Q2 18/19

Oct 24, 2018

Good day, ladies and gentlemen, and a very warm welcome to the Bajaj Corp. Q2 FY 'nineteen Earnings Conference Call hosted by Kotak Securities Limited. I now hand the conference over to Mr. Jayakumar Doshi from Kotak Securities Limited. Thank you, and over to you, sir. Thank you. Good morning, everyone. On behalf of Kotak Institution Securities, I welcome you all to Bajaj Corp's 2Q FY nineteen earnings call. We have with our senior management of the company represented by mister Sumit Malhotra, managing director mister Sandeep Verma, president, sales and marketing Mr. Dilip Malu, Chief Financial Officer and Mr. Kushar Maheshwari, Head Treasury. I would now like to hand over the call to Mr. Maheshwari for opening remarks. Thank you, over to you, sir. Thank you, Jeff. Good morning to all, and welcome to the conference call of the declaration of the second quarter results for the financial year 'eighteen-'nineteen. With me is Sandeep, Warmark's president, sales and marketing Dilip Malu, CFO and Kushal, Head Treshi, who also handles the Investor Relations. The company has closed the quarter with a total operating income of INR 212.7 crores. The growth in turnover vis a vis the second quarter of last financial year is 4.21%. The first half of this financial year has shown a growth of 8.1%. After adjusting the negative impact of GST, the growth for H1 is 9.9%. The EBITDA for the first quarter is INR 61.9 crore, which is a growth of 6.9% over the EBITDA of quarter two of last financial year. The EBITDA to sales ratio, which has always been very healthy for the last quarter, is still at healthy 30%, which is an 84 bps improvement over the last quarter last year, second quarter. The PAT and PBT for the quarter are 51.65 crore and INR 65.83 crore is outstanding. The highlight during this quarter is that the hair oil industry growth continues to improve its growth trajectory. In the second quarter of this financial year, the total hair oil industry has grown by 7.4% in volume terms, whereas in value terms, this growth is at 16.3%. The difference between volume and value growth are largely due to the growth in the coconut air oil MRT. In contrast to the total air oil growth, the volumes of light air oil have grown by 13.6%, with the growth being driven by our deep brand, Raja Raman Drop, which is growing at 17.7% in volume terms. The good news is that the growth in the rural area for ATSO as well as light hair oil is back. The urban growth are also robust in this quarter at 15.5%. I think the improvement in growth in rural areas potent very well for the coming quarter. Within the sales vertical, modern trade continues to grow at an impressive 23%. The international business, which has been a cause of concern over the last three, four quarters, has shown a very good secondary sales growth, and this should see the international business sales turnover coming back into positive within the next quarter. The concern in CFT continues, whereas the decline is at the rate of 45% in this quarter. We do not see a major improvement in this angle because the base itself is dropping quarter after quarter. Improvements in volume growth of lighter oil and even better gains in our lead brand, Vedar Dammondrops, has resulted in an all time high market share of 59.8% in volume terms and 62.2% in terms of battery market share. Acceptance suggests the growth of air oils, especially sweet light air oils, is continuing led by a revival in rural growth. During this quarter, we relaunched the new packs of Bajaj Amandross. This is the first time ever since the launch in 1989, Amandross has had a sales lift. The intention of this improvement in the fan design is that we are looking at better improving the brand image of the cues of lightness, management and strength. The new bottle has gone to the market in September accompanied by high decibel level advertising and visibility plans. There in this re launch, there has been a special focus on the rupee 10 or 20 ml bottles with the express purpose of upgrading sachet users into the bottle format. The difference between the uptake and turnover growth is partly due to the time out of the pipeline prior to the relaunch of the new pack of almond crop. In addition, there has been a shifting in the Diwali season from September to October. So the upstocking that used to happen in September will happen this year in October. Along with our market share gains, our effort of increasing direct distribution has resulted in an all time high distribution of brand, Bozad Ramanjob. The brand is now available in close to 40 lakh outlets, and the direct distribution is currently at 4.99 lakh outlets, which are and our aim is to reach 5.4 lakh outlets within this financial year. The increase in distribution is being led by the doubling of our direct Google reach over the last one year. Coupled with this, our dependence on wholesale has dropped to 53%. And over and above this, September has seen a very weak sentiment in the wholesale segment, which has also affected the volume this quarter. The second highlight that we have is basically the new pack of Vazalis MoMa has, of course, distributed across the country. Post the launch in June, the optics have been very encouraging, and the brand has shown a growth of 32 during the second quarter of this financial year. The sales volumes have shown similar trends, and the domestic sales have grown by 16% in the quarter and 40% in the first half of this financial year. Currently, we have focused on urban centers by creating special task force to come as tenants. During this quarter, we'll be targeting the rural areas of one state to strengthen our strategy of improving the rural market share in the anti mask screen category. In large parts of the country, Nomax is already a clear number two brand, which we will be strengthening over the next few quarters. With the effect of pricing through pricing, all our raw materials and packaging materials have been shipped, and therefore, the margins are under pressure. To absorb the rising prices, we have taken a marked increase of 3.48% within the restage of Baja Raman drops in this quarter. Despite this, the gross margin has gone down by 81 bps. In terms of raw materials, light liquid carotene has gone up 20% Y o Y. Refined mustard oil has gone up by 17%. Glass water has gone up by 5%. Perfumes have gone up by 6%. The full impact of these price hikes as well as MRT increases will be seen in the third quarter. The current price of light liquid carotene is close to 80 per kg, so we are still using stock bought at INR 72 per