Q1 19/20

Jul 16, 2019

Good morning, ladies and gentlemen. Welcome to the Bajaj Consumer Care Q1 FY 'twenty Earnings Conference Call hosted by ICICI Securities. As a reminder, all participant lines will be in a listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to mister Vismeya Grawal from ICFI Securities. Thank you. And over to you, sir. Thank you, Rizan. Good morning, everyone. It is a pleasure to welcome you all on behalf of SSA Securities for a q one FY twenty Bajaj consumer care earnings conference call. We have with us today from the management side, mister Sumit Malhotra, managing director Mr. D. K. Malu, CFO and Mr. Kushal Maheshwari, Head Treasury and IR. I now hand the call over to the management for the opening remarks. Thank you, and good morning to all, and welcome to the conference call for declaration of the Q1 results for the financial year 'nineteen-'twenty for Bajat Consumer Care Limited. With me are Mr. Dilip Kumar Malu, the CFO and Vice President Finance and Krishal Maheshwari, who's the Head Treasury and in charge of Investor Relations. The company has closed the quarter with an operating income of INR $2.40 crores. The growth in operating income vis a vis the first quarter of last financial year is 8.5%. The volume growth for the company during this quarter has been 4.7. Accompanied by the volume and value growth, the EBITDA to sales ratio is a healthy 50.9%. EBITDA for this quarter is 32 crores, which is a growth of 2% vis a vis EBITDA of quarter one plus financial year. The PAT and PBT for the quarter are 68.7 crores and INR 74.8 crores, respectively. Both of these indices have shown a 9.1% growth on a year to year basis. This quarter has seen the Airline volume uptake growth slowdown vis a vis last quarter. First quarter volume uptake growth of this category is at 4.4% on a Y o Y basis, which is largely driven by growth in the low priced arm lock category. This is in comparison to the 8.7% Y on Y volume growth that the hair oil category exhibited in the last financial year. The slowdown in hair oils is led by moderation in rural growth. The volume growth in the rural areas is now at 4.8%. The growth in the urban area has remained more or less constant at 4.1. The work undertaken in streamlining the international business vertical has shown improvement over the last couple of quarters. All geographies are now showing strong growth and second wave of this condition have grown by over 60%. Among the sales vertical, the biggest disappointment continues to be the canteen stores department, and this quarter has not seen any billing to canteen stores. The primary reason for this is lack of orders following the name change that was applied for the canteen stores. We hope that the procedural issues will be solved in July itself. The growth in turnover for the company, if we exclude Canteen stores, is over 10%. Modern trade continues to beat the growth with a 21% growth in turnover in this quarter. Our first extension of Bajad Almond Block, that is cool Almond Block, has been well received by the market. In the first two months of the season, it has locked locked the market share of 31.3% in the cooling oil market. The advertising for the product using Tarwinder Zazija as a brand ambassador has been noticed, and we expect a larger share in the mini summer as well as the next summer season. Our second launch, Bazaar's No Mask Sun has done well in modern trade and e commerce segments. The product has been liked. And with special promotions in these segments, we are seeing updates in excess of our expectations. Our association with Bain has now entered the execution phase and the triple point strategy of focusing on relevant communication, assortment and effective reach is now being implemented in the test date. The execution has started from the July 1 after two months of data analysis and one month of branding on ground activities. We anticipate positive results of this brand focused strategy to come in by August 2019. Success in our efforts to build efforts of building brand equity in this state will give us confidence to use a similar strategy in other states also. Despite fluctuations in crude oil prices, the prices of LLP that was consumed in quarter one has not seen any major change on a Y on Y basis. The prices of other r and p and have also not risen during the quarter. As a result of this, the COGS have shown a decline of 112 basis points, thereby increasing the gross margin. The reduction in EBITDA is large of 186 basis points is only due to increase in ASP of two thirty basis points. As announced in the Analyst Meet on the May 6, our attempts at cost optimization have been actioned. The various areas that have been shortlisted for immediate action of production, supply chain, IT and manpower optimization. You will see more visible results in our in in the quarter '2 of this financial review. We are now open for questions. Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you wish to unmute yourself in the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Please go ahead. Sir, thanks for the opportunity. My first question is on the CST. You mentioned in July, the recovery is likely with some procedural issue getting resolved. So it has already been resolved. So my question is in the last three, four years, CST has been a recurring theme either due to one issue or the other. So do you see this as the final resolution or this channel can continue to see disruptions? Yeah. I think what is different, Amish, between the last two or three years and this quarter is that this quarter is largely due to a proceed procedural issue. Basically, we changed our name from the Rajasv Corp to the Rajasv consumer care. And, typically, CSD requires you to read the system. That is the name change. And that has taken a lot of time because the chairman of CST is not in office, and therefore, it just keeps tagging along. For the last two or three