wholesale operates on the fact that retailers from far off come to wholesale to buy their requirements because they don't get the kind of discounts or the kind of credit that a distributor would pass on. But they come to pick up smaller lots and a large variety of products. But since transport and movement itself was constricted, retailers were not coming to wholesale. So that was the first indication that we got that this was not the new this was the new normal and things were not as normal as was even as late as the first week of March. The second indication that we got was that we got certain demand from the rural areas. Now as you would know, most of the rural outlets used to get their supplies from the wholesalers, but suddenly, weren't there, and therefore, we got a direct demand from these rural areas. But we didn't have the wherewithal to reach so many places there. And you're talking about 650,000 villages all over the country. So how do you reach these kind of things? So we did attempt to overcome that, and we tried pushing our direct distribution, how successful you'll probably see in the July when we sort of announce our results. That was the second thing that happened. The third thing that happened is within our portfolio, our lowest unit pack or sorry, MRP brand, which was what we call Amla Air Oil suddenly started jumping. And this was a clear indication of down trading happened. But again, since I said in my beginning of my introduction, we don't get Nielsen, so we'd probably not be able to give you exact figures of what is the amount of downward trading that has happened. But it is visible whether you sort of like it or not. So these are the three big changes that happened. Yes. There were other changes like ecom doing very well, modern trade for the first time being under strain. These were, I think, the other indications, but the three big ones were wholesale crashing, rural going up and lower MRP products doing better. This is extremely helpful. Thank you very much for this. Just one question, if I may, was so if you look at the next twelve, eighteen months and prior to this, the strategy thought process was to focus on the hair oil space and, you know, try to extract more market share from this space overall. In the context that, you know, the category has been slow as well as the fact that, you know, there is some stress, you know, going forward as well, Is there a thought process on relooking at single category focus versus diversification? Or is it too just too early to comment on that? I think it's too early to comment. It's not that we aren't working, but I think the parameters have changed drastically. So if you analyze your strategy on something that was there in Jan, Feb, or even early March, you could go horribly wrong. So at this moment, we are watching the situation. And believe you me, it's changing every day. What we used to have maybe a month review, we are now having nearly a daily review because it's changing so fast every day. So I I I think deciding and being able to discuss strategy is still at least a quarter, if not more, away. Very clear, sir. Wish you all the best for your future endeavors, and all the best to Mr. Nandi as well for the future. Thanks. Thank you. The next question is from the line of Harish Biyani from ICSA Asset Management. Please go ahead. No, sir. It's still bad. Sir, we still can't hear you. Maybe we can come back later, I can't I can't hear you, Harish, at all. There's some disturbance in the line. Harish, we would request you to please come back in the queue. The next question is from the line of Ayaz Motivala from Nivalis Partners. Please go ahead. Yes. Good good morning to you, mister Malhotra, and all the best for your future endeavors, and congratulations, mister Andy. So my question is on a point which you already mentioned a bit, which is you've noticed a bit of movement of your Amla product and maybe early signs of sort of consumer preferences, I won't use the word down trading. So do you do you see that as a challenge in your journey, which you have been embarking on for a long period of time to get people to move on from, you know, heavy oil to more value added and preferably your type of product I I ask as a medium term scenario? I ask two parts of it. Actually, we had moved away from premiumization, if that's what you're talking about. And we were talking about the whole basket of hair oils. And if you had gone through and heard us talk about the strategy in the last three quarters, you will realize we are not talking of almond air oil alone. We are talking of market share of Bajaj air oils in the total air oil. So Yes. Yes. So I've been attending the calls, and I I I yeah. No. So I I I I and I've observed an attempt on sort of coconut oil. There are other type of oils which you expressed in a couple of calls earlier where you talked about the, you know, the 13,000 crore market and unorganized versus organized, etcetera. Yeah. So my question was on that, sir, if you could elaborate maybe the the entire spectrum of hair oils that you described on and and elaborate the point on potential takeoff on Amla versus other type of oils and how that affects your portfolio. I understand where you're coming from, but unfortunately, I think it's too early because like I said in the previous question, the market itself is changing nearly on a daily basis. So the strategy that we had earlier on in which we had identified certain areas across India where AMLA could possibly help us gain market share. It doesn't hold true today, right? And we could be totally wrong if I start elucidating the strategy that was there as late as Feb. So I would like to pass this question and maybe as we go along in the subsequent quarter, when things become a little more clearer, we can talk about it. But yes, like almond oil, like the cooling oil, like the value added coconut oil, Amla is also a very important part of the aeroel segment. And therefore, if you were to try and gain significant market share, you would have to play in this. But where would you play? How would you play? What would be the investments? I think this is a part of the strategy that will evolve once again, and we are back to the drawing board as we go forward. Sure. So thank you for that. And just a question related again to your experience in this market in a more normalized, long extended period of time. So there's a talk that we read about in the press and otherwise that as consumers have been at home, you know, whether it's, you know, housewives or others and people who go to work as well, a lot of this type of, you know, hair products have had a a challenge on the demand front. So from your past experience, if you draw on that, do you think these things are are are are passing moment in the the long growth of this category? Or do you think there's going be a departure where I think the consumer starts sort of cutting this expenditure itself? See, in my experience, these are normally blips. They don't last longer. But having said that, you have never had this kind of a scenario ever, and I've been in the field for thirty three years, I've never seen this kind of a scenario. So even though I would like to say that I have experienced it all, I never experienced anything like this. So unless I have some consumer research or talk with the consumers and the household, I I wouldn't like to make a comment because I've seen too many of people becoming heroes and voicing predictions, but I think nobody really knows what will happen in the future. So I wouldn't like to fall into that group of people there. Sure. I appreciate your comments, And if I have one more on the wholesale trade, I'll come back. Thank you. Yes, sure. Thank you. The next question is from the line of Rahul Anandeep from Goldman Sachs Asset Management. Please go ahead. Yes. Thanks for the opportunity. Just a question from understand why our inventory actually has not gone up to good extent. We have kind of lost around INR 60 crore of sales in the last ten days. Should have been seen in the inventory, right? Why there has been an increase? There has been an increase. I don't know where you got inventories not going up, right? Because not only are our depots full, we even had around 70 trucks on the way, which really didn't ever reach the depots till the March. So where did you get this? So I'm just looking at the balance sheet. So last March, we had an inventory of around