kg. The positives that have been witnessed during this quarter are growth in volumes of the light aero industry, and this growth is being led by a fewer volumes Second, improvement in the leadership position of our lead brands with our diamond drop, with the improvement in both volume and value market sales. A healthy EBITDA of 13% despite strain on R and P and prices. Marked improvements in distribution led by improvement in direct distribution and deeper penetration into the diesel sector. Good growth of Nomac post launch, both OpEx and sales turnover dropping in such a figure. Focus on getting our dealer strategy right to ensure trajectory of market share gains in the anti mark category continues and our ability to maintain gross margins by increasing MRP and building stock of low, high raw materials. We are now open to questions. Questions. The first question is from the line of Abhish Roy from Edelweiss. Please go ahead. Sir, thanks for the opportunity. My first question is, you mentioned the pipeline got dried up because of the relaunch and also because of Diwali shift, also there was an impact. Sir, any insights what could be the impact of both of those? Normally, it would take a period of a quarter and even if you have fifteen fifteen years of downstocking, we have a fairly significant factor in volume. In terms of Diwali shift, it will be around 4%, 5%, not more than that. And sir, you also mentioned in September, the wholesale suffered because of weak sentiments. Could you elaborate on that part? And will it continue in Q3? See, it's too early to say. As of now, wholesale is down, right? It still continues to be down. But I expect that if the renewal growth continues as the way they are, there is no way but wholesale picking up over the next month or so. And what is the reason for this wholesale sentiments coming a bit poor? It could be many things. It could be basically they want to down stock and convert their tax into Diwali purchases because quite quite a lot of wholesalers shipped from FMCG to the Diwali kind of thing. Second, could be they are seeing something in the rural areas which they are not yet been able to spot. So that was a follow-up. You have a good exposure to the rural economy. So we are hearing the divergent pictures. One is monsoon has been shot in parts of the country. And second, of course, is distresses there in farm, MSP, etcetera, not helping because prices of farm cost anywhere below MSP. So in that context, do you see optimism for FMCG but negative for bigger value items like two wheelers, four wheelers. Is that the view or even FMCG could suffer after that? If this continues on this negativity that we are talking about this year, it will affect FMCG. Now if if you cannot continue to drink, like, durables and vehicles. It will affect us, but it normally takes a little longer for consumers nondurable to get affected or staples to get affected. Only time that I see is the weak wholesale demand in September. Sir, second question was on CST. It was down 37% in first half. While in q two, it was down 4044%. So it seems you have deteriorated. Now for such a long period, obviously, customers would have now shifted to other distribution channels. So modern trade has seen a very good growth, very good arrival. So my question is, has that happened? Shift has happened? And second, modern trade growth, what is the specific reason? Third, ecommerce, is it reported separately? I think is it part of the modern trade or is it reported separately, if you could share that number? One is the CSP. I think they are still not sure of which way to go. They obviously want to reduce the quantity being processed. And you would know that they have a smart card in CHT in which the entitlement of each rank of the army or the military has a particular limit that they're being constraining over the last three years, and that is one possible reason. Yes. A lot of that has shifted to the general trade and modern trade. I think modern trade has got the slightly higher side of the pie in terms of the shift. The first question was ecommerce. It's included in alternate channels. Currently, it's very, very small, but it's being added to modern trade in our reporting structure as of now. Sir, how much is it percentage of sales ecommerce? It will be less than 0.1% currently. But do you see that changing, or is it a portfolio issue? For some of the companies, it is already one and half, 2% for the larger companies. Is that a portfolio issue? Or It it is a portfolio issue, and I think the biggest issue is it's not very attractive for the ecommerce guys also. Because we have a a product with a put down price of 60 odd rupees, the delivery cost itself itself is so high. So currently, there are only a few guys like BigBoss, etcetera, who are really pushing staples. And as we go along, maybe the other guys will catch on. But we already have a subject task force who's approaching ecommerce, and the growth are very interesting. But they're still a very, very small part of our total. And, sir, last question. Ad spends do not seem to be up that much, in spite of relaunch, etcetera, happening. Is it because of Diwali that it has been postponed? It's basically we relaunched late August. So the advertising actually started only in September. So before relaunch, you basically sort of get off the channel so as to conserve a little bit more money for the relaunch. So September has been very high, basically, when the launch happened. But July was a dip in our main brand. Our other brands are continuing to be advertised in the normal sustainment mode. Okay, sir. That's all from my side. Thanks so much. Thank you. The next question is from the line of Prakash Kapadia from Anivet Portfolio Management. Yeah. Thanks for taking my question. I have two questions. You know, on the rural side, you've talked about uneven monsoons, you know, impacting sales. So which part is it you, PPR? And if I were to look at some of the government schemes in terms of the health insurance upcoming elections, so what kind of an offsetting impact that could have in terms of continuity of rural growth? As you know, the base remains favorable. Yes. A very difficult question because one thing you are suggesting is the good monsoon will directly affect payroll growth overnight. That doesn't really happen because the bigger ticket items get up much earlier than the other smaller ticket items like us. But I think it's more the enthusiasm of the environment that gets positive, say, because of monsoons or if some money is flowing in on account of election. On the ground, I