years, the the split is largely because of the way CST wants to do business. And as you would have heard and I've mentioned in my previous calls, they are trying trying to tighten this whole route to market for their demands so that leakages and other forms of corruption really goes down. And therefore, what has happened over the last two or three years and this quarter are very unlikely each other. Sir, this quarter, your volume growth, 4.6% was broadly in line with the growth, which I think most FMCG companies are seeing. So my question is, how is the competitive intensity in terms of promotions? I've seen DARPA offer 50% extra. So did that have any impact? And did you also have any counter to that kind of offer? See, all of these are largely contained in the modern trade or what, like, we call alternate trade channels in which deep discounting and all that happens. Normally, in general trade, which are the mom and pop stores, you don't see some kind of deep discounting. And if anything, the consumer offers that that was very, very prevalent three, four years ago has actually come down. So you really see things like fruit free or extra grammars and all that in many brands in the GT. In modern trade, yes, you have one plus, one three, you have extra volume, you have add on, all these things are there. But in terms of general trade, I don't think the competitive intensity has for now. And but the five in modern trade is well and truly on. Sir, why I asked this? Because the ad was there in the mass media. So you are saying the product was available only in the modern trade, essentially. You're talking of dabar almond. Right? Yes. Yes. Dabar almond. Yes. 50% extra. Yeah. That is largely in modern trade because the distribution in DTE is fairly low, and the market share in DTE is one just around 1.2%. It it it's doing much better than modern trade. And the final question, you have tried the cool product earlier also. So this time, of course, the branding, etcetera, is different versus earlier. So would you say that this time, finally, it seems that the positivity can continue in terms of scale up? I think it's too early to make that comment, but we are quite confident that thanks to it's coming under the Bajaj almond broth umbrella, you should see a better performance to this extent. Okay, Sadhguru. That's all from my side. Thank you. You. The next question is from the line of Sameer Gupta from India Infoline. Please go ahead. Hi, sir. This is Persi here. So my question is on the other expenses line, which even excluding advertisement has grown at about 25%. So just wanted to understand reasons for the same, sir. Actually, other expenses largely includes the overheads and all the costs in terms of supporting your sales. For example, all the consultant costs, all the rent that we pay, the new factory in Guwahati, the rent is added on and so on and so forth. So you probably it's a mixture of everything, but these are largely sales and admin overheads that we see on. So, sir, how long do you think it continues at this growth level of 25% before it annualizes and sort of comes back in line with sales growth? See, like I said in my opening address, we are looking at cost optimization. There are certain parts of it, things like rent or legal expenses and all that, which will continue because it's not a one off. It's a continuing thing, but there are a lot of expenses we will be containing. And therefore, I think it will fall in the coming quarters that we go along. Okay, sir. Okay. And this cooling oil, sir, can you give us some idea in terms of how do you plan to take this forward? I mean, right now, I think it's in certain geographies. Right? Yes. But by the end of this season, that is, as we are speaking, the season is about to end. We'll be there in the whole Hindi speaking area. Of course, South, we are not yet touching, but it's largely in the Hindi speaking area. And the first response has been good in terms of distribution and even off takes. There is 1.3% market share within three months of launch, which is quite good. As I was saying in the opening address that the ad has been really appreciated. And therefore, we should see further traction in the mini summer that comes in the central part of India in October and also the final the next summer season, which will start from March 2020. Right, sir. And I joined a little late, so I'm sorry if this was dealt with earlier. But could you give us some idea about how you're progressing on your plan, which you spoke about in the annual conference? You basically said that you wanted to become a a general player in the entire hair oil space and not look at only cooling oils. So if you can give some more idea as to what are the sort of steps you are taking towards achieving that goal, what are the subcategories you had already entered cooling oil? Is there something else on the annual that you plan to enter? I didn't talk about this in my opening. Guess, so you didn't miss miss much. But the plan was basically building the hero portfolio that we had. And keeping that in mind, we had sort of worked with Bain. And after two months of data analysis and one month of planning ongoing activity, we are actually launched the plan in the test date. The plan includes three parts. One is effective communication. That means that how do you communicate the benefits that are required in the head oil space. Second is assortment, which answers your question that what are the sizes and what are the products you would like to push. So that analysis has been done. New products have not yet been launched, but they will be launched as we go along. And further to look at increasing your reach. And despite we being the most distributed air oil in the country today, you still can increase the reach, and that has been shown in the data analysis that we have done for that particular state. And we are moving actively towards increasing our reach in