INR 61 crores. And this year, we end with around INR 63 crores of inventory. So just a 2 crores kind of an increase in inventory. My CFO has helped me. You're looking at inventories as a whole. FG has gone down sorry, FG has gone up and RM has gone down drastically, right? But then even if I look at the annual P and L, so change in inventory, the line item in the column for the full year ended thirty first March twenty twenty, it is only a gain of around INR 10.5 crores. Whereas if you lock our sales at INR 60 crores, I would put it at around at least INR 35 crores kind of a change, right? I think if you look at it, we have reduced our inventory for LLP drastically, and our finished goods have actually gone up. So I don't have the exact figures in front of me. I'll maybe I'll if you can send me a mail, I'll reply to you a more, yes? Okay, okay. All right, all right. And just to clarify, I missed the earlier comment on the dividend. So if I understood it correctly, it is the Board being prudent in order to kind of keeping in mind the objective of being a total airline company. You kind of envisage marketing spend also and new product development also, and that's why you kind of cut down on dividends. Is my understanding correct? Yes. All right. Thank you. Thank you. The next question is from the line of Harish Biani from ICSA Asset Management. Please go ahead. Harish, your voice is still not clear. There is a lot of disturbance in the queue. Can you please speak to this on my behalf? Now you're clear. Now you're clear. Okay. Thanks. Can you please clarify on the new dividend distribution policy? Harish, what I heard in between your the disturbances, you want to know what the new dividend distribution policy is. Am I right? Harish, there is no new dividend distribution policy. Our policy, like I'd always been telling you that we said that we would try and distribute onethree of our PAT as dividend minimal. But the kind of situation we are in and the economy is in that we have to deviate from this policy. And all I can tell you that this is only a deviation. It is not something that will continue for any length of time. No. So I appreciate that, but we have to my humble suggestion is that we have to clarify this once and for all. As you'd be aware, there's a lot of discussion on this particular point since last few quarters. And people then obviously, every investor has their own view of looking at things of how shareholding has changed and how this has kind of got influenced by the change in shareholding. So my humble suggestion is that whatever is the new dividend distribution policy and whatever you decide on that, please do it and please help clarify. Given our net cash balance sheet and given large cut in dividend distribution in this particular year, it doesn't kind of leave a great taste to anyone. I get your point, and I've got your point when we met last time also. I will definitely keep it in mind and convey it to all concerned. And hopefully, we'll be able to sort of Yes. Address your concerns in the We just have to kind of clarify that, look, this is my new dividend distribution policy, one third or whatever, one fourth. And then it will be once and for all, we'll try to move forward and we'll look forward to execution, M and A and etcetera, whatever you would want to do incrementally and focus on execution and business rather than on the dividend. Point taken, Harish, but not to have the last word. I'm not doing it just because I want to have the last word. But you should also remember that this is a very extraordinary situation that we are in. And therefore, even though you may have a policy, you have to be flexible in times like this. That's my, my point. But I take your point because, I had conveyed your point to, the management earlier on also. I will do so again. Thanks so much. Thank you. The next question is from the line of Aditya Malpani from Bernstein Investments. Please go ahead. Yeah. Hi, sir. Sir, could you please talk about the implementation and progress of our micro segment segmentation strategy, specifically in West Bengal and Uttar Pradesh? And how these two states have performed compared to other states? Yes. I think this was a question that made a lot of sense when we had the meeting in January. And if you look at that presentation, you'll see all those figures there. But again, where we stand now and unfortunately, we are really in the end of the first quarter of the financial year rather than the fourth quarter of last financial year. This discussion is has to be sort of tweaked, and I'll try and change the discussion for your benefit. For people who may not have been there on the previous calls, we started the experimentation of micro segmentation in West Bengal sometime in July. Right? And post seeing success in which we were getting significantly higher market share gains and even better growth in Bengal, we moved on to UP. And UP, we went there in November, and we ran UP till January. Once in January, we believe that this could be at least taken forward in the Hindi speaking areas. So we looked at 10 states, and we worked along with the consultant on looking at what we need to do in more states. We had started implementing in some of these states when the lockdown happened. In fact, the whole Hindi speaking market strategy for micro segmentation would have taken off on the April 1. But as situation the situation prevailed, we did not go into it. As we stand here now, we are not even sure whether that strategy is implementable today because the whole the situation on ground is changing so rapidly that you can't have a fix on what will work, what won't work. And we, at the top, at this moment, are keeping the strategy discussion purely on a theoretical basis, and we are not going forward as we speak today. We are waiting for things to sort of normalize and then maybe sometime during the next quarter or the quarter after that, we'll revisit this. So at this moment, we are not actually going ahead with that micro segmentation because today, the segmentation itself has disappeared. Thank you. The next question is from the line of Tevis Shah from Spark Capital. Please go ahead. Hi, sir. Thanks for the opportunity and best of luck for your future endeavors and Congress to Mr. Nandi. So a question on quarterly and dividends have been addressed. So just wanted to know that it's been fifteen years, you have spent fifteen years plus 10 to Bajaj consumer. What would you call out one biggest strength of Bajaj consumer you would like Mr. Nandi to protect and grow? And what was your what is your the biggest regret or unfinished agenda you would like Mr. Nandhi to address? You're going to make me a politician rather than a business guy, but thanks, Maybe that's the future's thing that I might get into it. But, yes, over fifteen years, I think the biggest strength this organization have has is actually people there. And you will realize that an organization that was low on systems, low on sort of strategy still did so well in the future in the past. And I think the reason behind that is the people. And Jadip, in his six months, has had a chance to see the strength of the people that we have, and I'm sure that he will take it forward. Maybe the regret, I would say, is that I was not able to push processes as fast as I wanted to. I knew where the gaps were. I knew where we would possibly falter in the future. And, unfortunately, for whatever reasons, and I'm not ascribing the blame to anyone but myself, I was not able to implement that as well as I wanted to. And that's perhaps the only regret, but I'm actually very happy that we got Jadip in because I'm sure he can take this to its, I won't say, logical conclusion because there is no conclusion in improvement of processes. But he'll take this to what I dreamt for the last ten years at least because that's the time that I've been trying to push processes. Great, sir. Hardeep, best wishes on that. And if we can hear from Mr. Jadip also his perspective or or key priorities as he goes as he goes ahead and on on taking the role. Thanks, Tejas. So it's actually been now five point five months, and it's actually been an absolute baptism by fire, if you can say. I mean, this is a completely new sector for me, and the basic reason of coming into this sector is more that the basic tenets of business really don't change too much. While the sector are different, I understand consumer