Dabur India Limited (NSE:DABUR)

Q2 20/21

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Nov 3, 2020

Ladies and gentlemen, good day, and welcome to the Q2 Results Investor Conference Call of Tabar India 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 Ms. Gagana Louwalia. Thank you, and over to you. Thank you, Stanford. Good afternoon, ladies and gentlemen. On behalf of the management of India Limited, I welcome you to this conference call pertaining to the results for the quarter ended thirtieth September twenty twenty. I have here with me Mr. Mohit Malhotra, Chief Executive Officer, Dabur India Limited Mr. Lalit Malik, chief financial officer Mr. Ashok Jain, senior vice president, finance and company secretary and Mr. Anghush Jain, head financial planning and analysis. We will now start with an overview of the company's performance by Mr. Mulotta, followed by a Q and A session. I now request Mr. Mulotta to start the presentation. Thank you. Thank you again, madam. Good afternoon, ladies and gentlemen. I hope all of you and your families are staying safe and healthy during these tough times. Let me also wish you a very happy Diwali to all of you and a great festive season ahead. Our war against COVID is not yet over, and my heart goes out to all those who have been affected by the virus. I would like to express my deepest gratitude to the frontline corona warriors, our police personnel, health care workers, and sanitization workers for their selfless service towards keeping us all safe during these trying times. Moments of extraordinary challenge like these test our collective will, and I'm proud and inspired by the way the entire extended Dabra family from factories to supply chain to the frontline sales force have risen to this challenge across the globe. I would like to thank them for their hard work, commitment, and invaluable contributions, which have helped us weather the COVID storm and emerge even stronger. They are our true heroes. COVID has entirely changed the business landscape around the globe, opening up newer categories and challenges while dismantling some of the established ones. As I've often said, a crisis is not to be wasted. It is in fact an opportunity to work harder, strengthen the business with new capabilities, beliefs, and innovations to emerge stronger and even further entrench our leadership position in the marketplace. This is exactly what we did in COVID times. We have transformed ourselves as an organization, becoming more agile, nimble, aggressive, and fearless. We have also enhanced our risk taking ability, encouraging our employees to become more entrepreneurial and self driven. This crisis has propelled the company towards a journey wherein we have accelerated the pace of innovation, retooled our distribution, increased digitization across value chain, enhanced our efficiency and productivity, and brought in a complete cultural change within the company. We have launched multiple new products since the advent of COVID in spite of restrictions on supply chain and limited availability of labor and raw materials. I can say that this has been the inflection point for the company, which has brought an enduring changes in the way we operate. Our strategic business transformation exercise has helped us to develop and implement growth strategies in the core business areas to successfully address the emerging challenges and deliver a robust top line growth accompanied by healthy profitability during the quarter. We saw growth of 13.7% in consolidated revenue from operations. Our FMCG business recorded a stellar growth of 20%, backed by a volume growth of 16.8%. Operating profit increased by 16.3% and consolidated profit after tax reported a growth of 19.5%. Riding the tailwind of immunity products and bolstered with the new innovative launches, the healthcare portfolio recorded a growth of around 50%. This was driven by a strong growth in our power brands in healthcare portfolio and supported by creative marketing campaigns, localized sales activations and sustained investments. The health supplement business grew by 70%, led by 2x surge in sales of Chavantras, a double digit growth in Honey. OTC business reported a strong growth of 56% on back of robust performance of Lalteil and the NPDs like Health Juices, Health Drops and other Ayurvedic products. The Ethical business also performed well, reported a growth of 26% on back of strong demand for immunity boosting product, contextual activations, visibility drives in chemist channels and initiatives like immunity at doorstep. Within HPC portfolio, Oral Care recorded an industry leading growth of 24.2%. Dabur Reds Paint, our flagship brand continued its growth momentum along with the strong performance of Misswark and Baboul franchise. Our market share in toothpaste category witnessed a 90 basis point gain vis a vis last year. Our Lal Dant Manjun also witnessed a strong growth of 30% during the quarter. Hair oils reported a marginal decline primarily on account of lower sales in the enterprise business, particularly CST business, which continues to be impacted. Ex enterprise, the sales of hair oils was flattish. Our flanker brand strategy remains intact with the launch of Badam Amla and Amla Aloe Vera. The shampoo portfolio recorded a growth of 17.8. Our market share in shampoo business increased by 80 basis