that state even further. So on this reach point, you are approximately about half a million direct, outlet. Right? What is your goal on a one year, two year, three year kind of horizon? Yeah. I think direct reach is not the goal. The two overall reach is the goal because you should realize the delta that will happen in terms of reach will largely come from the rural areas. And there, indirect plays as big a role as direct does. So direct actually is more to do with the better kind of outlets, which are largely in the larger cities and the semi urban areas, whereas the increase in reach will largely be from the rural areas. So, yes, we are looking at the our overall reach going up substantially. It's already at around 40.1 lakh, but I think you should be seeing a much bigger increase as the whole plan evolves. Okay. Got it, sir. Thanks, and all the best. Thank you. The next question is from the line of Prakash Kapadia from Aniwate PMS. Please go ahead. Yes. Thanks for taking my question. I had two questions, Sumit. One is your employee costs are down on a year on year and sequential basis. You did mention about, you know, rationalization. So if you could give some more light and, you know, is it fair to say going forward, the employee cost growth will be lower than sales growth? And secondly, on the variable pay comp implementation, if you can throw some light, that'll be helpful. First, on the employee cost, you have just seen the start of the reduction in employee cost. To give you numbers, we have approximately five seventy odd employees on our goals. We are aiming to rationalize these, and we are looking at a reduction of around 100 of them all over the country, partially due to outsourcing and also due to rationalization of the number of people in the support functions, right? In terms of variable cost, this was something we started around five years ago, in which we have been consciously taking this variable pay concept down to the lower level. We started only for Mancom around five years ago. Three years, we had variable pay only for the Mancom. Last year, we got more managers in, and all the managers were covered. This year, we have moved to the lower level of the the sales officer of the of the of the the charter. The whole idea behind this is participation in growth and profitability. So the way we look at variable pay is we have a percentage for individual performance and a percentage for the company performance. And company performance is measured by the turnover growth and the profitability growth. So ultimately, down to a sales officer level, there is a percentage that he gets for the overall growth of the company, both in terms of turnover and profitability. Okay. So going forward, it is fair to assume employee cost will be lower than sales. Correct? In the immediate terms, you should possibly see a further reduction in employee cost to sales. And as we go over a larger period, it should be lower than the. And do some of these, you know, expenses on the outsourcing be part of other expenditure? That is why that is It's a part of what we call legal expenses. Understood. Thank you. All the best. Thank you. The next question is from the line of Pradeesh Chera from Lucky Investment. Please go ahead. Yes, sir. I just wanted to draw your attention on slide 17, you know, where we have given the category trend. So first question is, you know, what explains the deceleration in the offtake growth rate in your opinion? And the second question is, until last year, we had this strong offtake growth and we were expecting a supportery primary growth to eventually flow in. So from that angle, are there any changes in thought process in your observations would be really helpful? Just one thing is, which I've been repeating on and on, please don't compare the quarter or the month growth versus the year because there are certain parameters because these, like I keep telling you, are from Nielsen. And Nielsen, in a smaller area over a smaller period, can go wrong. And therefore, don't waste towards understanding of what's happening on air oil just by comparing the first quarter of this year versus annual growth over the last few years. That's point number one. Point number two, what is happening in this quarter basically is that, again, the low cost products are doing better than the premium products. This was what was observed around a year ago. The last two or three quarters have been good for the value added perfumed oils, which are largely more expensive than the coconut oil. So what we have seen now is the lower priced products doing better, And this normally does happen when there's a strain on the rural areas because then conversion from unbranded oil largely moves into low cost products and not the more premium products that you see. So one thing that you can take is this is just a trend. I don't think you should base too much on just comparing comparing the quarter to a year. Second thing is this does show a little down trading into the low priced products, be it the low cost tamla or the coconut. Third, it also shows the strain on the larger part of the consumption that happens in the rural areas. And your thoughts that eventually the primary growth rate will pick up considering we had a fairly strong secondary market offtake that we saw all throughout last year. In the long run, trend will be equal to secondary, will be equal to off take. Right? Because you can't build up stock over a long period unless there's a data error because there are three different sources of information. One is our sales to distributors, second is distributor to the retail, and third is retail to the consumer. So there are different there are three different sources of data. And therefore, if anyone is off, and the first one that could be off is the Nielsen Optic data because this is sample based data analysis and not the physical movement of stocks. Okay. And just one more