behavior is different, the primary, secondaries are different. But if you look at process systems and the way companies have been built over time, I think there's a method in most of this madness that you see. And in Bajaj, as you rightly said, Sumit has really built this company from nearly scratch, nearly nothing to what it is today. And it is this kind of a it was anywhere at a point of some inflection point where it had to go in some direction. And this COVID-nineteen actually has changed quite a bit of it. If you look at last year when this main strategy was thought through and that micro marketing segmentation, all the two states that we got into, there are a lot of clarity as to where we want to take it for the next one or two years. Now whether all of that had got implemented, whatever yielded results, etcetera, we don't know. But at least there was some direction that the company was taking and the entire company was rallying behind it. Now middle March, everything seems to have completely changed. And as you heard from Sumit's narrative, that entire direction as to where it to go forward, etcetera, is now complete in a different direction. So that entire micro marketing. So a lot of information we have or a lot of action points we have. Now when to implement all of this is something that we would also want to wait and watch and see how it is. So for the next one or two quarters, I think we'll play as it comes. I don't think fortunately for a company like us, which is a little smaller in size, flexibility is a huge advantage. We can be flexible without too much of impact on either our consumers or shareholders or any of the people who are with us. So this, I think, would be an advantage in times like this, which is clearly, nobody knows where it is going. For the next one or two years, we'll be hopefully fleet footed. We'll also look at what are the areas we can access into. And if that changes some of our DNA, so be it. But the basic tenants remain same, how can we increase shareholders' value and how can we ensure that this company comes to a path where it has something to offer to both the consumer, to the to all the other stakeholders involved. So that's the direction. So for the next two weeks next two quarters, let's see how it goes. We are playing by the year. So one big advantage that this COVID has seen, at least for this company, is that I think this has made the people, as Sumit was talking about, a great strength in people. I think people have rallied behind each other. And whatever little we have been able to do and in the next quarter, we'll be able to come up with some of those points. You'll see that at least the company is trying to rally back in spite of a not so good March, has been able to it's not down and out. They are coming back strongly. They are trying to do whatever little they can do from their end. So there's a very, very positive scene that I see as far as the company. So I'm very balanced. Let's see how it goes. It will be a difficult time. It will be choppy, right? No question on that, but let's see how it goes. Great. This was very helpful. Best of luck to both of you for respect to Endeavors. Thank you. Thank you. The next question is from the line of Shailesh Pardeshi from Frontline. Please go ahead. Yes. Hi, Sumit, and hi, Jaysheep. Thanks for that opportunity. I just wanted to understand. We have what kind of category growth you are seeing? Because suddenly, you used to give these all details. But if you comment on March, February, these two, three months, how the category growth has happened for light hair oil? And the question is related to that what is the volume share we have got for ADH in, say, till February? Suresh, I think what you have to understand is Nielsen from March is not available. We don't have Nielsen. And you'd realize why, because this is actually done by picking up data from retail outlets by people going into the market, and you couldn't go to the market after that period. So and therefore, an answer to your question is we don't have figures as of now. And YTD Feb, I told you that the air oil market was growing at 0.9% by volume. Urban was growing by 2% and rural was declining by 05%. And that's the last Nielsen data we have as of now. Yeah. I got it, Sumit. What I was trying to understand, how the light hair oil segment where we have have a strength, how this category is performing Jan Feb and if you can help ADH of volume share till February. Okay. If you again remember when we started this strategy of trying to gain market share in hair oils, we had warned everyone that we would stop talking about light air oil because we believe that if we had to make a certain dent in the hair oil market, it would not only be light hair oil, it would be other brands across the segment. But to answer your question, then Jan said, the light hair oil market actually grew lower than the total hair oil market. The only segment that was doing well was the low cost of the Pamela segment, and light hair oil was actually flat in that period. But our strategy was to gain market share. And therefore, end of Feb, we had a value market share of 10.7% in Feb, and that was the last Nielsen data that we got there. Okay. And my last question is on can you guide us what is the CapEx which we are planning for next, say, nine months and maybe twenty two? Shailesh, this is not a CapEx driven organization, as you rightly know. And the CapEx we would only need for either building a new plant for a new category, which I don't see happening in the next nine months or the office that we are trying to construct in Worley, which also currently is on hold, looking at the kind of situation. So the answer to your question is I don't think there would be any major CapEx. Yeah. I got that. So let's why why I wanted to ask because in the press release, I've read that you have converted one factory into manufacturing of hand sanitizer. So this is is that the balance capacity will suffice for us, the growth rates, what we are looking for FY '21 and '22? We strongly believe so until the market surprises us, but I doubt whether there'll be such a massive rise in demand that you will have to build a factory in a hurry, but we have enough capacity as as a different point. Okay. And just quick question on project Vistar. You you you mentioned that the same space what we are trying to enter and the strategy was supposed to be implemented by April. I think that strategy will now change, or will we will will that go beyond June, July? I don't know whether it will change or not. All my statement was that the things are so uncertain at this point of time. So therefore, whether it will change, how will it change, what will be the new strategy is actually crystal ball gazing. And therefore, I would seriously desist from this kind of Okay. I have one question. I'll This come back to is Jadif here. Just to take that question on whether we'll continue with Project Vistar, etcetera. See, one of the things that happened is after the two states that we implemented, a lot of learnings which has come back to us as well as there's a lot of work that has happened for the other Hindi speaking states. I mean, as you can understand, if you're planning to go live in April or May in the this quarter, basically. So obviously, there are a lot of back end work that has happened. So that depository of data already remains with us. And we'll keep continuing to monitor the market and see when it will be relevant for this kind of a strategy to go forward because market needs to normalize before we can launch this. But at this stage, we are ready with this. So there'll be no real long pickup or gestation period before we can get into it. So when we feel the market is right, etcetera, we can always come back to this one. Alright, Jazeep, and congratulations, and we'll have more interactions. And so let's since your request, we'll remain good friends. Thank you. Me not being a managing director doesn't change friendships. Yeah. Thank you. Thank you. The next question is from the line of Jay Modi from NK Investment. Please go ahead. Good afternoon, sir. Sir, you mentioned that YTD growth for urban was 2% and rural minus point 5%. Is this a similar sort of number that even our company has seen, or it's too different for us? I I think I told you YTD said we were flat in value. No. I meant rural and urban growth split for us. See, our rural growth was faster than the urban