Q3 18/19

Jan 10, 2019

Good morning, ladies and gentlemen. Welcome to the Bajaj Consumer Care Q3 FY 'nineteen Earnings Conference Call hosted by Kodak Securities Limited. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to mister Jayakumar Doshi from Kotak Securities Limited. Thank you, and over to you, sir. Thank you, Luzanne. Good morning, everyone. On behalf of Kotak Institutional Equity, I welcome you all to Badaj Consumer Care's through 3Q FY 'nineteen earnings call. We have with us senior management of the company represented by Mr. Sumit Malhotra, Managing Director Mr. Sandeep Parma, President, Sales and Marketing Mr. Dilip Malu, Chief Financial Officer and Mr. Kushal Maheshwari, Head Treasury. I would now like to hand over the call to Mr. Mahotra for opening remarks. Thank you thank you, and over to you, sir. Good morning, and welcome to the conference call for declaration of the quarter three results for the financial year 'eighteen-'nineteen of Gujarat Consumer Care Limited. I think the good news is that the name of the company has changed from the Raj Corp to the Raj Consumer Care with effect from first January two thousand nineteen. The change in name has been put into effect to represent what we do and what we aspire to do in the future. We believe that the new name will be more in line with the nature of our business and also takes into cognition, one of our core values of becoming more consumer centric as FMCG companies should likely do. In the board meeting held yesterday, the board has recommended a dividend of rupees 14 per share. This dividend is the highest ever given by the company since its inception as a listed entity in 02/2008. The company has closed the quarter with a turnover of crore. The growth in turnover vis a vis the last financial year last the third quarter in the last financial year is 12.5%. The volume growth during this quarter has been 7% with our flagship brand, Bazaar Diamond Box, showing a robust 9.4% volume growth. Our company with the volume and value growth, the EBITDA to sales ratio is a healthy 32.6. The EBITDA for the quarter is crores, which is a growth of 17% over the EBITDA of quarter two of the same this financial year. The growth in EBITDA on a year to year basis is 13.3%, excluding the GST refund of INR 5.2 crores, which pertain to the second quarter of Life's financial year, but was accounted for in the third quarter of last financial year. The PAT and PAVT for the quarter is 60.09 crores and INR 76.6 respectively. The third quarter has seen the hair oil volume growth remain healthy. The mat volume growth of peak volume growth for the category was at 7%, which was driven by Lite and Amla hair oils. Our brand has been driving the growth of both LHO for Lite hair oil and the total hair oil category volume growth, and it's at two x of the total hair oil volume growth. Though we don't have the December 19 deals in data as yet, the good news is that the global growth for almond hair oil as well as the light hair oil continues to be good. The effect is seen on the volume of wholesale upticks during November and December. This quarter saw all the sales verticals exhibiting a positive growth. The fastest growing vertical was canteen stores with a 35% value growth during the quarter. However, I I would caution not to read too much into this because this is after six quarters of negative growth and the outlook doesn't yet seem to be very positive. Modern trade continues its impressive growth trajectory with the growth during the quarter of 28%. The work being done in international business has started showing results with a 12% year on year growth in this quarter. The new pack of almond hair oil, which has been well accepted in the market, the volume growth during October and November of this year has shown a 21.3% growth on a Y o Y basis. Our focus on the rupee 10 pack has helped us gain room to market share, and this SKU now forms 5.6% of the total amount franchise. In addition to this, the rural growth coming back has helped our rupee 1 sachet growth to pick up. With the picking up of rural volumes, the wholesale volume growth will continue to grow in the fourth quarter as well. Along with our market share, the efforts to increase our distribution has resulted in an all time high distribution of Bazaar diamond drops. The brand is now available in 40 lakh outlets all over India. The direct distribution currently at 4.92 is expected to move up to 5.4 lakh outlets within this financial year. Our strategy of focusing on Loma cream across Chemex channel continues to work. For the nine months in this financial year, the Nomac franchise has shown a 11% growth with the creams now forming around 82% of the total value sales of Nomac. The effect of the falling crude prices has yet not been reflected in our margins. During the past period, the LLP prices were rising. We are protected by the low priced stock that we are holding. This can this stock will continue to last till 2019. Post which, you will see the increase in gross margins because of the fall in LLP prices. We are currently consuming light liquid paraffin at INR 74 a kg, though the price at its peak was INR 82 a kg. We have now started contracting LLP at a much lower rate. The positives that we have witnessed during this quarter are growth in volume of takes of Aman, which is 2x the growth of the total exhibited in the total hair oil segment, growth in volumes of the light hair oil and improvement in total volume growth, improvement in market share of almond within the total hair oil market, the market share in the total market rises by 50 basis points if you compare MAP '18 November 2018 versus MAP November 2017. Healthy EBITDA of 32% despite strain of RMPM prices during the third quarter. Distribution is hitting an all time high of R40 lakh outlets. Good growth of no marks post launch. MAP market share is hitting 8.6%, which is 100 basis points higher than the same