think monsoons have shown positive and negative impact across the country. I think the negative impact largely is in the central part rather than all across the country. And in terms of the positive impact of elections, we haven't yet seen much of it at this point, even in the states that are going into elections now. Okay. Okay. On those rounds, I don't see that. And on the distribution side, when does the direct reach start having a more positive impact quality of sales, continuity of sales once we reach, say, 20%, 25%, obviously, we scale the distribution reach and derisk the wholesale contribution over the last few years. So when does that start having a positive impact? I don't think the positive impact of direct distribution helps to you in the range, which means that rather than only selling a few sizes of the Raja Amin broth, the range starts getting sold. And not only does almond drop sell, but the marginal brands get a better feel it because you should understand the the problem or the the fixed side of wholesale dependencies, only one or two of your fast moving SKUs go. And therefore, direct distribution effectively much more strongly when you start launching your innovation products in the market, like we have done for Bharat, Ramyamla, Advisecoil and to some extent in Coconut Glass. Okay. Understood. And lastly, around the sales side, you did mention the channel sales. So when do we see the channel sales translating to company sales in terms of higher growth? As you know, GST is now out of the deal, the taxation and all the channel related issues seem to be settling down. Assuming if you know the channel sales are buoyant in the sector, that should translate to higher sales growth for us? Growth, I think we're talking about growth depends on two or three things. One is the rate, right? And therefore, you do see these ups and downs and difference between sales growth and offtake growth because offtake don't swing overnight. Whereas sales can swing because of things like Vmon, VST, downstocking, upstocking and things like that. But I think on a like to like basis, you should look at a clear to sort of time match when we see it versus offtake. Otherwise, if you do it on a monthly or quarterly basis, I guess you'll never see a one:one correlation. You will be very lucky if you see a one:one correlation, which would mean that last year, the base was stable, and this year also the base is stable, sir. Understood. And lastly, sir, on the inorganic side, you mentioned some bit of this thing we are looking at. So it'll be more on the export side. Anything we are, you know, sensing our valuations or are things okay on the domestic side or in case we look at inorganic, it be more on the international side. Of course, valuations outside India are much more palatable than those inside India. But I think we continue to look at both angles because it's not that we have a huge number of targets available and you are going to pick and choose. You sometimes need to focus your attention on international and our biggest interest, obviously, is in domestic acquisition. Being better than what they were on a relative basis in the domestic market or so? Very difficult to quantify these things. Better means what? Valuations are cleaner. Yes. I think valuations are becoming cleaner even in the domestic market. Understood. All the best. I'll come back here further. Thank you. The next question is from the line of Parsi Pantaki from IAFL. Hi, sir. Good morning. Sir, my question is on the issue of the relaunch and its effect on the pipeline stock, which you mentioned as one of the reasons for why the primary sales growth for this quarter has been a little subdued. So just wanted to understand that a little more. See, your relaunch was in the August. Typically, when you're doing a relaunch, you would have the new product already on the shelf. So the drying up of the pipeline and refilling of the pipeline both should be done by August 10. And even if there is some spillover into September, that is also within the quarter. So why should this be an issue impacting the sales growth, sir? See, I think what you are trying to simplify is that as if we have one distributor all over the country and one depot. So the issue with this is that you have to get a uniform drying out across the country because it's not that I have one point, we can can try out overnight and fill up overnight, sir. So you have sort of potential stock across the country. And when you launch it and you want to start your advertising, you have to be reasonably sure that the old stock is out, at least from the distributor point of view. So what you normally do is you stop building or stop producing the old stock sometime in July, dry out your decors and last part of your distributors within August and start filling it up towards the August or September. Most of the retail happens in September, but it goes back by that time, most of the old stock gets out because it's very detrimental to the new advertising when you start saying, look, you have a new pack. And when a person goes to buy a pack, he still sees the whole pack in the retail or distributor outlet. So since it's not the last product, you normally have a much bigger dip in your stock. It happened in Nomast also. And if you remember last time, the phone call, we said one of the reasons why we didn't see that kind of a big growth was that we dragged it out in April and dragged out no marks in April and May. Understood, sir. Understood. So just taking this a little forward, and I think one of the earlier participants asked about this. You have mentioned in your PPT that off takes at the consumer level are very healthy in high teens or even higher. So what I mean, how do we interpret this number? Does it mean that if, let's say, off takes are 20% now, two or three months later, the primary sales growth will also be at a similar level? Sir, see, again, please remember the off take figure is at comes from Nielsen. This is a sample, sir. It is not a 100% activate number. And therefore, if you look at trends, and that's why we in a main in my con call, I look I keep asking on trends. I think the trends are positive. Both total air oil is being driven by good growth in light air oil. So the light air oil growth, it has dropped to something like 4% odd. Last year, it's not picking up. And the important part is ZULAR is picking up at a decent pace because if this continues, we will see much better growth. Whether it's going to be 10%, 15%, 20%, it's a matter of time, we'll tell you how much these updates will get translated