growth in our case, and that's because of the work that we had been doing. Like, Sherry said, the project restart, we are doing better than the rural areas. We were down in the urban largely because of wholesale strain. Okay. And what would be a rural urban split? Now or then? Now. I can't tell you now, but then it was 42, 43% was. Okay. Okay. And, sir, with respect to sanitizers, what would be our monthly run rate, if you could talk about that? By the March, we had not launched sanitizer, and therefore, I would from answering this question. Please wait for a few more days when we announce the first quarter results, and you'll have enough dope on sanitizer, what's happening, how did we launch, what did we do. All of that will happen in a few days then. Sure. And last question was around recent years. So do we see any inorganic opportunities popping up for us? At that point of time, before the thing, we were looking at various options. But now again, things have changed. We are going slightly slow. But that could be if the strategy remains what it was earlier on, you could be then looking at certain acquisitions in Aeroil there. But like we have been trying to point out to all of you, the strategy itself could change depending upon the changes that are that are happening on ground. So what makes sense in Feb may not make sense in August. Okay. Got it. Okay. That's it from my side, sir. Thank you, and all is well. Thank you. The next question is from the line of Rajesh Sharma from A Bank. Please go ahead. Yes. I think I find you reluctant to talk anything about the first quarter pretty surprising because I thought you were on CNBC on June 9, where you talked about pickup in rural and Yes. Migrant workers back to rural aiding demand and all that stuff. So Okay. Where did you hear numbers? Is available for everybody to listen to. Right. But where did you hear numbers in that interview? And what have I said? I've only told you that I'm reluctant to talk about numbers in the first quarter. And I've been talking about rural. I've been talking about wholesale, not No. I didn't hear you talking about any pickup and demand and things like that. Yeah. I didn't because that was But then how come you call how come you were talking about the same thing on a CNBC interview? Gave us a number. Did I give you a number for pickup of demand and all that? No. No. But in this particular call, I'm not sure you talk about pickup and demand as well. No. But he asked me whether demand has picked up or not. All I've said is, see, I will not talk about numbers. Yeah? Yeah. Okay. Maybe not to talk about numbers, but, qualitatively, how are you seeing things in this quarter, both in the rural and urban? Again, I'll repeat what I said. I said that what has happened is that the rural area demand has come back faster than the urban areas. Demand within the urban, wholesale has been badly affected even now, right? Now if you say demand is what I sell into the market, that composite is of two things. One is pipeline filling because in the period that there was a lockdown, there would be a depletion in the stocks in the channel. So a lot of stock got picked up as soon as lockdown opened. But in terms of demand, we are yet not being able to determine what is the kind of consumer demand pattern that is emerging because it changes and again, this is what I said, the changes nearly daily. Yes. But I find the reluctance pretty amusing because none of the other consumer companies appear like this. If you talk to Hindustan, they were, in fact, talking about the extent of that we are back to 80 to 90% in terms of production and demand, anything like that. Looking. Why are you being the exception? I don't understand. Well, that's the way I would like to present it. But this is a public call. So I I'll answer that much as I could, and that's the call I'm taking. Come on. You guys do a free even a 200 rupees, and the cost is down to $1.51 You're ultimately responsible to shareholders. Yes. I am. But that's how I'm telling you You can't you can't be totally secretive. I come on. Why are having this call otherwise then? It's not secretive. Where am I being secretive? And I I go to the extent of saying I'm as open as anybody else is. The only thing I'm saying, I will not give you numbers. That's all. No. But you're not even talking if you were to compare your production levels or your operation levels compared to when you were during lockdown, how is the situation? Never asked me. Today, we are at least 70% of our production levels now. Right? And that's there in the investor presentation if you look at it also. I don't know what is upsetting you. I mean, you have you have my number. You can please call me directly, and I'll then switch your discount Sorry. I don't want it within a one to one. When you have a public call, which is available for everybody On a public, it will be more forthcoming. And especially, where the time when you are actually going to leave the company, I think you are leaving investors totally clueless what's going on. Mean, you're sounding so depressing. That's such an unfair statement, and I won't like to comment on it. It's got nothing to do with me leaving the company after sixteen years in this company. And I'm being as forthright as I could. And if you don't like it, but I can only say that please call me. I'll try and help you. This is not a comment on you, but it's my analysis coming at The controlling shareholder. Means they dump the stocks, and then they don't bother about the shareholders. Sorry. You could come on the board. The time I'm leaving the company, you are not forthcoming. That is a statement you made, and I'm reacting to that. Yeah. But I think you should not leave the shareholders at a in a in a lurch at a time when you are no longer going to be there for the next call, probably. That's a personal comment I'm coming from. That's a personal comment you're making. That's a personal comment you're making, and I would don't want to comment on that any further. Yeah. No. Yeah. If you took it personally, I'm sorry about that, but it's not directed you as person. But I think the management, not only you. That's the way you're making it out. You don't have to personally answer, but your colleagues can. Right? I have no nothing further to talk about this, please. Can we go to the next The next question is from the line of Kailesh Kumar from Insight Edge. Please go ahead. Thanks for the opportunity. And congrats, Sumit, for bringing the company to this level. Thank you very much. Recently, across a particular board channel to interrupt. Still sure I'm unable to hear you. Your voice is not very clear. Hello? Can you hear me now? Yes, sir. You can go ahead, please. Hello? Can you hear me now? Yes, sir. Please go ahead. Yeah. So recently, across a particular trade channel, I come across a new product by Bajaj Corp, which is basically anti grain hair oil. So my specific question is, what is the market size? Who are the competitors? What is our strategy? And what kind of revenue we are looking at from next two to three years perspective for this particular product? Good. Actually, you would have come across this only in modern trade. And we actually were test marketing this product in a few modern trade and a few ecommerce channels. And the logic for this was basically that as we go along, these two channels would become very, very important. And the consumers on these channels would seek benefit from hair oils and specific benefits like greying or any other disease or problems that you have with the hair. And that kind of a thing was the whole idea of launching anti gray. It's a very small market in India. Currently, it's not even developed. You have, at the moment, basically around two or three of antigrain products that are there, largely very expensive products. We didn't touch that kind of thing. And therefore, it was more a test market that you saw. And therefore, at this point of time, what is the amount we expected, how much would be we will be doing is something that I'm not too sure how it will pan out, but it was a very, very small market that we are looking at while doing the test market. But, Sumit, don't you think I mean, when we started Bajaj almond drops hair oil, that was also a very small market. And today, hair dyeing is a very, I mean, around 4,000 crore market. So this particular product is also going to compete with those products as well. That