period last year. Conversion of sachet users to 2P10 bottles during short term results. With crude prices dropping, LLP prices have started from softening, and this should improve gross margins post '19. We are now open to questions. Thank you. Ladies and gentlemen, we will now begin the question and answer session. Participants are requested to use handset The The first question is from the line of Abhish Roy from EagleWise. Please go ahead. Sir, congrats on Defence Show. My first question is on the direct coverage. For past three quarters, your number has been fairly stagnant at 4.8, 4.9, 4.92. Now in three months, you want to increase it significantly. What is the reason for such a sharp increase? And why is it possible to do that in three months? See, it is possible. It's not that it's not possible. You should realize that the source of the data is through our SSA. It is a Salesforce automation, and we actually keep updating it on a regular basis. So update updation would normally happen during the period Jan said, and therefore, you should be able to hit 5.4 lakh ounces. And, sir, on the volume growth data, you mentioned 9% in the almond and 7% overall. So could you take us through how the 9% falls to 7%? So essentially, the other parts of the business, how the growth is? See, if you look at the other marginal brands, since we have not been really concentrating, they have not been growing. So that's not a big thing. The two brands that we are focusing on, both have been growing during this quarter. Sir, coming to the name change, what is the full reason for that? Why I'm asking this is when I see your EBITDA margin, that's one of the highest in the consumer pack. So when you want to be more consumer focused, does it also mean longer term, you'd look at a lower EBITDA margin than the 3032%? Because very few companies make this kind of margin in the consumption space. Amish, I don't think both points are related. So I'll answer it in two parts. One, consumer care, we made because we all felt within our management team that the name Bajaj's Corp really didn't signify the business we were in. The more important question was that within the organization, we're trying to be much more consumer focused than trade focused. With that, the crop seems to be a trading post rather than a marketing company. And therefore, with the changes that you will see as we go forward, this was one step we thought that was crucial to sort of reignite the internal passion of becoming more consumer focused, right? The second part was the EBITDA margin. Yes, I've always gone on record and said that 32% is a fairly high EBITDA margin, and it is bound to drop with new launches and acquisitions. Whether it will happen in this quarter or the next one or two years, I'm not sure, but the fact is that 32 is a very high EBITDA margin. The next question on Nomarc, sir. When I see your rural market share, India or UP, that hasn't moved much while your urban market share has. So is that part of the strategy that you want to do rural later or rural, there's a stress and that's why that's not happening? Good question. Abhishek, if you remember the last conference call, we have said that we are now looking at look, pushing into the rural areas. Now normally, this doesn't happen overnight, and it's a strategy that takes at least three, four quarters to sort of turn into sort of numbers and market shares. The reason why we are focused only on urban and still largely on urban was that the market was higher and we had enough problems to solve in terms of getting into the right kind of outlets. And therefore, we said rather than spread it all over India, we took one state and rather than spread it across the state, we looked at urban. But going forward, we have stated on record last conference call that we are looking at a strategy to push the rural volumes and market share. Sir, last question on the pet format. Your launch is 10 rupee pack, 40% growth quarter on quarter. So, of course, any new launch in the first three months, there is a very good sale. My question is we are hearing a fair bit of rural distress that's impacting, of course, other forms of non FMCG consumption quite quite on the higher side. So in this, my question is to essentially this 40%, is it largely because of the new launch? And so does it come down significantly in terms of growth in the coming quarters? Second, on the rural distress, what would be your comment on this pack? And then overall portfolio, what is the comment? Abhish, just to put it on record, our 10 rupee pack is not a new pack. It's been in the market since 02/2003. The only focus the only problem was focus. We really didn't focus on it. And in terms of even distribution, it is increasing, but not dramatically. It's not, like launching a new product and suddenly you build up a pipeline and therefore you grow. So I'm quite hopeful that this 10 rupee pack, given our strategy of trying to upgrade from rupee one sachet to a bottle will work. That's our strategy for rupee 10 bottles. Your second question was on Gluerlifter. Gluerlifter. I think our feedback is that after November, there has been some change in that. And the reason we are not in agreement to this district is that the wholesale volumes have started going up again. And you would realize that the first indicator of any, increase in rural uptake is wholesale because wholesale caters to the largest part of, the rural area. Very simply, the near 650,000 villages, there's no way any company can look at it in terms of direct distribution, and therefore, indirect through wholesale is a very important indicator for rural off dates. Okay, sir. That's all from my side. Thanks a lot. Thank you. Thank you. The next question is from the line of Sameer Gupta from India Infoline. Please go ahead. Hi, sir. This is Percy here. First, just wanted to check on some numbers if my understanding is correct. So ADHO volume growth is 9.4% and