points, touching 6.4%. Our focus on increasing bottle salience in yielding results has yielded results with a strong surge seen in the quarter. Vatika shampoo reported a good offtake on e commerce platform as well. Home Care reported a muted performance during the quarter due to discretionary nature of this portfolio. The air fresheners and mosquito repellent creams were under some pressure. However, our market shares in both the categories saw an uptick. In air fresheners, Odonelle recorded an increase of 60 basis points in market share and in mosquito repellent cream category, Odomose recorded an improvement of 80 basis points. The recently launched home hygiene portfolio under Darbar Sanitize and Darbar Dazzle brands have registered a strong performance. Skincare portfolio witnessed a growth of 38%, driven by strong performance of Dabur Sanitize range, which includes hand sanitizers, antiseptic liquids and soaps along with fem hand washes portfolio. Albeit the traditional portfolio of HRC bleaches declined by around 12%. With the Horeca and CST businesses continuing to operate at lower levels, the food business reported a decline of 3.8. Ex Horeca and CST, the domestic food business saw a growth of 8.5%. The in home domestic business has sharply rebound, while the out of home portfolio has seen sequential recovery month on month. Our market share in J and N category saw an increase of 170 basis points, reaching to a market share of 61.5%. Our culinary portfolio under the homemade brand recorded a growth of 12%. Domestic business for Culinary ex Oreka and CSD has shown a strong growth of 45%. The new products launched under the Foods portfolio were Real Mango Drink, Real Flap A Milkshake, which are also witnessing encouraging response from the market. Among the channels, e commerce was an outperformer with a growth of more than 200%. This channel is now contributing to around 6% of sales vis a vis 2% last year. We were able to capture the increasing preference for online purchases among the consumers and increase our market shares on e commerce platforms across categories. International business recorded a muted growth of 5.5% during the quarter, while MENA region continues to face macroeconomic headwinds due to lower crude prices and outward movement of expats. We saw strong double digit growth in Turkey, North America and Saas businesses. New products were launched in hair care, skincare, hygiene categories. The business reported an increase in operating margins aided by saving initiatives across the board. We believe innovation is the cornerstone of our strategy to deliver robust growth and tap the emerging opportunities. During the quarter, we extended our portfolio with the launch of Dabur Honey immunity range, Toothpea and Ashwagandha variant, Dabur Herbal Clove Toothpaste in South, Amla Aloe Vera Hair Oil, Dabur Badam Amla Hair Oil, Low Calorie Juices, and Real Apple Mini. We also entered new categories with launch of single herb, Dabar Vedic Sriracha Tea, Ayurvedic Nasal Drops, along with Chutney's Pickles range in the culinary portfolio. E commerce continues to be a driver of growth, and we fortified it with the recent ecom brand launches of Davor Himalayan, apple cider vinegar, baby range and cold pressed mustard oil. Going forward, we intend to drive our business by investing aggressively behind our brands, staying focused on health and hygiene, driving innovation and renovation across our portfolio, leveraging the new age channels like e commerce, cash and carry and modern trade, besides expanding and enhancing the efficiency of our distribution network. These initiatives are coupled with cost and cash flow management to ensure stable and healthy margins. I would once again take this opportunity to acknowledge the superlative efforts of each and every member of the family from our plants to the sales organization who have gone above and beyond the call of duty to catalyze the transformation of Dabur into a stronger, more nimble, and agile enterprise. While the challenge of COVID still remains, we will strive to continue our pursuit for excellence and stay course on our strategy of strengthening and leveraging our power brands, expanding distribution footprint, digitization across the value chain in the company, cost optimization and building organizational capabilities for sustainable and profitable future growth. With this, I will now open the Q and A and invite your questions. Thank you. Thank you very much, sir. Ladies and gentlemen, we will now begin the question and answer session. The question is from the line of Avnish Roy from Edelweiss. Go ahead. Moist, congrats on a very good set of numbers. So my question is on the oral care portfolio. So two questions. One, market share data other companies are seeing is not reliable because of the lockdown. So if you could comment on that. how much is the contribution of Daltrakshak and the club Dabar Club in the percentage of sales this quarter? Yeah. To me, market share thank you, Abhish, of all. I think thanks for your support. So market share data, actually, in my mind, is pretty robust, and it's very indicative of the way we've actually performed. So oral care market showed the uptick of around 5%. And as compared to 5%, Dabo shares in Nielsen are showing a growth of almost like around 10% for us in the Nielsen data, whereas our business