was a belief we had, and that's why we were test marketing. We are not going all out and putting it into the general trade because we thought that it was initially going to be a niche product and it would grow in future. So we still have it. And if you see, we are still selling it to the modern trade outlets that we targeted at. And as things stand today, e commerce is becoming big, and we are sure that this and other brands, other hair oil brands that we had in mind would do well in these two channels. And what kind of revenue we are targeting from our hand sanitizer in next two, three years? Very difficult because I'll give you numbers. Hand sanitizer by Feb was nationally a 150 crore market. And by April, people were already talking of that being a 600 crore market nationally. Now with so many unorganized players, etcetera, coming in, nobody really knows. But yes, I think this is going to remain a much bigger segment than the INR 150 crores it was. How big? Time will tell, and we are in for a long haul here because we truly believe that this is something that the consumer will want, and we have the wherewithal to provide the consumer a range of products that can help him maintain the health and hygiene that he has. Yeah. Thank you very much, Amit, and all the best. Thank you. The next question is from the line of Amit Doshi from CareCMS. Please go ahead. Yeah. Thank you. Sir, last year, you know, of course, we decided with this new strategy that, you know, we want to target the entire hair oil segment and not the light hair oil only as we were a player significant player there. So what as as our product basket stands today, what portion would be a light hair oil and what portion would be the hair oil, I mean, the overall other than light hair oil? I mean Currently, Bajaj almond drops would be around 92%, 93% of our total portfolio. But it's changing as we go along, and therefore, it could change very, very fast in the coming years. So you believe that in last one year, only Despite the Herald segment, which is far larger than what LHO segment is, we could I mean, the contribution could increase only to that six, seven percent of that other handler. Increase to six. It remained flat. We were always 93% dependent on data. Right? Because we didn't really implement this strategy across nation. Like, you would have heard me talk, we actually went to only two states by January. And while we are planning to implement it across the Hindi speaking area, this lockdown happened. So the whole strategy and, therefore, getting other brands of hair oil becoming salient actually really didn't happen. Okay. Okay. And, sir, can you say something about what are the LLP prices being a significant raw material, and it is a crude dependent? So how they have been panning out over this last five to six months where the oil has been crashing? Surprisingly, the LLP prices have not fallen as much as we thought it was. Currently, we are at around 48 rupees a kilo, and that's really not the figure that we are looking for when crude dropped to even $25 a barrel. And that this is something which has surprised us. And the only reason we could really decipher is that a lot of the LLP manufacturers in India were holding high priced stock, and therefore, they had to liquidate it. And since production itself was low across the industry, they were not being able to sell this out and refill it because and that's the only reason we can talk about. Even BPCL, who's actually an indigenous producer, hasn't actually dropped his rate to that extent. Okay. Okay. But why should not shouldn't it be a proper market linked, you know, like, a different Normally, I've normally, for the last But when I looked at the quarter four presentation, you know, the prices were down just very marginally. So I thought maybe probably January, March, the effect would have been on the lower side. So now it should have been on the heavier side. Oh, it's dropped. It's not the the the rate on the in the presentation. Is really It's gone down. It has gone down. It's gone down to 48 rupees, but it's not crashed like we all thought. And that's something that really belies the trends that we saw in the past. Okay. Okay. Okay. So on the repo side, that's probably not not predict. Okay. I can't worry. Okay. Okay. Understand. Understand. And, sir, sanitizer, you said that, you know, I would really appreciate that, you know, you quickly launched the sanitizer, and that shows the proactiveness of the organization. But just wanted to know, did we because since NOMARKS is purely a Northern focused brand, did we launch this sanitizer in particular state only, or it was Even national because the the demand was all across the country. And even South, which is very small for us in Herais, there's a good demand for sanitizer. And we had the advantage of quickly turning it around and being able to produce significant numbers, and therefore, we launched all over here. Okay. Okay. Okay. And just last one, sir, while I continuously on the call, you mentioned that, you know, this new strategy is currently put on hold, and, you know, we don't know how really things will pan out. And that was one of the reason why even dividend wasn't declared. But do you really believe that this of course, this lockdown of two months was a different ballgame, but the customer consuming the hair oil would change drastically. I mean, of course, it would change from a, say, a premium product to a lower value product or something or a high SKU to a lower SKU. But how come the entire strategy of micromanagement and microstate wise going and, you that strategy could be under a question because the product itself still remains, and I'm sure the consumption would be there. It's just that a plus or minus here or there. So I'm just slightly trying to understand why such a low visibility you believe this lockdown has put under the product or the demand of it. Okay. This is Jadip here. So Yes. Just to see, see, if you look at even our just to start from a very, very broad perspective, if you look at for the last three months, I mean, this is the first time maybe in the history of this company that for three months, we are off air, right? I mean, we have just come back from the June 15 on our product. Never in our history have we done that. Well, if you look at the strategy that we had for micro marketing and as we were discussing what we did in West Bengal and UP, and it was still evolving, it was really not like fine tuned and cast in stone. One of the key things that we were seeing is it was a pretty three sixty kind of approach. It is looking at which are the micro markets in each of the states that you would want to work at, what are the SKUs that you would want to do, GTM strategy right up to the retailer, back to the consumer and then also the entire marketing strategy. So it was all of these put together. And if you look at all of this, it still does not remain the same. While you're absolutely right in terms of consumer preference, etcetera, while there have been a little bit of down trading that is happening, I mean, that's at the core level, most of the consumers might still remain, and that's why we are still seeing traction in our sales. But if you look at the way companies have been approaching marketing itself in terms of ad spends, etcetera, the kind of channels that you are seeing that you are many people are on. Mean, DD is big. Today, news is big. I mean, all the mainline channels of general entertainment, most people are not there today or they are there in a substantially reduced quantity. So a lot of our strategy was based on all of this. And that obviously has taken a bit of a change. And for the next two quarters, we don't think it will come back completely to this date. So if you have to implement all that, and as you can see from our results, there were pretty high cost investments that you have gone into. So if you want to really go big bang on that and really take that forward, it has to be in a market which is a little more stable because returns won't come immediately. Returns would be expected after a few quarters or maybe even a year or so or even more. So if that were to be happening, the market needs to stabilize before we can embark on that. This is exactly why we've while we'll not completely put this on hold. Obviously, the learnings that have come up in some manner or the other, in some segment or the other, we'll come