into our growth to our distributors. Understood. And one more question I have, sir, that basically the price increases that you have taken so far, are they sufficient to offset the cost inflation assuming that your input costs continue to remain at the current spot prices? At the current, it it if it's only light specific pricing, which is currently a KT, we are recently covered. But, unfortunately, this is one of the few times that all our r m and PM prices continue to rise. And that, like I said in my opening address, you talk about mustard oil, you talk about glass, you talk about perfumes, you talk about trade. All of them seems to be going up. If it goes up any further, you will have to do a rethink about it. But it's not a it's not in the next one month or so that we'll have to take a leak. We are covered at least at this time. Sure. So my question, sir, was all all these five or six, inputs that you mentioned, supposing if we just take an assumption that all these inputs sort of remain at the current spot prices for the next two or three quarters, then are we protected as far as margins are concerned? You only. What I'm worried about is food continuing to go up, and therefore, light liquid product paraffin moving up from the current 72 that we have bought to pay past 80. Right. Understood, sir. That's it from me, sir. Thanks and all the best. Thank you. The next question is from the line of Rahul Jha from Bay Capital. Please go ahead. Hi. This is Nikunj Broshi from Bay Capital. Just a couple of questions. What is the percentage of revenue from ADHO in this quarter? And what would it go in the corresponding quarter last year? See, the percentage of FPSO hasn't shifted too much. Novax is currently around 3.430.5% to 4% of our total thing. And the total almond drop would be between 92% to 93% of our total. Okay. And we have target of launching one new product every quarter. So have we launched anything new or any new product which is under trial or pilot launch or anything at present? This quarter was the release date of almond drop, Okay. This was a very big initiative we have taken more than a year ago. Because I think you should appreciate that a brand that has been here for so long, if you start playing around with the packaging, you have to do it very constantly and carefully. And I think we focused all our attention on that. And the media campaign that you see now accompanied by the political support advertising, like visibility or on the social side or all activities that we have been doing, it's a very, intricate thing and takes a lot of time. So we did not launch a totally new brand in this quarter, but I think one of biggest effect that you see is the destaging of Pruta Raman process. And for the full year, what will be our ASP target as a percentage of revenue? Again, if you look at our numbers, they would be the reported numbers are between 1315%. But a part of that actually goes into reduction in the sales volume. So the way we look at it, it should be between eighteen percent nineteen percent a and p. Okay. Thank you. Thank you. Is that a part of that goes into reduction of sales number under the new. So thank you. Thank you very much. Thank you. The next question is from the line of Salish Kumar from Suniti Securities. Please go ahead. Yeah. There are couple of questions. I mean, if you could throw some light on these newer products, which are there in the pipeline, which we intend to launch over, say, six to twelve months, that will really be helpful because we really don't have any sense. Unfortunately, these things cannot be disclosed because obviously, you're opening yourself up to competition. But having said that, we are looking at largely the first round of innovations happening in hair and skincare before we go into any other segments. And rather than naming, I would say that these are the two categories that we understand and we are further ahead in terms of closing in on these innovative products. Unfortunately, I will see over over a call or even one to one, I cannot tell you what product we are. And do we still sell Kallax cooling oil? No. We are. It's a heavier deal, sir. Thank you. Thank you. The next question is from the line of Parthi Mundara from CDE Research. Please go ahead. Sir, how is your EDHO volume sharing PAN India? 93% of my download is down on this system. Yeah? Mhmm. In this for the company is the volume is more or less flat, whereas value has grown by around four and a half, 5%. So so which regions are availing for DHL? Yeah. I think, like, you know, our main three regions are North, East, and West. I think the East is doing the best, and I would say a part of North is not doing as well as the rest of the country. And, well, if you could highlight why is it so? Like, why is East West not doing that well? I think it's it's too much of a long discussion because it depends on three things. One is obviously uptake. Optake is not different across these regions. Second could be infrastructure. This should mean our own manpower and distribution. Third could be the rural uplift that we're seeing. I would say that, I think, the biggest impact on downshopping and wholesale has been felt more than the lot rather than across the country. All right, sir. Thank you. Thank you. The next question is from the line of Ankit Baba from Shubham Ventures. Please go ahead. Yeah. Good morning, sir. Good morning. Sir, first question is this time we couldn't find the volume details of your product in your presentation. Any reason for not disclosing? Yes. To there are two parts of it. One, I actually wanted you guys to ask this question because, see, when you start looking at volume, you start looking at one number. And when you have multiple categories, now Nomarc and skincare is much bigger and bigger, looking at one number doesn't really make sense. The second thing is also that in Nomarc itself, we have various strategies. For example, if I tell you volume growth of Nomar is growing at 8%, green growing or growth growing again doesn't make too much of sense. So we actually pulled it out once. We think that at least you start looking at upfront segment in terms of value, which is a equitable number rather than looking at one part of soap and trying to equate it to one part of the cream, which is more than what and and the cost of carton of soap. But, sir, like other companies, you can at least disclose the underlying volume growth of your products. This is not too much of a problem. I'm saying we have grown at 4.2, and we have taken up to 3.48%. So volumes are are are more or less flat. Okay. Okay. And