overall is 7%. So does it mean that the rest of the portfolio has seen a material decline? See, firstly, other other three, you're right, but the other things are the Hebron portfolio that we have apart from common drops, which is a decline. Nomad has not seen a decline. Okay. I see. I see. And, sir, over the last one, one point five years, whatever new products that you have launched, could you sort of give a summary of how those launches have been, whether which ones have been satisfactory, above expectation, below expectation, etcetera? Hi. So hi, Patti. This is Alipay. Let me answer that question. So over the last four quarters, we've had two relaunches three relaunches, actually, and one launch one new product launch. First relaunch was the Ramya Amla relaunch, which we did in September. Brahmi Amla relaunch is is doing well in the urban and empty markets. Unfortunately, Brahmi Amla has a 35% contribution from CSB, which has basically taken the overall volumes on Brahmi Amla down. Other than that, it's growing in in voluntary, it's growing in general trade ex of the CLD. We are also focusing now with Ramy Anvil on the e commerce channel a lot, and it's doing quite well over there. Our next new product launch was the Vidazh cocoa jasmine product, which we launched in Maharashtra, where which we are which we are doing more as a pilot to understand and to iterate on it, you know, to help us understand what works, what doesn't work. There, last three months back, we had started doing a pressure test in certain specific districts of of Maharashtra itself, again, to just understand what works and what doesn't. So, again, in those pressure test, district has done well. We are still looking at how do we take this pressure test into the other districts of Maharashtra now and get the same kind of growth in the other districts of Maharashtra. Once we are done with that, then we plan to expand the cocoa diaspora into some of the other states as well. Then our third relaunch was Nomax, and you are aware of the Nomax relaunch. We are gaining market share quarter on quarter. We are at our highest ever All India share. We are at the highest ever urban share, highest ever share in UP, etcetera. That's done very well for us. Then we launched Amundroth itself in September, and you are aware of the Amundroth performance. I mean, sir, I just spoke to you about it. So, yes, I think we've had a few hits and misses. I think the last relaunches have done very well. Dami Amla has not gone as per, what we were expecting, but largely because of the CSD factor. So we are hoping that once CSD stabilizes or once the contribution from CSD goes down, we will start seeing some growth over there as well. And by that, Kupul Jasmin, like I explained, is more of a pilot where we are still trying to figure out what works and what doesn't work. Okay. So, Sandeep, when do you see the overall hair oil volume growth exceeding the ADHO volume growth? That's a tough one, firstly, because that's a tough one. Then you have 92% of your sales coming from one. You can imagine just by pure mathematics, how much the other brands will need to grow to grow over the other revenue. And just to give you a perspective, firstly, if I take away CLV from the Gambia Abla growth, then our other Aeron growth are actually higher than the ADHO growth, just to give you a perspective. Okay. Okay. Understood. So it's mainly the CSD which is pressuring. So second question is the volume growth that we've seen in ADHO this quarter at 9.4. We need to look at it in perspective of the last quarter performance also, right? Because last quarter, you had said ahead of the relaunch, there is some amount of pipeline drying, etcetera. So I mean, can you just help me understand this number in context of pipeline adjustment, etcetera? How does it look? I mean, how is the underlying growth happening there? I would like to sort of turn that question around and try and explain to you how it looks in terms of the offtake. Yes. Because a pipeline filling or depleting is a short term measure. Consumption is a long term measure. And when I said that almond drops is growing at two x in terms of volumes of the total air oil, you can see how well it is it is doing again. The sort of strain that happened over the last two years is clearly abating now. So here's the 8.4% offtake growth for the hair oil category. Almond drops has actually grown at 18%. So it's actually more than 2x of the overall market growth, again, as compared to previous quarters. The previous quarter also, we had a fairly decent volume growth of about 7% in offtake. But this quarter, our offtake growth is double of that, more than double of that, 7% versus 18%. So I think you're right. So like Sumit is saying, pipeline filling is a onetime phenomenon, we did suffer because of that in the previous quarter. But offtake give us the confidence that all of that is behind us now. So when you say offtake, these are Nielsen numbers. Right? Yes. Yes. Yes. Nielsen numbers. And these are YTD in November because we still don't have December numbers with us. Understood. Understood. So, sir, since your offtake growth is continuously, at least for the last couple of quarters, coming higher than your primary sales growth, does it mean that the trade pipeline is shrinking materially? And how long do you expect that process to continue? Again, firstly, we have had this discussion many times, and I've always maintained that since Nielsen is a sampling exercise, so there's always an error plus minus. Right? And therefore, if you look at Nielsen figures on a shorter period, which is a quarter or a six months, you will always have these things. But if you look at it on a Mac basis or a annual basis, these kind of numbers are much more easier to digest in the sense of comparing it to volumes. Also, the issue that we always have, we look at the company volumes. It also includes things like the international