question on the margin side. Until we had this whole new product launches that are stated. So if I recall in the analyst meeting, we were of the opinion that it will not impact the margins. So just looking at the elevated slightly elevated cost that we are seeing in the quarter one, is that an indication for throughout the year or there would be some one off or bunch offs in this cost and which would subside eventually? So your thoughts on the two cost lines? I think if you look at cost, the margins have actually expanded and the gross margins. What has gone up is the expenses and expenses that are really gone up are the other expenses like we discussed, which would include rent, legal expenses, etcetera, etcetera. What has gone down and also advertising. What has gone down is the employee cost. So I don't think margins have gone down. It's actually gone up. Sir, the EBITDA, it is down, so which is a function of, you know, other expense line and the advertisement line. Yes. That's largely, and that's both for brand building and also support that is required in the overall overhead space. So you is it safe to assume that remain at these elevated to slightly higher levels than what we were is something that we will have to control as we go along to match competition. Other expenses would go down as a percentage of sales as we go along. Okay. Okay. Thank you, sir. The next question is from the line of Dagash Shah from CDE Research. Please go ahead. Good morning, sir. My first question is that what is the business growth in EDHO? The business you talk about value growth, turnover growth? Sir, volume. Volume growth is around 5.2%. Alright, sir. And sir, could you give us the revenue mix for rural and urban for ADHU? The revenue is still around 41% rural and 59 urban. Alright. And, sir, what is the growth in rural and urban, sir, if you could give us that? I'll give that in my opening address for these are uptake growth, which are 4.1% in urban and 4.8% in rural for ADHO. Alright, sir. And so just wanted to understand what is the price differential of ADHO with, let's say, Patanjali and Babar for similar volumes? I didn't understand price system for similar volumes. Oh, you mean Yes. Price SKU. Right? But is not a major. To give you an idea, our 100 ml is now priced at 65 rupees, and Ravaramla is now priced at 45 rupees. Okay, sir. So that's all from my side. Thank you so much. Thank you. The next question is from the line of Shalini Gupta from Quantum Securities. Please go ahead. Yeah. Good morning, sir. I just wanted a small clarification. So, basically, this is on slide number five. You said strong strong penetration increase in ADHO. I mean, there's a 22% increase in households. So, I mean, what exactly is happening? You hope you could just please explain this. You want to know what does penetration mean? Or No. I mean, where where are we getting a 22% increase in households? Because I think it was more and more people are using your product. Yeah. So, I mean, we are reaching out to that many more people in the in the rural areas? Not necessarily rural. It could be urban also. This is overall increase in penetration of Buddha Raman Doors. So, essentially, there's there's been a substantial increase in in in the distribution? No. This is consumption. This is buying by consumers from the retail outlets. It's got nothing to do with distribution. Penetration is not distribution. Penetration is number of households that have the Raja Raman Trust. To give you a marketing one zero one lesson, you have what you sell to the distributor, which we call primary, then what you sell from the distributors to the retailers, which is secondary, what you sell from the retailers to the consumer, which is basically off take, and what the consumer consumes with this consumption of penetration. Basically, how many households you're getting into. No. Sir, actually, my question was that suddenly, how is it do how is it increasing so much? It's not sudden. So if you take five years ago, we were just at around nine odd percent penetration. Right? The the consumers do not suddenly start buying your product. They buy over a long period. So over one year, the penetration has gone up by 3.2%. This is not very, very high, but it's not low also. It's a very good performance of the product. Now remember, this distinction between penetration and the volume you sell is the consumption per household. Right? So the mathematics works in consumption per household into number of households, which will give you the number of the amount of total consumption by people in India. And, sir, like, I just wanted to understand your thoughts on this. See, your the cool oil is is right now is very new, but and it's a it's a smaller As in it's a it's like a thousand crore market with very strongly entrenched entrenched players, especially in the Hindi belt. So I I I just want to ask, and you, yourself, has all have also launched in the Hindi belt. So, I mean, over over, say, like, the next three years, what kind of market share do you see for yourself, and and how large do you see this this becoming? Yes. You are right. You have many intense players in cooling oil. So you have in coconut oil, Amla, light air oil, and that's the peculiarity of air oil industry. And the reason you have these strong in trends is that there hasn't been a launch which is which can create differentiation. That is why should I buy you when I'm very happy with my existing plan? And what we're trying to do in cool almond drop is create that differentiation by having a light cooling oil from the staple of the largest hair oil brand in the country today. Okay. And, sir, like, vis a vis vis vis the market leader or vis a vis your closest competitor, where where would you be priced in cooling? We have the same price as a. We are not playing on pricing. Okay. And, sir, one last question. Again, like sunscreens sunscreens, who would be your close