back. But the entire strategy in totality will not get implemented is what is being said. Okay, okay. And on the employee rationalization front, we were taking some step on reducing the number of employee. That strategy also, of course, has started last year itself. So what portion of it is still left? And can you give some idea as to what is the plan on that front? That was done and dusted by June itself. And post that, we have not even thought about rationalization at this point of time. And you'll happy be happy to note that we have been giving salaries in advance. We have not laid off any person. And of even in March, we paid on the March 25 all our employees. In April, we paid on the April 28, and not a single employee, and I can tell you upfront, has been laid off. So that strategy was something that was done initially at the beginning of the year, and that was closed by June. Okay. Okay. Okay. Okay. Okay. Thank you so much. Happy retirement period to you, and wish you all the best to J. D. I'm not retiring here. I'm just moving on from being a MD of Bajaj Consumer Care. Oh, okay. Okay. Okay. Thank you. Thank you. The next question is from the line of Keshav Ghal from Counter Cyclical Investment. Please go ahead. Sir, after the promoters sold their stake in the market, saying one and a half years, company's dividend has reduced from 14 to 2 rupees, sir. We are operating in the same market where other FMCG companies are operating. Nobody has cut dividend. So that is why our share is trading at a single digit PE multiple. Sir, and if you see, HUL is trading at 70 times earnings. So so if today HUL announces a swap ratio for merger at double our CMP, it will still be earning the earnings accuracy for HUS because they are trading at 70 p, and we are trading at a single year p. So so I would appeal request to our MD to please tell this to the promoter that this poor corporate governance will really take a toll. And, sir, the market will lose faith, sir, because in FMCG business, if you are not expecting losses, you have $4.50 per all line cash in your balance sheet. You are trading at single day p multiple. Still, you don't want to do buybacks. So so this is really unfortunate. That's all I can say. And, sir, before market loses confidence in your stock, please do something about it. Thanks for your advice, and we will definitely talk to the board about this, not to say that we haven't. And I think you heard when I answered Harish's question. I said that we had, and we will again talk. And I will pass on the concern to all your concern on dividends to everyone in the top management here. Thank you very much. That's all from my side. Thank you very Thank you. You. The next question is from the line of Sonal Minaj from Pristeenth Capital. Please go ahead. Hi, sir. This is Sonal Minas. I have a non quantitative questions. Typically, organizations have, let's say, like, two, three year milestones on revenue, on product, on things where they want to be. Now I think you were in that direction, with the test pilot that we were doing. Post COVID, and maybe I'm a little, provocative deliberately, but does hair oil fit in the the longer scheme of things, and or would you want to grow beyond that category, to actually meet the longer term targets of the promoters that they have set for themselves for this particular business? That's question number one. And, Sumit, understand that I think you moving on from being a move, MD and taking this position on the board. Just want to know, like, what has been the organization learnings, as as as a company, to actually work with Nomarc? And, what would basically, the company do differently, going in the future? Maybe, be a little much more bolder in terms of taking decisions for the right for longer term, and it's been very basically real tough on the company in the shorter term. But, just, I think, building it up to understand, is there a shakeup in the company in terms of understanding that the more of the same would not lead them to a longer term milestone? Just trying to understand the undercurrent of the management of the company and the team overall. That's that's how I would want to sum it up. So, Marcelo, it's very, very long question, and we can actually go on talking of this for quite some time because this is exactly what I and Jadip were trying to tell the people that the strategy going forward needs to be relooked. And it's not that we were in a wrong strategy. It's basically the parameters that govern the strategy, which was on ground situation, consumer buying behavior, the effect of price versus the effect of premiumization, all of that will need to be reconsidered. And that's why at this point of time, we are holding our cards at saying because let things cut back to normal and so we know what the future is going to be because you can't have a strategy in such an uncertain future, at least in such a short time, three months that we have tried understanding what's happening in COVID. We have daily not really been able to sort of pinpoint what would happen to the consumer. We know what will happen in the market. We know how to handle rural versus wholesale. But what ultimately the consumer wants, we really don't have a complete view. And if you make a strategy without having a complete clarity on the least common denominator, which is the consumer, is bound to fail. Right? I think the one question that you asked about learning from Nomarc is very pertinent because we keep asking ourselves this question because as you would know that the best learning experience comes from the biggest failures. And this is something that we have been consistently looking at. And I think the way we need to attack new launches, the way we need to look at acquisitions, the way we need to look at future strategy, while evaluating all of that, how important is your bench strength, all of that has come into visibility now, and we will continue to keep an eye on this going forward. Okay. And and just, I think, the last part of it that, do you, see the future of the company beyond Heroin? And maybe and this is earlier again, I'm, like, too early to ask this question, but asking more on a gut feel level, and I think it would have been brewing in your mind maybe in the last three, four years, and that comes out as a strategy. That comes out as execution. But just want to understand, like, is there is there that thought from the top management at all? Or is that something which is too premature right now? See, it all depends on what time period you're looking at. You're looking Maybe two to years, if let's say, little longer. If it's the EBITDA margin, I know your strategy is in flux. But as a long term shareholder, what should we be thinking about where this margin will settle down given the prior change in strategy and given what may happen with the change in current thinking? Rajesh, let me answer it on two fronts. One is a general overview in which in the last two quarter meetings, we had said that this investment in the long term strategy of gaining market share in Air Oil will see a reduction in EBITDA, and that was something that you saw last quarter also. Having said that in this quarter, the EBITDA to sales ratio of 14.8% or 15%, if you only change the amount of money spent on ASP, right, which moved up from a 14% to a 28%, and you add that back to the EBITDA, it becomes 29%, which is more in line with what the situation was earlier on. And therefore, I think this is a one off low or a major drop in EBITDA. And that's why in my opening address, said unnaturally low EBITDA. And I don't think EBITDA is that big a problem unless you get another hit like COVID. Okay. Thank you. That's all I had. Thank you. The next question is from the line of Shailesh Pardesi from Frontline. Please go ahead. Yes. Hi, sir. Just to follow-up, you have mentioned about LLP. Can you also throw some light on the raw material bottles and refined and perfumes? What's the status there? Is there any inflation? Oh, no inflation. We are looking at trying to reduce those rates because in in a situation where demand is not very high, we should possibly talk about reduction. There's absolutely no increase in all of these. Even RMO is not glass, you could see an increase because of the energy cost, but otherwise, we have been holding that also. At this moment, we have not increased any. So the reason why I'm asking, is there any sensitivity that we need to