business. This is not a part of Nissan retail service. Right. Right. So, sir, what's the last twelve months average offtake growth? It's similar. Exactly the same as not just last twelve months. Even the last nine months, average offtake growth is just 2% higher than our primary value growth on EDHO of domestic of domestic. So what what is the number, sir? See, our YTD on technology. And GT, which one? The business total. You want? Okay. Yeah. So all just to give you a perspective. Yeah. So our let me a volume. We haven't so basically, our domestic if I look at domestic volume growth, x of the TSB, it's seven and a half percent, 7.1%, 10.1%. And our average offtake volume growth, it was about nine and a half percent. So there is not that much of a difference between the two. And, actually, value is even similar. Value growth is even even even closer than that. Of course, one one one benefit that we should get hopefully in our, offtake growth is now with the increased MRT that should start getting reflected in the value numbers, which obviously start getting reflected a little faster in your primary sales value numbers per se. Right. Right. Right. So when you said ITD, you're saying Jan to November. Right? No. Q one q one to q three. Okay. April to November. Okay. Okay. Okay. That's all from me, sir. Thanks, and all the best. Thanks. Thank you. The next question is from the line of Prakash Kapadia from Anipaid Portfolio Managers Private Limited. Please go ahead. Prakash Kapadia, your line is in the talk mode. Please go ahead. Yeah. Thanks for the opportunity. I had two questions, Subit. If I take a slightly mid to long term view, given that our market share in the category almond hair oil is at an all time high and the initiatives which you are talking about of scaling some smaller brands and new launches, these will have some time to shake the needle because the contribution of Almond Hale is large to our overall sales growth. So how do we achieve 1415% kind of steady sales growth in the mid to long term? I'm not looking at one quarter to quarter. Over a period of time, how do we achieve that? That is the first question. And secondly, given that we have declared an interim dividend, can you highlight some of the issues which you would have faced while scouting for an acquisition? Is it valuation? Is it size? Or, you know, some of the other challenges in our, you know, key focus areas of hair and skin care? Okay. Two very deep questions. Let me answer the first one, which is the source of growth. What you're basically asking is how are you going to get growth? Again, this is something I've gone on record and said that we still believe there's a lot of meat left in almond oil. Right? Because one way of looking at this at our market share within the light air oil. But that's not how a consumer or how the market should actually look. We should look at the market share within the total air oil. So that's your playground. So you can't say I will only play in the behind the stumps area. I'll I'll play the whole ticket game itself there. So keeping that in mind, our market share, even in value terms within the total payroll is under 10%. And therefore, we need to grow that. How do you grow that with the marketing cost that we have been at for the last three years, and we will continue to focus? Our new ad is actually aimed at gaining market share in total air oil and not in light air oil, right? So that is one big source of growth. And if we can keep pushing at that and if volume doing at the 15 odd percent, you'll probably be able to use this as a major source of growth. Source of. Right. The second is the new brand launches and extensions that could come up in the future, and that's why we went on record and said that we're actively looking at new launches. Yes, it could be a bit of degraded, but I think the good news is that we are already fairly high on EBITDA. And therefore, worse from worse, think we can we have a play out there. The third, obviously, is acquisition because this is an effective use of our treasury because treasury, like I keep telling you, gives you some 8% returns and business gives you 32% returns. Right. Absolutely. This is the three main sources of growth. Now you can also look within India where am I going to get growth outside India where I'm but that's, I think, a long discussion, which if required, we can have offline. Sure. We'll take it offline. Right? The second part was Sorry. Challenges in terms of the acquisition of any use while counting? If you know, and I think it's hidden in your question itself, valuation is still very, very high and expectation, especially after the recent two big acquisitions that have happened in India, are still obnoxiously high. And therefore, we are not desperate because this kind of valuation can sort of push back the payback period to unacceptable limit. So we are looking at smaller brands, regional brands that we can actually use. And to top up our strategy of growing in international businesses, we are also looking at smaller brands outside India. Understood. That is helpful. Thank you. All the best. Thanks. Thank you. The next question is from the line of Kosto Pawaskar from BNP Paribas. Please go ahead. Yes. Hi, sir. This is Kosto here from Shere Khan BNP Paribas. So my question is on the input cost. You mentioned that the LLP prices have seen a declining trend with the fall in the crude prices. So I just wanted to understand the benefit of same would start flowing in from Q4? Or you will start seeing it from quarter one of FY 2019, considering that you will be having some inventory left of the, you know, high cost raw material? Like I said, the cost of we have stopped till Feb. So you probably see the new priced stock being consumed in Feb and March of this quarter. And therefore, hopefully, when we report quarter four, you'll see the consumption coming down. Okay. And so what is the price increase you have taken, you know, in almond drop? We have taken a 3.5% price increase in August, which actually came into the market in September. Okay. And the 10 rupee pack, how much it contributes? It contributes about 5.6% of your revenues. Yes. Sorry. Almond drop volumes? Yes. Okay. And how was it maybe a year back or since you had 4.8. 