competitor, and how's the the market itself doing? Market is doing well. It's growing at 20% plus. Right? But the market hasn't yet been established. We have a lot of players all over the the spectrum, all with sort of fragmented market share. So we have people from we have a brand from Himalay, from Joy, from Lotus. We have a lot of brands in this thing. But since the market has still hasn't stabilized, so you don't have big leaders or laggards in this whole space. This is normally what happens in consumer. So that the market becomes more established, the consumer start displaying their preferences for one or the other products. Okay. Thank you, sir. Thank you. The next question is from the line of Shri Kishore from Cholamandala, MMS. Please go ahead. Hi. Thank you for taking my question. I just want to understand what is the split between wholesale and retail sales in terms of volume as well as value? So wholesale retail only happens in the general trade. And the figures that you have, if you see the presentation, you will see that we are also giving you splits of general and market share. If you take the general trade, currently around 33, 34% both by volume and value are comes from wholesale and the remaining comes from retail. Again, qualification is this is only for GT, and this is largely urban because rural, you have a different split. Okay. Okay. Okay. Fair enough. How is this trend expected to be so planned going forward? We would like to maintain it at this for this coming few quarters at least because the only reason they should go up is when your direct reach or the number of outlets you sort of tackle directly either stagnate or start going down as a percentage of your total reach because the difference between direct and the total reach is what we call indirect, which is the wholesale component of the total. Okay. Okay. Understood. Understood. So one other bookkeeping question. What is the breakup of your upper income? Because there's been a definite spike, right? And I just want to understand. It's all the investments we have in our treasury. We update and invest it in only AAA rated bonds. And therefore, a large part of this is basically all the triple a weighted bonds. There's a very small amount in mutual fund and a slight mutual fund, and it will be more net deals. But did that actually give you a treasury income of 5.97 crores versus Under under the new accounting laws, you're supposed to mention also mark to market gains or losses. Understood. Understood. So these are not realized profits or or whatever. These these include realized profits and also mark to market profits and losses. But I don't know, sir. One last question. I just want to understand how good or how bad is the fragmentation in the hair oil business? I I don't know how to answer that. Diplomatically, I I can tell you there's been work, and there's definitely been better times that we have. But, yeah, it's a qualitative question. I think everybody will answer it in a way we have time. But, yes, it's not the best we have seen. And even if you look at the figures that we have done, we give much more data than anybody else in this industry. And you can see that this is definitely not the best time that we are Fair enough. Thanks a lot for taking my questions. Thank you. Thank you. The next question is from the line of Arshad Mukhadam from Vibrant Securities. Please go ahead. Hi. Good morning. My first question is regarding the impact of the appointment of Bain. What what will be impact on the income statement? At this moment, like I said, implementation has started from the July 4. So impact on appointment of being in the fourth quarter itself. Okay. And do we will we get a figure of, like, how how much it's gonna affect us going forward? We will have a figure, but I doubt that we will share it with investors on our call. Okay. Another thing is, previously, you have given the split of raw material as a percentage of revenue. So is it possible to get access to that split for this quarter? Yes. If you can send a mail to Kushar, we'll send it to you. Yeah. Perfect. We'll do that. You're talking the line wise composition of our costs. Right? Yes. Like, LLP is the mineral oil, the glass bottle as a percentage of revenue. Right. Yeah. You have Kushar's mail ID? Please send it to me. Yes. I'll do that. So my first question is regarding the glass bottles used. So are we seeing so if I look over the last three, four years, the prices of the amount spent on glass bottles has been pretty stable. So could that is that because of the prices of glass being stable? Or could that be because of shifting the plastic bottles in, say, smaller SKUs? We took a price hike of around 6% last year. And the difference that we see is also on the weight of the glass we use. And we have been doing reengineering on our glass bottles that has brought down the price of the or brought down the quantity of glass being used. And therefore, though their price hike is there, you don't see it in the PML. Okay. Got it. And could you give possible guidance on how you see these gross margins going forward? Do we expect it to come back down? Or any comments on that? As you would know and if you've been following us, we don't give guidance. So I don't have any guidance to give you at this point of time. All I can say is that our biggest raw material, which is light circuit pricing, we are covered till October. So the coming quarter, you shouldn't see any decrease in gross margin because of LLP going up. Okay. And my last question is regarding the pledging of shares. So if you I think at the meeting, you said that the pledging of shares is going to come down. And from the March, it has reduced, I think. So can you kindly just figure for the June end? If you're there in the Investor Meet, I did not change it. This was said by the chairman because the pledging of the shares is outside my purview. And therefore, I cannot