so my second question was that that now, sir, it has been around, what, more than nineteen, twenty quarters that we have been moving around the 200 crore revenue per quarter and a $50.55 crores of profit. And at the same time, our employee cost cost has almost doubled. So with no corresponding increase in revenue. So, sir, we just wanted to understand when did it come out of this range of around this 200 crores revenue. I I guess, I I would have loved if I can answer it. But, yes, what you're doing a lot of things, not only adding employees, but we are adding newer products, our innovation center. We are adding efficiencies in the system. The whole idea is to bump this up to the next level, and that's one important thing we are all focusing on. Whether it will happen now or it will happen a quarter or two down the line, not only depends on us, but also the environment that we are in. Actually, we really we really sir, we really appreciate the efforts you people have been putting since at least one and a half years. But, actually, we are just waiting for that inflection point that, you know, then results would come. So just wanted to help you out here. Time. All I can tell you is half day, so we are still working on it. And it's not only what's happening internally. It's also a lot of external factors that are not in our control at all. Okay. And then lastly, just one question. You did mention that the 18% volume growth is just on a you know, based on some sample analysis. But at least you people would also be talking to your distributors, your retailers, that how the growth has been. You would also be netting something like that. So how is the growth at the secondary or the consumer level from your end? Okay. That's a good question because what we have always focused on is family. Secondary is a much closer thing to consumption. Secondary doesn't drop so much, and secondary is significantly higher than the primary growth that you see in these presentations. Okay. So so should we now assume that it's not if the the January destocking thing is now behind. So suppose assuming that your second Pardon? So that's behind because, see, it it it's also something which is natural. But when you started looking at numbers on a monthly or quarterly basis, you see higher things. Over the years, this over the years, this downstocking will not have any effect because downstocking in August will see a stocking in September, October, November. Sir so that's what, sir. As investors, we do have to take some call on your growth rate. So if assuming that this, know, the secondary market growth which you are expecting, say, high double digit or 20%, then your growth will also be in that range if we long period of time. The disclaimer is never ever look at numbers on a quarterly basis. Please look at a longer period. We have been looking since last three, four years, sir. We definitely are looking on a longer term only. But we just need to understand that if the secondary growth continues at 20%, at what time our growth will also match that? See, you're asking us to do a lot of speculation there. Okay? And since you're asking us to do speculation, I'll tell you the best way to do speculation, which is what Sumeet has spoken about earlier. If you look at the overall market growth in the Heroic segment over the full year, the overall market growth in the last if you take Q1 and Q2 together is about 11 odd percent, 10.5%, around 11 odd percent. And if you look at our H1 value growth, what is our H1 value growth ex for GST? Around 10%, right? Yes. So we are in line with the market growth right now entirely. And that's why the whole point that is being made again and again, which is that look at growth look at whether it is offtake growth or it is secondary growth, you have to look at it over a longer term period or even the primary growth. You have to look at it over a longer term period. In quarter one, we did a relaunch of Nomax, okay? So there was obviously a destocking which was done on Nomac. Now Nomac is only distributed in 2.8 lakh outlets. So it is much easier to get the stock out of 2.8 lakh outlets. AmandRO is actually the most highly distributed airline brand in the country. It is distributed in 40 lakh outlets. So the so we don't just need to clean out the stock from the distributor, and we also need to clean out the stock from the retailer's point. Otherwise, like Sumit was saying earlier, you feel that you go to an outlet and you see the whole bottle over there. Nobody wants to buy the whole bottle so the stock gets stuck. So the cleanup of the stock from the retailer's end is not going to happen as fast as it happened in the case of Funoma. And hence, think somebody else was also making the point earlier that if you're if you did a destocking in orders, then it should come back in September through the upstocking that you do post the launch. So things with such a very distributed brand, But still the secondaries start coming back in the same fashion, which means that the top at the retailers end are also being cleaned up, the primaries also will not get to that level. And that's why we are reiterating again and again that you look at the volume growth over two quarters, over at least two quarters, yes? And I was this long winded answer answers your question. But the point I'm making again and again is that look at trends, like Sumit was saying, and look at the overall numbers. If you see the overall numbers, you won't find too much of a difference between the offtake trends and the primary trends. And primary is always reflect secondaries because they are not stocking in any case. Great. Thank you. Thank you. The next question is from the line of Rahul Ranade from Goldman Sachs. Please go ahead. Yes. Hi, sir. Thanks for the opportunity. Just a quick clarification to begin with. So the price increase you have taken in September is around 3.5%? Yeah. On almond drops. On almond drop. And this is over and above a similar price increase that we took in April. Right? April, what we have done was in two sizes. We have done a size down downgrade from 105 between 253 to 50 ml. And for price increases only into a scale. Okay. So three hundred and five hundred. So it's not 3.5% there. Okay. So effectively, that would have worked out to around 15044% range? One odd percent. Right. Okay. Okay. Okay. And just looking at the off take data, so I'm still, you know, kind of if you could help I understand. So the value offtake is still lesser than the volume offtake if you look at the numbers, wherein we have different price increase. So I just