in terms of our secondary and primary is showing a growth of around 24%. So in my mind, it's pretty indicative, and the difference between our sales and the Nielsen sales remains intact. That said, there were COVID disturbances, which Nielsen also witnessed in their field work while they were collecting the data. But, overall, it seems to be in line with the performance that, we've shown. So that's on that. As far as Dantarakshak and Dabur Clovis are concerned, having very miniscule performance, we guys just rolled out these brands around two months back. Still, there is pipeline filling happening. Overall, we would have only done around INR 7 odd crores out of Dantrakshat and very small INR 1 or 2 crores out of Cloves, which is insignificant to our overall performance of oral care. My question is on the new products and very high A and C spend. So if I see sanitizer, ACV, and herbal tea, these are not products in which you have a right to win because you have entered here late, already established players are there. So one, will you advertise here? And will this go into the general trade also at some point of time? Right. As far as sanitize is concerned, Abnish, we've actually tried to create a vertical vertical of home and hygiene under the brand called Sanitize. And this will continue across our portfolio, whether it's a sanitizer, it's a hard surface cleaner or it's a home hygiene products like antiseptic liquid, soap, etcetera. This is a portfolio that we are trying to create, which is all about sanitization. In my view, consumer habits are changing and consumer behavior of purchase is also changing. And these habits will ingrain as we're going forward. And the number of players in the market are very few and far between here with rickets being one of the player and one more one, two more players in this category. Rest of the soap market, if you see, is all about beauty space and less about antiseptic space. To me, market is underfed in the antiseptic space. So there is a need of multiple players. As far as the right to win is concerned, Dabur stands for health and wellness, and I feel we have a right to win in these categories with the credibility and legacy of Dabur and the trust given on our back. So there is a complete credibility of Dabur and the right to win to, get into these categories. You see our antiseptic liquids are doing fairly well, and they are not just plain gel antiseptic liquid. They are herbal antiseptic liquids, which will actually carve their own niche in the antiseptic liquid category, way we guys did it in shampoos or the way we guys have done it on oral care. Likewise, there are examples, Replete, which I can tell you one after the other, wherein Daval has carved out a niche of herbal and natural in these more cosmetic or these, artificial category. As far as apple cider vinegar is concerned on ecommerce, it is showing very good traction. There are limited number of brands present. And with the Davos name, we have a right to win. So your point is right. We will be extending this brand to modern trade also going forward as we launch extensions and variants in apple cider vinegar. And have you seen a sales slowdown in sanitizers in terms of weekly sales number? Yeah. Sanitizers, sales have really gone down. There are multiple players who entered into the market, and the prices have also come down, the margins have also reduced, and everybody is getting into a market, be it a larger multinational or be it a local company. There are multiple players going into the market. So therefore and the sales, our sales have also gone down. We had registered a total sales of around INR 80 odd crores in the first quarter. And in this quarter, we've only registered around INR 12 crores sales coming from sanitizer business. So it is not a sustainable business. It will go down over a period of time, and that's what we'd anticipated when we had launched. It was very contextual for the COVID times, and that's what it served its purpose. And now the business will kind of mute, and we are pretty well prepared for that. But that said, that is only one of the products under the double sanitized brand. But now we have got a multiple portfolio of the sanitized brand, which with the new launches, we'll try more than cover up in terms of margins and also turnover in the sanitized portfolio. Right. My last question is on Chavantras, 2x tint and stronger growth in the honey. So any sense on how much growth is coming from new customers? is this all in house manufacturing? edible oil companies are coming into this space. Do you see a threat long term in terms of market share? Or because you have the dominant share, it will be a loss for other players, if at all? Yeah. of all, DCP, if you look at the total penetration levels of Chawanpra, Chawanpra sits at a 2% penetration level in the country only. So the penetration levels have gone up from 2% to around three and a half, 4%. In the season, it'll go up beyond this also. But that said, 4% is also very low. And if you compare with the Heroin portfolio, you are 90% penetration. DCP is only around 3% penetration level. If I have to compare myself with other developed countries, which is where India will move from developing to a developed in other developed countries like The US, health supplements and nutraceutical penetration levels are 80% with the