take price increases or maybe it will impact our margins? Satish, in this kind of environment, taking a price increase or MRP increase could be very detrimental. So I don't think we are even considering taking anything. In all our strategy sessions, I don't think, David, correct me if I'm wrong, we have even considered a price hike yet. No. Because there is a change in rates, so I thought that maybe there is a change of thought also. No. Good one, Satish. I don't think organizations work like this, and I don't think my organization works like this that on July 1, everything will change. It doesn't work that way, sir. But we will not change, sir. So my last question is on the distribution. I think what you've highlighted is that we have gained 4,100,000 outlets. I think the if you can help us, so what is the direct and I'm not saying target, but where do you think next two years because our strategy is clear that we want to be a heroic company. So in terms of distribution, where we want to have a direct coverage given that the wholesale is not picking up or not delivering up to the market? See, our direct distribution when in Feb was around five point five point zero four lakh outlets, and you rightly alluded to the fact that if you are to take care of the drop in wholesale, you will have to keep increasing your direct distribution, which we are trying to do. And most of our increase in distribution is and will come through our rural reach. And this has been done by adding people, adding infrastructure all along the way. Thanks, Sumit. Just quickly on the wholesale contribution in Q4 FY 'twenty. I said it had dropped. Earlier on, it used to be 34%. It had dropped to 32 odd percent in the first fourth quarter, and it's dropped even further in the first quarter of this financial team. Okay. Thank you. All the best. Thank you. The next question is from the line of S. N. Rajan, an individual investor. Please go ahead. Yeah. Hi. Good afternoon. First of all, thanks for extending the call for more than one and a hours so that people get to ask questions, which is not a norm these days with other companies. And all the best to Sumeet and JD in the new role. I have three questions. Actually, none of these questions are related directly to either Sumeet or JD for the management. It's related to the promoters. Quickly, number one, mean, dividend, enough has been talked about the dividend policy cut in the dividend, thanks to act attribution as a reason of their bringing down the stake. It would have been better since every January, their company has been declaring dividend. This January, the company could have at least given an indication by of paying a 14 rupees, by paying 1 rupee or 2 rupees or 50 peso, whatever it is. That would give an idea to people as to what to expect rather than as I would say coming at a root shop yesterday and it came to 2 rupees. I would attribute this not to the management as I said, again, it's the promoters. Second is let me after the stake reduction to bring out the pledge shares, there has been no preferred or any indication about either a buyback you since the company has the money or the promoter increasing the stake. In fact, last week, we said we had allowed the a preferential allotment to 10% now. So after a drop in price by 15%, I I think the market has doesn't derive real comfort from the promoters not from the market or talking about a preferential route or I mean, they are very happy with the reduced stake. And number three, hand sanitizers, I think, is a extremely crowded market. My personal view, I may be totally wrong. I think neither to me nor David would think that this is a great area to be there in this crowded market when everybody is there and your realization this is I mean, I don't know. There is sugar miller there. A 150 rupees is the max realization that is going to be there. And I looking at the bottles that I could find from the net, I think this is not being manufactured by us. You're doing a contract manufacture somewhere else, and the preference these days is for sanitizers with a pump and rather than a pour down sanitizer and the pump because of China, it's a you're not you're not having it. So it's a very surprising foray in my view, you can throw some light on that. And I would like to get a categorical yes or no whether this has got to do anything in terms of getting ethanol from Bajaj Hindustan Limited? You. Rajan, thanks. And I think the first two, which was your commentary on dividend and your feedback to the promoter And secondly, whether buyback, etcetera, is being done or there's going to be a professional potential allotment. I think the promoter can answer. I'll pass your feedback on to him definitely. And Sorry. I'm to interrupt. My my request was only because he's not there in the call. I have a request. I will pass it on, but I can't answer on his behalf, unfortunately. But I don't want an answer. I just wanted to pass it on. So that's what I think I I and Jadip can answer on the hand sanitizer. And I think there are two or three misconceptions that you have in mind. And I think let me try and clarify that. One is that, yes, it was a very temporary upswing initially that you probably saw. But believe you me, it's there, and it will continue in the future. And the reason is simple that I think finally, the Indian consumer will spend more at least thought and maybe even money on hygiene. And therefore, in hygiene, things like hand sanitizers and other hygiene products that we are looking at will definitely be a a consideration in the future. The second thing, what you probably saw was made by a 3P, but the major part and as today as we speak, as much as 75% of the production is made by our own factory based out of Ponta South. Actually, we have converted our Ponta South hair oil manufacturing plant into a hand sanitizer plant, and that's the commitment we have behind this product and other products that we are launching and we will launch in the future. The third thing that you said, the pump, I think you probably wouldn't have seen it, but you will see it in the market very, very soon. And we realize and we have been in touch with the market and we realize that pumps is something that people want. But unfortunately, like you rightly said, most of the pumps used to come from China and therefore sourcing took some time, But we have done that, and we have now enough of the packaging material to be able to supply to the market. The last thing, I think, which you saw that, is it connected to ethanol coming from Bajaj in the sun? I would say, yes, it is. And that's a strength and not a weakness because when all of this started exploding and people started seeking alcohol, the biggest source of alcohol was actually sugar, and we have that within the group. And we are paying whatever we pay to anyone else, but the advantage is that the supply is assured. And therefore, we don't need to go running around to various other manufacturers to get supply of this, which is a big advantage. And the quality that we get from Hindustan is really good. And therefore, I think I, at least internally, my team views it as a positive rather than any kind of negative attached to it. I'm very happy if it has the approval of Sumit and you and Jaydeeb. But my view is I'll be happy to be approved wrong. This is going to be just a rounding of error in terms of our total size even three years down the line. We'll revisit it after three years. Yes, we will. You very much, sir. Thank you, Raj. Thank you. The next question is from the line of Ayas Motivola from Nevelis Partners. Please go ahead. Yes. Hi. Thank you for the opportunity. So I have two questions. One was, I think, Jadid mentioned about the the change in the entire sort of marketing elements, including how consumer viewing habits have changed in the, in the short term, on on the media front or the buying habits or the preference for purchase in the lockdown period. So, you know, do you think this is a a sort of dramatic change in sort of marketing one zero one or things get back to normal as such? And the second question, maybe you can take that first, is on the wholesale side of the business. Sumit, you mentioned about it. And we read also that the channel is quite broken. There's a challenge on funding, and this is from the demon times. This has been structurally getting damaged. So as a company, you mentioned 20 the number has come down for you from a high