wanted to understand what the disconnect is over there. There's no disconnect there. We are looking at a price increase at our production level, and we are looking at volume and value of offtake level. Right? Please remember between the time we produce and ship to our distributors and the time an offtake to the consumer happens, we have got a long lead time, and that's the pipeline that we keep talking about. Okay. So so how long would that be in duration? Because We currently look at it. Our our distributor stock is just under a month. Our retail stock is around, what, close to forty days. Right? So even if we do a simple mathematics on average just for the river, you're still talking about more than two, two and a half months. Okay. Okay. And it doesn't happen. It happens somewhere faster, somewhere slower. So it will happen faster. Even it will happen low. And that's why, again, at the cost of sounding like a broken record, please look at trends. Don't look at these monthly, quarterly numbers so deeply. Sure, sure, sure. And just one final question on the employee cost. Again, again, it has gone up in this quarter. So just wanted to understand what is driving that and where should we kind of expect it to stabilize? See, this quarter, we have for the first time, we have started acknowledging the ESOP cost because after the study guidelines, if you have given a ESOP, you should equate that cost over each quarter rather than at the year end. So that has added. It's not only salaries that have gone after. Salaries have also gone up because of some marginal people that employees that have been added to this. Okay. Okay. So so say from 22 crores in q one to 24 crores, the ESOP would be Close to around India. Sorry? It's close to INR 80 lakhs has been accounted for in this quarter. Okay. Okay. Okay. Got it. Okay. Thank you. Thank you. Question. The next question is from the line of Tejas Shah from Spark Capital. Please go ahead. Hi. Thanks for the opportunity. Is this I can't hear you. Yes, sir. Is it okay? Yeah. Yeah. Sir, thanks for the opportunity. Sir, just wanted to I was just going through the presentation. The kind of buoyancy that we have witnessed in recent data, our market share and overall total overall volume has moved up by 25 basis point only. So are we saying that this kind of buoyancy, obviously, not at this level, but we are seeing an overall Herald market as well as the reason? Okay. If you see the market share, what market share do we put there? Is it a month or is it a a MAC market share? It is a MAC market, sir. But I'm I'm saying PPM basis, it should be it it the the traction should be overall basis. That that's what I'm asking, sir. The traction over the last twelve months is not as much as you see now. You're currently paid last quarter versus what has happened over twelve months. So market share is and it's like I was just saying, we look at mass market share and not month market share. If you see, month market share, last month, it was 63.1% was the market share. But that's the month, whereas we are trying to equate the royalty in this quarter will there be twelve months of the preceding year? Okay. Let me rephrase the question, sir. So the the kind of buoyancy that we have seen in this quarter for us, would it be at least trend wise, would it be the same reflection on overall market? Or is it that LHO driven by our numbers is an outlier here? That's a good question. Yes. See, LHO grew by around 13.6% this quarter volumes, and we grew by around 17 odd percent by volumes. So the delta here, it will get translated into our market share gain, which you're seeing in this quarter. In total Air Oil, the value growth is around 16 odd percent, right? As I said in my presentation, this is largely due to the increase in market of YTD is 16 odd percent. This is is in the strength of our total heroine market share. If you look at the total market share of ours, it's not going up as significantly as the market share within the right hero. And of course, our analysts, we actually put this in our presentation. We are now putting our market share in LiteRevol as well as total market market share share in total. You won't see that kind of a significant market share shift in total. Sure. So second, is there any less than average or more than average inventory primary or secondary distribution? Not. See, again, you should realize we sell on cash. And therefore, why would the distributor increase his inventory or his investment in stock? He would rather increase his investment in market credit or service to the market rather than stock. So, we, unfortunately, do not have that cushion of increasing, distributed stock over a significant period of time. I can do it with a few, or to take points of schemes, but that will happen only maybe fifteen days to a month. And after that, it will drop to the normal level. Yeah. So, sir, if that's the case, then the 25% growth that in retail after that we saw. And I take your point that it is just a sample and it should not be taken in totality. But even in some diluted form of this number, it should show up in primary sales in in coming quarters. Is that correct, sir? I said in my previous question, I said that you have close to two and a half months of stock in the pipeline. Right? This is not this is distributor plus the retail. Consequently, if I reduce distributor stock over, let's say, a month, in a period of three months, you're talking of 53 percent drop in your volume. Again, there is, again, at the cost of the if you look at a smaller period of time, just these things are very difficult to explain. And so what a longer period, you you you see that they're even out. Even over months, they're even out. If you just add something over here, in general, there there have been many marketers who have died in trying to marry the offtake growth to the primary and secondary sales growth. So normally, what most of the companies do is that they don't look at I mean, they stopped trying to correlate the offtake sales growth with the primary sales growth. The only thing which most of the companies do is firstly, a, look at trends. So whether the trends are going up and down, offtake the market share is the best indicator. And secondly, whether you are growing in whether your OpEx is growing faster than the market growth or not, instead of looking at the absolute numbers of 25%, which we seem to be the OpEx seem to be growing at. What we are more interested in, whether we are growing faster in the market. So the market if the market growth rate is the market offtake growth rate is 