and will not talk about pledging because I'm not directly responsible or in control of what is being pledged by the promoter. I understand. Thanks so much. Thank you. The next question is from the line of Harit Kapoor from Investec. Please go ahead. Yeah. Just two questions. Firstly, you know, the hair oil growth that you mentioned for the quarter, how do you see that, sir? I mean, you know, has that been slowing as the quarter has gone, you know, gone through or it's been fairly steady at this 4.5% that you spoke of? I just wanted to get an understanding where the market is slowing as the quarters went by. Yes, you're right. April was good, and May and June have been back sequentially. So if you talk about monthly growth, I would say it's if after a good April, this was more or less the same growth as we had in the fourth quarter of last financial, May and June have been going down. Got it. Got it. The second question was on the pricing. So you took a 4% or 3.7% of price increase at the start of the year. You know, given that you're covered for LLP for half the year and, you know, the other cost inflation is not so significant as well as the fact that, you know, market environment is a bit challenging. You you you or do you expect, you know, pricing to be fairly stable now for for FY '20, at least as it stands right now? I I expect so because, ultimately, this depends on the price of food, Right? And the fluctuation in crude is the only driving factor, and I don't see that being too up and down during this year. That's my estimate. But like you know, there are very few analysts, alone professionals, you can actually predict the price of food because but I don't expect it to go up drastically. Got it, sir. That's it for me. Thanks and all the best. Thank you. The next question is from the line of Pija Shah from Spark Capital. Please go ahead. Hi. Thanks for the opportunity. Sir, last time when you when you presented at the analyst meet, you shared a broader outline of the new Bajaj Consumer Care. Now it's been two months. Can you share some more details on the same on two key aspects? First, growth plan for AlmondRock. And in the sense, what are we planning? States we have outlined where we'll be focusing more on? And and the whole NPD outlook, which needs to change under the new plan that we have. Okay. Just in terms of growth plan, currently, what is on ground is the the kind of we look at almond drops and therefore, how do I change the communication, how do I change the pack sizes, and how do I change the distribution setup in almond floss. What will happen as we go along is you will see the second part, which is which I called in my open opening at address. It is assortment that which product do we launch and how do we take it forward, that will happen. That, in my opinion, will take at least six more months, if not more. We do have a NPD pipeline, most of it on hair oils, but I don't think I can share anything at this point of time because we first need to see whether our brand growth strategy that we are using in one state works, and then only can we start trying out different kind of payroll. Sir, just a follow-up on ADH. Are we entering new states or we are digging deeper into existing market as you had highlighted that there are pockets within the existing regions also. Are At this moment, we are trying it out only in one state. And as we go along, you'll see it moving into other state. Sure. Thanks, and all the best, ma'am. Thank you. The next question is from the line of Ekta Mehta from Valium Capital. Please go ahead. Hello. Sir, thank you for the opportunity. Most of my questions have been answered. So I just had one more question that it has been highlighted that there has been the weighted a numeric distribution is is at an all time high. So I just wanted to know whether this distribution is concentrated more in the urban or the rural area. Oh, it's there both ways. And the figures that we have given is the consolidating consolidation, which is urban plus rural. So, yes, sir, typically, numerically higher in the rural areas because we have a widespread and smaller kind of outlet. Whereas, will be higher in urban areas. But this is typical for any product in India. But the figures that you see are a summation of urban plus region. Okay. And, also, like, even going further, our distribution will be more focused for, like, tier two sign out for cities or, like, more for the fully recruited. Whatever the That's all the the depends on the state. There are states in which rural is very, very high. And, therefore, if you were to gain any market share in that state, you'd have to focus on rural. There are other states where you have a higher composition of the urban sales of aero, and there may be urban would be. So it's a mix. You can't have a strategy across India. Like I said, and like we said in the analyst meet, India is a continent, and therefore, you can't have one color paint all in India. And therefore, you'll have to identify areas that behave similarly and try a strategy for that area. For other areas which don't behave similarly, you'll have a different strategy. So saying that the portion distribution will be only rural would be a long thing to say. But, yes, rural is a very important part of the overall growth strategy that we have. Okay. Thank you, sir. And, sir, one more thing. The ad spends have been increasing recently since you have been having new launches. So, like, is the ad spend going to increase over this year as well, or is it going to be on the same level as last year? The ad spend will be high, but you won't see too many new launches in the next one or two quarters. So the ad increase will happen largely on what extra we spend on almond air going there. Okay. Thank you so much. Thank you. The next question is from the line of Janal Seth from Alta Capital. Please go ahead. Good morning, Sridhar. Hope all are well. I just wanted