80 basis points has gone up, and it's gone up only in the last two months. So you can expect see what effect Focus makes. Right, sir. Right. Right. Right. I think your Focus turned up well or or it was at the right time maybe maybe. As time will tell, but, yes, that's all about strategy. When you have senior people looking at marketing, these are the calls that normally come positively. Okay. Thank you. Thanks. Thank you. The next question is from the line of Janal Chait from MultiAct. Please go ahead. Good morning, Sumeetji and Sandeep. Just to take a perceived question that what you mentioned, Sandeep, that the growth in the offtake in the last nine months until November and the gap between offtake and retail, the 9.5%, 7%, so that was a smaller gap. But what correct me if I'm wrong, that the gap right now is far larger, right? Yes, yes. So that has to shrink over time? Jimal, again, shrink, it might shrink, but actually, over the longer period, it's already shrunk. Yes. That's the point I was trying to make. And when VNF also, I told you that, look, Nielsen is a number that should not be taken to 100% correctness, and therefore trending should be what you guys should actually look at. And the reason we put it in investor presentation is that you can actually see what's happening in the overall aero industry and not look at numbers and try to, sort of build a model on my next two quarters profit or turnover growth. Okay. Other thing that reason why there was a big difference, let's say, in the previous quarter between our volume our primary volume growth and a primary sales value and the Nielsen offtake value was also because of the ADHO relaunch. So obviously, the optics will continue to happen because the stock is still there on the shelves. While at this site, we had cut we had shut down the pipeline of old stock. So our primary sales suffered and a hence, the primary sales volume and value suffered, but the optics continued to grow at a good pace. So I think there is that bit also which accounted for this gap that you are seeing. But like Sumit is saying, over the next you add one more quarter, we are hoping that even this 2% gap between current primary sale volume growth and offtake volume growth will come down to maybe next to nothing. On a YT basis. On a YT basis. Okay. I got that. Okay, I got it. And my last question is, in terms of the export outlook, do we still maintain the momentum that and the tone as what discussed last quarter or any change there? No, no change there. We are seeing a little more light at the end of the tunnel. I won't say we have come out of the tunnel, but I think we are seeing more light at the end of the tunnel. Okay. Thanks. Thank you. Thank you. The next question is from the line of Abnish Roy from Edelweiss. Please go ahead. Abnish, your line is unmuted. Please go ahead. As there's no response from the current participant, we'll move on to the next. That is from the line of Amit Sena from Macquarie Group. Please go ahead. Yeah. Hi, sir. Thanks for the opportunity. Sir, firstly, the question is again on rupees 10 pack. And do you think that this will continue to remain the key growth driver at least in the near term? See, will it or will it not is a question I can't answer at this moment. But it's a very important part of our strategy, and therefore, we will continue to push it with all our might. So I'll just I'll just add that, basically, the a rural penetration is actually much lower than an urban penetration. Okay? For a and most, you know, most of the time, this is what happens for premium brand. And then both the 1 rupee pasche and that 10 rupee pasche are absolutely critical for us to enhance our overall rural penetration. So, yes, at least we are looking at it as a strong driver of our penetration growth in rural in the future as well. Sure. Okay. Follow-up on on the same is that while your strategy is to upgrade from 1 rupee sachet, there might be a risk of of of, you know, some down trade from from higher SKUs. And in the same light, do you think that if that happens, there is a risk of margin getting eroded? Because I mean, I'll throw some more light on 10 rupees back whether the margin is similar to the higher SKUs or there'll be some kind of lower margin for this pack? Yes. So you're right. You're absolutely right. There is obviously that risk of downgrading from the 50 ml to the 10 rupee pack. But we we do believe that see, when this 10 rupee pack was not there, the gap between a 1 rupee sachet and our next SQ was 32 times, 32 x, basically. So it was just too high a gap for, most of the rural consumers to bridge. And hence, we were never able to get them to upgrade to a higher SQ. And when the consumer continues to buy a smaller SQ of your of your product, there is a much higher likelihood of her switching over to some other brand. And hence, this 10 rupee pack is important for us from that perspective of ensuring that we have a greater amount of consumer loyalty. But your both your points are absolutely correct. There is definitely a risk of of downgrading. The way we have tried to underplay or or avoid this risk is by selling the 10 rupee in slightly different channels. So we haven't gone, for example, into urban with the 10 rupee pack. It's largely rural and semi urban pack. Okay? So if you go to any urban market in India, you will not not even find it there in in the shop shelf. So we've restricted it to certain channels and certain geographies, with the absolute objective of ensuring that there is no clash between the, 50 ml pack and this pack. And, yes, to answer your last question, yes, the