late thirties number. Do you see this channel being of less and less importance to you as you go forward, please? I asked I think I see it three see your your questions being three in number. One is advertising. I think changes do happen, and viewing happen viewing patterns keep on changing. But the big one that has happened is in TV shift from the normal GEC of things like stars and colors, Sony to DD. Suddenly, many, many years, and I would say more than decade, DD has suddenly become big, and now they're asking for top dollars per ten second spend. So that is something that is there. When I said that we are not willing to comment on what the future might hold, one of the reasons were that these kind of indicators, these kind of parameters were changing so fast that it is very difficult to predict where it's going to go in the future. And it was not that I was trying to stall somebody's question. It was basically that, frankly, it's very, very difficult to predict what will happen. And if you had asked me on February 25 that would you pay 65,000 rupees for a ten second on DD, I would say, are you mad? I I don't advertise on DDA. Now today, you are paying that, and I'm paying that. It's not that so and tomorrow, you might suddenly find that TV viewership drops and things like the OTT channels of Netflix, Hotstar, all that takes over. So how do you predict that kind of a thing? And how as a responsible manager can I even lead you off the garden path here? That's the whole point I was trying to make here. The second question was wholesale. I think I gave a large commentary on wholesale. It's yes. It got hit in Devon. It got hit again in GST. It's got badly hit now. And today, it's not to do with funds. It's largely due to wholesale outlets not being allowed to open because if you have seen a wholesale outlet, you'll find it's in one small crowded area. The outlets are small. You normally have ten, fifteen people crowding at the counter. All of these things has come to a close. They can't crowd that outlet. And then until they get turnover, the margins are so low that they can't run their businesses, and that's why they've got hit today. So what we are trying to do is we are trying to speed up our direct distribution in outlets, which either to buying from wholesale, whether it be the big wholesales in the large cities or the feeder wholesale in the semi urban areas. Both we are trying to track and we are trying to sort of go to areas that used to come to wholesale to buy stock. And this will be a key going forward. And maybe the total distribution of our brands may remain stagnant, but our direct distribution will go up. Right. All right. These are helpful points, sir. If there's anything, I'll I'll reach out separately. Thank you very much. Thank you. The next question is from the line of Taha Merchant, an individual investor. Please go ahead. Yeah. Hi. Good afternoon. So I think it was the q two conference call that mister Bajaj alluded to the fact that one of the other reasons why that we should look to a lower dividend payout ratio compared to the past is the fact that we're building a large corporate office, not just for in Worley, not just for the large consumer, but also other promoter offices and other promoter group companies. So my question is that considering the fact that now that we so significantly slashed the dividend this time because of the extraordinary situation that we're in, are are we also looking at a long term kind of strategic rethink on that large corporate office and the investments that it would entail? So at this point of time, because of the situation, we have stopped work on the corporate office. And therefore, what it will cost, then we will do it is something that probably in the next few months, we'll be able to talk about. And at this point of time, it doesn't make sense in spending more money there. Yes. At this point of time, doesn't. But just in terms of like a strategic on a strategic level, in terms of the utility of an office, considering what we're seeing right now, on that level, are we are we have we had any discussion? About it, but I don't think we have reached a decision at this point of time. Okay. Okay. Okay. The second question is that I think we're paying about 17.5 percent, MEP, effective tax rate currently. So over the next few years, what are our tax rates likely to be going forward? If you look at our production, you realize that the only area that is under the tax break or income tax break is Guwahati now. And therefore, we have been looking very closely, and our finance department keeps on updating those figures. We are trying to increase our production in the Guwahati area so that we have more MAT credit to extend this. So at least in the year or two following now, you will remain under MAT, And we are trying to see how how much we can extend that to. Hello? Hello, Taha. Are you there? I think he's logged out. There is no response from the current participant, I have muted the line. The next question is from the line of Rahul Shah from Zero Cabbage. Please go ahead. Oh, hi, sir. I have a question regarding the product design. So recently, I bought the Bajaj Almendrops bottle, and the hole from which the oil comes is really very small. You literally have to shake the bottle so much so that the oil comes in our hand. So can you please expand on the design aspect? Because, like, our goal should be that the consumer uses more of our products and not less of our products. And secondly, in in the previous calls, you had alluded that you will be looking for acquisitions if you get a good company at a good price. Sir, our company is trading at a single digit fee, so why don't you just do buybacks? It is equivalent to buying a good company at a good price. Okay. I'll answer the first one because that's a topic I like discussing, which is why do you have a drop out there when you should you could possibly use that old thing of the toothpaste nozzle becoming larger and people consuming faster. See, the simple thing is this, that the product is a light hair oil, which means that it is a non sticky hair oil, Right? Nonsticky depends on the composition of the hair oil and also the amount you use. So even if you were to use eight ml of Bajaj almond drops and apply it on your head, you will say sticky. So commensurate with the benefit that we are trying to give, we refrain from increasing the hole on the top of the bottle because more use of hair oil will make it more sticky, and then there will be a dissonance between what we are offering and what the product is. Apart from the fact that we use less oil in our composition, and therefore, it is less sticky. But even a less sticky kind of a thing, if I use a large amount and if I pour it into my hand and typical Indians, you will not waste whatever comes in your hand. You'll lose all of it. And if you use all of it, you'll have a dissonance between the product benefit that you're offering and the response that is. So I think this is a very conscious thing, and we are not being greedy in trying to get consumers to use more hair oil per application because it would destroy our overall brand equity, right? Second thing about buyback and all that, yes, this is something that we have been thinking for the last many years. And I think only time will tell when this will happen. But I think Mr. Badaj also said that he is not comfortable with the 39% he has, and he will use the laws available to increase his stake in this company because he would like to come back to at least 51% as fast as possible. So how you do it is something that needs to be worked out. Okay. Okay. Okay. So please think about the buyback because it is literally trading at a single digit PE. Thank you. As there are no further questions, I would now like to hand the conference over to the management for closing comments. Thanks a lot. And I think in my ten years after listening, this has been the longest conference call that we are at. But I think I take it as a parting gift to you, your interest in my company, and I would like to sincerely thank all of you from the bottom of my heart. I won't be there on the conference call from next time, but I'm sure you have my number if you need any help in any kind of way. I'm there. Jadip is definitely there, and Kushal as the Investor Relations side will always help you keep in touch with the company. Thanks a lot. Take care.

• Quarterly report
• Slides