to touch base on just for a on the growth part that you mentioned that May, June saw some slowdown compared to April sequentially. So just wanted to understand that from your experience, do you believe that right now it's a waiting watch to see that whether it's slow down can worsen further? Or it's not as bad? So any thoughts on that? If you look at it after so many years of experience, you realize that bad times and good times come off and on. The the thing is that if you really want to build a strong brand, it is what you do in that time, more of that matters. Right? Because what happens is most companies try and reduce advertising and sales promotion expenditures and therefore open a gate for you. And that's what we did last time this slowdown happened. That's what we are planning to do now that we spend in building brands at this point of time. Like like that, know, neither good time nor bad time last, and we strongly believe on that. And I think it will return. It's only when will it turn is the question that we'll have to wait and watch and see. Okay. Secondly, on our relationship with Bain, I mean, how is it that that is moving forward where we are constantly tracking the, you know, how the process moving forward with them, how developments are happening. Any any insights on that? How are we kind of keeping track of that and whether things are moving in the right direction? See, I think you should understand Dane is not a consultant alone. They're actually a partner in progress. And therefore, there there there's a whole group of Dane employees and partners who sit in our office and work with all our reps on daily basis. In fact, once the implementation has started, there's another group sitting in that test date office and monitoring progress on a daily basis. Right? So it's not that at the end of the month, they come and present and go away. So you do have a steering committee meeting for every fifteen days, but you have literally a meeting every day that it they're here in the office. So we have a whole area for them, they're free to speak to any of the departmental heads or the various group members of finance, supply chain, marketing, sales, obviously, and any company and any company employed they just should speak to. So is there incentivization is there an incentivization structure that if we met certain milestones, then yet it's how do you accomplish that? Is that something Not yet. Because Is it a This was an experiment that we have tried. But as the partnership becomes larger and larger, there will obviously be a partner in in progress concept that will be built up. Okay. Got it. Okay. Got it. And lastly, since you mentioned this in the earlier call as well that in such a period that we have we've seen downgrades to the low end AMLA category. But I presume based on when I look at your market share that it's not working us to that extent that we've lost market share. Right? No. Not really. Okay. Okay. Okay. Thanks a lot. Thank you. Thank you. The next question is from the line of Shadish Padresi from Centrum Broking. Please go ahead. Yeah. Good afternoon, and congratulations for the explanation. My I have only two, three questions. One is the CFT business you said under consultation. Can you share what is the CFT contribution last two, three years for the company? It's been coming down over the period. Three years ago, it was five. It dropped to 3.5. Last year, was around 3.5. Currently, this quarter is near. And you are very confident within next one quarter, it will get resolved? Yes. But what happens is it may not cover up for the loss in sales of the quarter one. So if you see on a H1 basis, it will be down. Okay. My second question is on Slide 17. You have given some numbers on AC Nielsen coverage, which is about 4,000,000 outlets in terms of penetration. If I compare your direct distribution between 2,016 and now, it's about three lakh 71,000. However, the if you look at the number, it shows only 2.62 lakh outlets, which has gone up. So is there anything that the Which slide are you talking about? Slide 12. Where you're saying, Nielsen coverage and direct coverage? Yeah. So this is a direct And you're comparing direct to Nielsen? Yeah. Yeah. So what's your question? So my question is that right now we cover almost 13% of the outlets under penetration. And you just mentioned earlier in the call that you want to improve this 4,000,000 to maybe something more. And before that, we also read that wholesale has come down from 60% to 33%. So what are the activities which is driving in on the ground? Increasing the efficiency of our field force and adding to field force. Yeah. But you also mentioned that there is 100 people who need to come down. But I didn't did I say it will be in sales? Okay. I clearly said that in support functions, we are trying to do manpower optimization. And if you read the transcript, you will see that I mentioned it was from support. I think you assumed it would be from sales because, logically, the largest number of people are in sales. Okay. So when you say that this 12%, which is right now the measure, do you think this 12% will move also in tandem with your indirect distribution? It will go up as we go along. And any thoughts on wholesale? Which part of India you are seeing the severe issues of wholesale? Actually, in our biggest areas, which are the North and Indy speaking areas, there are also a lot of largest, biggest wholesale market. So things like Delhi, Punjab, UP, MP. These are the large wholesale mundits for our products because, obviously, your when your market share is very high, wholesale requirements also go up. And I would presume that wholesale would be doesn't I mean, in wholesale, only sachet and maybe 10 rupees to certain extent would have gone up. No way. The largest product selling in wholesale is actually 100 ml. 100 ml? Yeah. Okay. And the largest product for Bajada, I think, But Slash is also