21% in quarter two, we are growing at 25%, which means that over a period of time, over a period of next one or two odd months, it will start reflecting into market share. So there is no point in trying to completely correlate or do a one:one correlation of offtake with primary. But yes, as your offtake continue to grow faster, especially in the market, your secondaries, which means that if you're not up stocking, then your secondaries will obviously grow faster as well. And if your secondaries grow faster, then your primary also will grow. So there is that bit of a simplistic correlation, which is the only way we can correlate time being to offtake. But otherwise, if we are like I said, if we are growing faster than the market, we are happy with the growth rate because it means that our growth is competitive. Fair enough. And how's the NPD pipeline looking for rest of FY 'nineteen in terms of counts? I didn't get your point. What's NPD? NPD. New product development pipeline. They're far ahead of our requirements, and it's only which product to launch and how close we are to sort of having a portfolio ready in terms of communication, packaging, products and all that. And probably, we should see one towards the end of this quarter or early next quarter or next quarter? The other additional that we have into the NPD pipeline now, with the stabilization of our international business team overall, we've also added international business into our NPD pipeline. So hopefully, by the end of this year itself, we will also have one new product coming in, in the international market, which should help us boost the growth over there. It will be an extension of current product portfolio or new product for that market? It could be either. It won't be from the existing portfolio. So we're not I'm not talking about extending the current portfolio of India into international market. I'm talking about an NLTD. Okay. Great. And sir, what is the effective tax rate for this year and next year? It's 20.3 Even for next year, sir, looking at whatever assumptions you have on our business? It will continue to remain in net. See, remember, Krijas, around one third of our production still happens from Guwahati. Yeah? Okay. And, sir, lastly, one request, perhaps I'm speaking for majority of participants here, if not all. Since listing through Thicken, you have been consistent in sharing volume data, and you've been placed on calls also for your consistency in presentation. So I appreciate the complexity in the business as we are growing, but we'll still appreciate if you can find a way to share underlying volume data, which you have been doing for so many Mani:] years now after this time. Point taken, sir. And thanks for changing me after so many years. Thanks a lot. Thank you. The next question is from the line of Amit Sinha from Macquarie. Please go ahead. Yeah. Thanks for the opportunity, sir. Sir, how has been the trend in the offtake growth in the last four to five quarters? I think we have been putting it and consistently, unlike, let's say, volume data, we have been showing you those trends in our numbers. Let's say, in volume, total quarter one of this year, we were at 10.4% volume and 10.7% volume growth. This quarter, we are at 25% value and 25% volume growth. And some of the presentation data is not there, and that's so that that's why I I asked this question. I mean, the trend has been improving the last four, five quarters. Is Definitely. From zero in quarter three of last financial year. It's we are talking of 25% growth now. Sure. Okay. Secondly, sir, we would request you for some update on your on some of the new launches that you did last financial year, mainly on Brahmi Amla, Ayurvedic oil and the Coco Jasmine oil, which you launched. Yes. So let me just start with Brahmi Amla. Brahmi Amla continues to do well on offtake. So we again have a good Optics growth of about 15%. What we are now doing is that we are extending the range of Ramyabla. So we are adding more SKUs of Ramyabla into our alternate channel business, into modern trade and e commerce, which we hope is going to enhance the overall portfolio. One big challenge that we are facing with Grammy Abla is that CSDs, which used to be a big customer of Ramyabla, there we have sort of come to complete zero over there. And that's why the primary numbers on Ramyabla are on account of that. But like I said, on OpEx front, it is still growing at about 20%, and we are trying to get a lot of the volumes that we've lost in CFD through modern trade by increasing the range over there. Then the other brand which we launched in February was Cocojasmin, Mirage Cocojasmin in Maharashtra, which is, again, hopefully, we should be able to meet our launch parameters this year. Right now, this is big season time for Maharashtra. So there is we are doing a big pressure test, what we call a pressure test plan in Maharashtra, where we are going with Full three sixty and a very strong consumer offer. So going across all fronts, the big learning we've had in Maharashtra is that we've now managed to identify specific SCR or specific districts where we believe we can spend a little bit where we believe we can invest a little bit more and get a better bang for a buck. So we are focusing on those specific districts, rolling out this initiative plan, and then trying to create a repeatable model, which we can then implement in all of Maharashtra by the end of this year and then hopefully extend Cocojacmen to some of the other states where perfume and coconut oil is becoming a big category. So that is something on both the new launches in the last one year. No more than Sumit has spoke about already. Yes, yes. Very clear. Thanks a lot. Thank you. The next question is from the line of Jin Alsheb from Multiak Equity. Please go ahead. Just to clarify, I'm slightly confused between the conveyor. Has the restocking been already done? It's in the process. Like Sandeep pointed out and before that, tried explaining, is it such a widely distributed product? It takes much more time in destocking the whole thing. So it happened it started in September. I think it will continue in October and maybe November. Okay. Okay. Okay. I I I think that's about it. Thanks a lot. Thank you, ma'am. Thank you. Next question is from the line of Saurabh Ghandan from BNP Paribas Mutual Fund. Please go ahead. Yeah. Hi. This is Konal Bora. Sir, on on the eighty eight two redone, because of like, there could have been some temporary stock out. Do think there is some loss of sales because of temporary shutouts? And can you help me in that? It