margin on this as the margin on Sachin also is a little lower than the margin on the bottles. Very clear, sir. For for the it was a very detailed answer. My second question is is on the CSD channel. And despite this quarter numbers being good, you have highlighted that there is some risk still some risk still remaining in the overall, you know, per CSD channel sales. So just wanted some perspective on the same. Why I said there's a risk? Because the whole strategy of CSD is not really clear. It changes from month to month or as you know, there's no chairman of CST as of now. The new chairman is coming on a temporary basis, and there's a lot of confusion in terms of what route do they want to take. Do they want to take, by providing the ones larger variety or steady supply of a limited variety of stock. And till that happens, these numbers keep on fluctuating up and down. They've got the numbers for the orders for the current month, and it's exactly the same as the average of what we used to do two quarters ago. So I'm, yes, not very confident because I I really can't understand what is their sort of future outlook in terms of supplying stocks to the Johans. Okay. So lastly, on your new product launches, and if I go one year back, I think the both on the commentary side as well as on the on the action front, I think there was a significant action from from the overall company and, you know, some of the new products were doing significantly well quarter over quarter. And I'm I'm including even Bajaj. I saw Brahmi Amla as also as a new launch because I think it was on the Ayurvedic side. But after the Coco Jasmine launch, we have seen some some amount of, you know, kind of slack in and if I can use that word from from your side. And you have highlighted that, you know, some of the relaunches took your bandwidth. Now with most of the major products in the key segments done with the relaunches, can we expect the new launches momentum to continue from going forward? See, Amit, this is a very analytical way of looking at it, which I don't doubt. But in a marketing terms, relaunch is actually a launch itself because you're looking at the change of packaging, communication, move to market, and all that. So saying that relaunch is easier than a launch, I'm not agreeing with you. But going forward, since our two largest brands already have been launched or three largest brands have been launched, it's logically connect that the new the new products that will come out in the market will not be relaunches or the stages, if you can call. Okay, sir. Thanks a lot. Thank you. Thank you. The next question is from the line of Ashi Anand from Alagro Capital Advisors Private Limited. Please go ahead. Yes. Thanks for the opportunity. I have two questions, both of them financial. At the first level, promoter pledging has actually been increasing quite steadily on a quarter to quarter basis. I just wanted to understand, one, the background behind the pledge and what really is the outlook in terms of this unwinding going forward? Yes. You're right. The pledge has been increasing, but I think as the managing director of Rajatkopf, I can't obviously comment on this because this is something the biggest stakeholder in this company is doing for this managing its personal financing. But the reason for increase in price is actually not because more sales are being placed. It's basically because the stock price is coming down, and therefore, proportionately, the number of sales will go up. That's it. So it is not incremental financing. It's really just, sir, he needs to give additional security to to maintain that particular cover? Yes. And is there any outlook in terms of his desiring to actually unwind the pledge, or that this is also not something you can comment on? Again, I'm not mister. But having having heard your question, I think it was logically that any promoter will unwind the pledge as and when his investments start giving returns. Sure. Perfect. Second question is we do have reasonable cash balances. You mentioned that acquisitions are reasonably expensive and not really easy to get through. Given the fact that the share prices has actually fallen quite significantly, we're one of the cheapest FMCG companies in the market, are we considering a buyback because it could be very value accretive for all shareholders? Yes and no. There are obviously lot of debate that I've had with other investors on buyback. We have considered not now. We are considering for the last three years. But at this moment, we believe that giving dividends is a better return to shareholders than buying it now. But obviously, this is something that's insubated. Okay. Great. Thanks also for the answers. Thank you. The next question is from the line of Ravi Shrivastava from Bay Capital. Please go ahead. Hi, Sandeep. Congratulations for a great set of numbers. Couple of questions. One, how much is the distribution of Nomax right now? Have we sort of become All India present or we are still in selected geographies? Yes. There are two parts. One is distribution, which is numeric. The second is where we are now in terms of dedicated. You realize that we started with the UP. We have now moved into three states, around four or five large cities because if you look at the current market of anti mask, it's largely in the large cities. We have been trying to change the thing and start going into rural, but that's a future project and not something that will yield results today. So in terms of numeric, we would be at around 2.1 lakh outlets all over India. Also, that's quite less compared to where the charge and The what I'll agree is only INR $3.50 crores as against INR 11,000 crores of error. Right. Second question was on whole disclosure standards in a way. So in the last few quarters, we've been what we have observed is that you used to give far more clarity over different oil categories that you have, oil brands that