contributing? No. Obviously, yes. Every price contributes, but it's the third largest. Okay. Just last one question. On Nomax, we have done the sunscreen. And probably if you could share what is the distribution of sunscreen? It's too early to say, Shashank. Basically, it's a very new launch, it's not a very widely distributed segment also. So I don't think distribution is the key. And like I said in my opening address, the current growth are basically coming from modern trade and e commerce, which don't contribute to distribution assets. I got it. Just last one, if I squeeze in. What is the modern trade contribution in this quarter? Seven and a half percent. Okay. Alright. Thank you, and all the best. Thank you. Thank you. Next question is from the line of Mano Vijay from SL Finance. Please go ahead. Yes, sir. Thank you for your opportunity. I wanna ask you a couple of questions. First of all, so all my questions are from the annual report. In the annual report, you mentioned that you have eight manufacturing plants including third party operations. Now consider the fact that you are doing consolidation all across the company, whether in terms of warehouses, sales, and everybody, does the the work with with Bain also includes consolidation in the manufacturing plant as well? No. Currently, Bain is only working on brand building. So they have a process which is called BBA of being brand architecture. This focus is on building brands. Right? And they're currently not working on networking and way to place your production and so on and so forth. Okay. My second question is you also mentioned in the annual report that you intend to put up a a a greenfield facility in Dodhodara. Yeah. So what would be the CapEx for this plant, and what are the timelines? Since the time of annual report, we are relooking at that. And when I talked about cost optimization, we are relooking at the model that rather than we put up a plant, does a third party outsource to manufacturing process to make more sense? So currently, that project is on the hold, and therefore, a question of how much it will take in terms of CapEx is something that we'll answer along the way. Okay. So my third question is that you have already reduced the number of warehouses that you or the depots that you had from 28 to 20. Now you intend to cut two more in FY 'twenty. So this will, sir, so this will have impact on the balance in terms of reduced fixed assets or in or in the P and L with some reduced rentals? These defaults do not belong to the company, and therefore, the effect on fixed assets will not be there. Right? And therefore because these are not our depots. What it will do is fix expenses of these depots will come down because whether you sell one case or sell 100 cases from a depot, there are certain expenses like rent, manpower, etcetera, which are passed on to you by the third party's. So you see it largely in overhead and not any but to give you a simple answer, you see it in P and L and not not in balance sheet. Perfect. My last question is that you have also mentioned that you started now tracking. I would say, batch tracking has been implemented in ERP for all the production for the product to actually identify slow moving inventory. Yeah. So what kind of, let's say, benefit you intend to see from this step? And what kind of, let's say, timeline you have so that you can see that that, let's say, all the efforts that you made towards this this process are getting some fruits for you? See, this kind of a process is ongoing. It's not a start by and end by process. So the reduction in slow moving or ex expiry goods, etcetera, is something that you keep on tracking. Having said that, we do not have a very high incidence of slow moving and expired goods, but we are still doing this so that we can reduce it even further. Right? In terms of our total thing, our damaged stock, sir, the slow moving and the sort of expired stock is around 0.3% or 0.4%, and you can expect 0.3%, 0.4%. The scope for massive reduction is really not there. Okay. My last question, is it possible to share what kind of a CapEx plan you have, if at all, for FY 'twenty? I just said that CapEx in terms of the factory is not there. Once we get all our approvals, maybe there will be some CapEx for the office building we have in Worley, but I think we are still at least six months away from deciding how much the CapEx will be and how it will be placed over the next one point five, two years. The next question is from the line of Anshat Mukhadam from Vibrant Securities. Please go ahead. Hello, sir. My question was on dividend payout. Is there a policy that we pay a certain percentage, at least the shareholders? We have stated that we would be giving one third of our tax minimum to our shareholders. That's very helpful, sir. Thank you. Thank you. Reminder to the participant, anyone wishing to ask a question, may I please press star in one? The next question is from the line of Shri Kisho from Chola Mandala, Mammoth. Please go ahead. Yeah. Hi. Thanks thanks for taking my question again. I just want to understand what is the latest shareholding pattern? I mean, how much does the promoter hold? 60%. 60. Okay. That hasn't changed since March. No. We haven't sold anything after March. Okay. Okay. Hang on. That's it. Thank you. Thank you. Ladies and gentlemen, that is the last question. I now hand the conference over to the management for their closing comments. Thank you all for logging on to the conference call. And I think in the coming quarters, you'll see a lot of more activity happening in Aero as well. Therefore, there'll be a little more to share with all of you. Thanks for logging in and staying on with our company for so long. It's me. It's afternoon. Thank you. Ladies and gentlemen, on behalf of ICCI Securities Limited, that concludes today's conference. Thank you for joining us, and you may now disconnect your lines. Thank you.