could happen because even it because it's such a big country that you can't even easily destock and restock everywhere. So you do run a risk of getting other stock in a few places. That could happen. Yes. In general, if you do a relaunch of our mass consumer brand, then they could also there could even be a dip in the market share for that month or even the next month because there is a lot of sales. These are all low involvement products. So a person who wants to use the hair oil will use the hair oil. If your hair oil is not on the shelf, she will move to some other live Heron. So that bit of dip is expected to happen. See, even if you look at the restage of Nomar and if you go back and look at market share, it did dip before the relaunch really took off. And here also September offtake, if you take only September, you did see a minor dip because of downstocking. Okay. Okay. And second question, how has been the feedback to your INR 10 per jar? And Is there a risk that the customers could down trade instead of upgrading from fishing? Not really because it's not that convenient if you are a regular user. If you are a user, it's a little more convenient. Or if you are traveling, it makes sense. But for some, let's say, who's a 100 ml user won't move to a 20 ml definitely. Okay. That's it from my side. Thanks. Thank you. The next question is from the line of Dera Raji from B and K Securities. Please go ahead. Good afternoon, sir. Good afternoon. Sir, I just need one clarification on the volumes. Like, you mentioned around flattish for this quarter, but does it include the CST or the IV business also? Yes. Included. Because the like for like growth of 1%, so flattish volume would be around the pricing would be around 1%, but we are taking around close to 3% this quarter, sir. Not quarter. Only September this quarter. Okay. And any any update on the international business when you could start generating revenues? I I think I told you that, secondly, we have already started growing at a good pace. Right? And Sandeep would most probably be turning around in this quarter. Thanks a lot. Thank you. The next question is from the line of Amandh Bacha from Goldman Sachs Asset Management. Please go ahead. Hi, sir. How are you? Very fine, Amand. Good. I just wanted to understand this 10 rupee SKU in more detail. Well, this is an SKU which is always there for you. So what's the relaunch about, and how are we gonna promote it as such? Are we advertising specifically for it? What are we looking at it? See, Aman, yes. You're right. It was already all those there. The issue with this was we had certain drafts earlier on, and because of this, we hardly made any profit on this product. And therefore, whenever we tried to push it through, we didn't really support it well enough. So now what we have tried and done is we have moved away one from the floor. Actually, put in a a laminate and hung. So this time, what we have done is we have put it in plastic jars, which make it more visible and much more attractive to the retailer because what he does is he sells all the 10 m 20 ml, 10 rupee pack and uses the jar for stocking other things in his portfolio. We don't advertise for 10 ML because it's not that widely distributed, but we do do point of sale display material to attract consumers who basically come to buy sachets and get them to move from a 1 rupee to a 10 rupee sachet Understood. To a 10 rupee bottle. Sorry. Understood. Also, one of the challenges which we figured out, which we learned through some consumer work was that when we put it in the in the floor app earlier, and the reason we put it in the floor app was because we said we should hang it like like like a cache itself so that it's always right next to the cache. Now that was a good thought in in principle, but didn't work out because the consumers never understood that there was actually a bottle inside the floor app. And consumers typically tend to see inherent value in a bottle versus a sachet as such. So that's why we just took it out of the floor app, which also which makes the bottle very clearly visible to the consumer, and it also helped us to reduce some costs on the pack itself. Okay. Thanks a lot. Thanks a lot. Thank you. The next question is from the line of Anubhav Sahu from MC Research. Please go ahead. Hi, sir. I wanted to understand what is the distribution mix, sir, we are targeting. Let's say, I think I think for wholesale, mentioned I think we have around 23% of exposure. Could you also comment on what is the trend on the wholesale side? Say one year back before DSU, what was the share we were having from wholesale? And is there any idle mix which you are targeting in terms of direct versus wholesale? See, to answer the last part, there is no ideal mix. It depends on your product, and it depends on uptake of your product. If your product isn't being picked up in the market, wholesale really is not there for you. But coming to pre demon, actually, the downturn happened in demon itself, because the the wholesalers normally make money in cash seasons and not by paying tax. So it used to be around 54, 55% of our total sales at that point of time. Now thanks to the external factors and also our endeavor to increase direct distribution among the larger outlets, it's gone down to 33%. Okay, 33%. Okay. And, sir, in terms of direct reach, sir, what are we talking? I mean, in terms of Yeah. I made a point in my opening address. We are targeting to hit 5.4 output by the end of this time, actually. And what is what is it now? Right, sir? 4.9. There at the time. 9,000. Oh, okay. Fine. Fine. Got it. Thank you, sir. That's all. Thank you. That was the last question in queue. I now hand the conference over to the management for their closing comments. Thanks a lot for getting in on the phone call, and if you go back and see a lot of questions, it wasn't trying to create a new front data with timely data. And all I can say is that, yes, even when I started my career, it it should be very it's really confusing on on the fact that I can never equate primary with off take. And my only concern is please look at the longer period, and all of you are long term investors in our company. And therefore, over a long period, you'll see both of these starting. The confusion that you have today is to friction with it. But thanks for coming in on a very nice conference call that we had today. Thanks a lot. Thank you. Ladies and gentlemen, on behalf of Kodak Securities Limited, that concludes this conference call for today. Thank you for joining us, and you may now disconnect your lines.