you have and their volume growth, their value growth as well as the breakup of cost of goods and everything. That has, over a period of time, started to reduce. Why is that, Vitius? The case is very simple. When you keep doing the same thing over and over, it loses its significance. The moment I will not give it, it's not that we are hiding it. If you want, we can give it to you. There's no issue out there. We do maintain it internally. But I think the significance itself got lost, and therefore, we gave if you know last time, we did not give volume. This time, I've given you total volumes. Probably next time, you'll give it get it brand wise. But this is something we, alone, used to do. I haven't seen it with any other company, but we get it so that, as an investor, you know what's happening in the business much more than, other in what's happening in other companies. So the reason, Sumit, I'm saying is that because over a period of time, while optically pledge may not be increasing, optically, it looks like pledge is increasing. And at the same point of time, if the disclosures are coming down, it puts a negative impression on the investors as to what's happening. But again, I'll go back to my question, how does pledge affect me? How does relate it? Can you explain? I failed to understand because this is a decision I cannot take. Pleasing or unpleasing of shares is not in my control because the money is not mine. Right? What is mine is my company and the disclosures we make from my company. So I take the call on the disclosures I make for Bajat Corp. Is it is it effective whether the the promoter has pledged or not pledged? And these two things are really not related in my opinion. Just just just just to directly add a point. The thing is that the the person who's pledging the shares is the chairman of the of the company. Right? Yes. So so in that sense, it is important if the disclosure standards are maintained at the same level as they were What disclosure are you talking about? What disclosure do you want? I think in the last, forty eight minutes, we answered pretty much every question that you where people had about volumes for ADHO, for Nomarx, for Brahmi Avla, for Cocojaspan. Is there any other brand you have in mind that you want to ask us the volume shop? Tell me a brand that you have in mind. I'm not saying anything specific. I'm just commenting on that. You are you are saying something specific about disclosure. So if you have any concern, you please raise it directly, and we'll we'll answer it directly. So let me to to confirm the argument shop, let me assure you that from Bajat's corp, there's there's no question that we will not answer. Right? So if you have something that you believe, disclosures we have not made, we can answer it off-site. Or if you want, I will put it in the next investor presentation. Right? But having said that, pledging, I cannot answer that question. And therefore, I'm trying to sort of request you not to link these two things, which is not correct. No. I'm not trying to link anything. I'm sorry. It it meant that way. I just meant that the disclosures were the previous view for us, but whatever we were tracking was sort of not available. That's the only comment. There's nothing else to it. What what more do you want? We'll put it in the next. Yeah. Sure. Yeah. Nothing. Go ahead. If you want to please send me a mail, I will answer that mail and give you that. What what is it? Also, you can tell us which other FMCG company you want us to follow the standards of, which does any more disclosures than us. We will do that. We will follow them. Sure. Got it. See, frankly, over the time that we have IPO ed, one thing that I predict very, very aggressively is disclosure. There is nothing that I hide from you guys. Right? And I'm going on record on a conference call and saying that. If anybody believes that we are hiding something, please do get in touch with me directly and not to anybody else. And I assure you that this is something that I personally protect very, very aggressively. So if there is something you'd like us to add, we will add it. Right? Like last time, people said you're not giving volume while you're trying to hide. So instead, we gave you volume. Now you want to know exactly each brand. I don't know why you want to know each brand. But if you want, we can add that also. Got it. Thanks. Thank you. The next question is from the line of Amanbatra from Goldman Sachs Asset Management. Please go ahead. Hi, Sumit. Hi, Sandeep. Hi. Thanks thanks for your time. Just a couple of questions. One on Nomar, you said it's now in four states. So just trying to understand what's the salience of UP roughly the Nomax business? Sorry. Say, come again, Amand, and then get your question. So you said Nomax has now expanded to four states. Just trying to understand what's the salience of UP currently in the business? So UP is about 38%. I think 38% was the category. For us, it's about 40% now. Okay. So similar to for the category. Right. Similar. So it used to be about 25% for us when we started UP project one and a half years ago. But it's now come to the same sales as the category. Sure. The the second question is on the international business. So are we looking at stable growth from international business? And any specific geographies you want to highlight are the focus areas for you? Yes. We are so absolutely, we are looking at so I think our report is just about done now, at least in terms of people and in terms of structures structures and in, you know, in terms of just putting people and structures in place. We are still going we we still haven't completed our systems reboot, let's say. So a complete automation of IV system is what we are into next, which is going to take a little bit of time, maybe one one or two quarters more. But going forward from this quarter itself, we are expecting more consistent growth to come in from the international, business front assets. In terms of key markets, we are basically focusing on five markets outside India. We are focusing on Nepal and Bangladesh for within the SAR countries. And then in Middle East, we are focusing on KSA, Saudi Arabia and UAE, four. And we're looking at one market in Southeast Asia. So we have a good presence in Malaysia, but we're looking expanding into one bigger market in Southeast Asia, Maikha, Indonesia. So these would be the five pillars of our international business strategy going forward. Sure. Sure. And then just lastly, some bookkeeping numbers. One on employee cost, how much is the ESOP cost factored in? And second, on the GST refunds, are we getting cash refunds now, or or is it building up in the balance sheet? Good question. The ESOP is around 1.6 crores that has been factored in, and this is not being paid because, like I said in my opening, all the question is basically going to be first vesting will happen in August 2019. In terms of refund, we haven't got refund for quarter four of last financial year and all of this financial year. The total of about $25.25 dollars. Okay. Okay. Fine. Fantastic. Thanks a lot. Thanks, Anubhav. Thank you. The next question is from the line of Kyaar Sentel from Correct Wealth Management Private Limited. Please go ahead. Sir, thank you for the opportunity. I just want to know, out of this 24 crores employee expenses, is this 1.6 crores accounted, sir, the use of numbers? Yes, sir. As per accounting, you have to add everything. Even gratuity that you may need to give has to be accounted. Bill, that and, again, even if I adjust that 1.6 crores, I am seeing a increase of close to some 60%. Is that the this will be the increase going forward, sir? Increase? So this should be the steady state going forward except for first quarter of next financial year where the increments would hit. Okay. Is it because of we are adding employees or or across the regions or, you know, due to international expansions? No. No. No. No. No. No. International. International is not the the big part of it. It's basically we are adding layers to most of our support functions also. Also, this is not a major increase in salespeople. Yeah. Okay. Okay. Fine, sir. Thank you very much. Thank you. The next question is from the line of Abnish Roy from Edelweiss. Please go ahead. A few follow on questions. First is ecommerce, FDR retail has been some change, and FMCG has is seeing very strong growth. Because of the discount and cashback being made much lower, do you see a big impact on FMCG growth for you and the sector? Not for us, for sure. In fact, it is good for us because we we, anyways, are a premium brand, and we don't like selling it at discount on any chance. In fact, ecommerce was becoming a bit of a challenge for us just on this account, and that is why we had we were limiting the platforms, that we were going on ecommerce. So, actually, if the discounting comes down, it will be good for us because that will, help us in terms of competing with some of the other, mid price and discount players on ecommerce. And second one was also on regulation on the tariff order in terms of the new media rules. How does it impact your media planning next few months? Because viewership ratings for TV channels will become extremely volatile. So will you go as per the historical, or will you take the new research findings? How do you deal with it? So, Abhish, currently, we are going as per the historical data only because we have to do it do it at a at a comparative level. Many things are still not clear, but when we go for our media planning for the so right now, my assumption is that we probably still have to go with the historical stuff for a for a while more till the air is a little bit clearer. But we will wait for the for the final for the dust to settle down on this one when we go on for a media planning in in February for the balance part of the year for for for the next financial year. And last question, Induleka in its ad claims more hair, no loss of hair. So my question is more from a a claim perspective. You are a prominent hair oil company. Are you also working on something similar longer term? Because this is a big risk. Right? Yes. Price points are very different, but, ultimately, hair is also very important. So Obviously, I mean, sir, we can't tell you what we are working on. But to answer your question, the reason we why we started the innovation center was this. Because we are launching or we are looking at products without really testing the claims. And when you don't test claims and you start making claims like, darker air, less dandruff, less white air or less air fall without claim substantiation, you open yourself to such competitors who come in with the experts and can say that we are more certain of an outlook than you are. Having said that, yes, there are a lot of opportunities we are looking at because hair and problems with the hair are growing. And therefore, if we can get a a good product which satisfies the need of the consumer, we could form a niche of ourselves. Okay. Okay, sir. That's all from my side. Thank you. Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to the management for their closing comments. Thank you for logging in, and thanks for always being here for us and asking questions that not only sort of clears your doubts, but also helps us look at possibilities in the future. Before I end, just one thing, we had a discussion on governance and transparency. Let me assure each one of you that we are perhaps the most transparent company in the FMCG space. And if you believe we are not, please reach out to me directly, not through anyone else, and I'll, try and, take care of that part of your doubts that are there. Thank you. Ladies and gentlemen, on behalf of Kotak Securities, that concludes today's conference. Thank you for joining us, and you may now disconnect your lines. Thank you. Thank you.