VMS contributing 80%. In India, it's barely 10% level. So the head room for growth is huge. So it's the onus on companies like us to bring about seven plus in modern format, in palatable formats, in better packaging, which can traverse the distribution. And then sky is the limit for increasing the penetration back of Seventhrash. We think we should be able to increase the penetration levels of nutraceuticals in the country also going forward. As far as honey is concerned also, honey penetration levels are high. So they are in the range of around 24, 25%, and they've gone up post COVID. And multiple players will come into the category, but if you look at other countries, honey penetrations are, again, the range of around sixty, seventy. So we have a huge headroom to cover as far as, again, honey potential is concerned. And more the number of competitors come in, the more share of voice on media, the more category expands, and therefore, more players will come in. So more players are welcome into the honey category while we try to protect our turf, but they are welcome, and we will try to do our best in the marketplace to fight competition. Mohit, one small follow-up there. So in terms of penetration for Chavantras, what are you doing on LUP? So we have seen and come out with much stronger, much lower pricing, smaller pack. So what are you doing there? And manufacturing capacity you could discuss for Chavantras, is it all in house in house? Yeah. I'll answer the question Abhish. Our manufacturing capacities are all in house. It's a very sensitive product. Not everybody can make it. And if other companies claim to be making it a party, I think one has to be very sure that the proprietary formulation, which is registered or authorized or authenticated by Ministry of Ayush before you buy because seven parts is a classical name, and you need to follow a classical proprietary methodology of making the product health product before you say just taking it from a party and rolling it in the market can be very risky for the health of the consumer. So that's why most of them are not nomenclatured it as Chawan Prash. They call it Chawan Amrut or they call it Chawan something, etcetera, etcetera. So it's a twist in the tail, which I think the consumer will understand very fast. For as far as we are concerned, it's all in house manufacturing and which is very proprietary to us and which is inspected by Ministry of Ayush, which is made as further text. And we have augmented the capacity. Our capacities are running short. We've augmented the capacity, and therefore, we are expanding our capacity. We are actually taking a mega project in MP of roughly around 40 acres of land. We've also paid an advance for that, and we'll be commencing a production in couple of months, almost three months' time. So we are augmenting the capacity of Chavantras manufacturing going forward as well. Now coming to talk about penetration of Chavantras and introduction of LUPs. Yes. We understand the huge potential there, and we have to reduce the price points to make it accessible to the rural consumer. For that, that's early days yet, but we are working on some formats which are amenable to LUPs and reducing the price points there. So we are working on that. It's difficult for me to let you know at the moment. Sure. Thanks, Mohit. That's all from me. All the best. Thank you, Abhinish. Thank you so much. Thank you. The next question is from the line of Persi Pantaki from IIFL. Please go ahead. Mohit and team. Congrats on a very good set of numbers. My question is on your margins and related to ad spends also in that context. You've grown your ad spends by 40% this quarter, and that has prevented the margins from expanding. So just wanted to know your view on a sort of four to six quarter basis. Where do you see ad spends stabilizing? Do you think that there is any upside in your EBITDA margins from these levels? Right. Thanks, Percy. So as far as our ad spends are concerned, I think if you compare double to other companies in terms of the ad spends, we are sitting at a very low ad spend to revenue ratio at the moment. I think we have a lot of catching up for us to do. So we still sit at around 8% ad spend ratio. If I look at the best in class companies who would be spending still 12% on above the line to generate demand, so there's a catching up to do. So therefore, we'll have a leverage coming in from other line items of cost and also some some of the projects, and they will be invested behind the on ad spends and increasing our ad spends going forward. So for the balance of the year, we will only increase our ad spends vis a vis last year. That's on ad spend, and we don't want to increase our margins. We want to keep the margins where they are, and we want to invest the upside or the leverage in the business into the ad spend. That's as far as the ad spend is concerned. Now coming to the margins. We've already got upside on the operating margins. In India, the operating margin has gone up by 22 basis points, and in consolidated, it's around 50 basis points. That will happen, and that's already happened. Even in half, you've seen a margin growth. And in the balance of the year, we want to keep the margins same as what they are to last year. So overall, for the financial year, there will be an upside in the margin of the half getting captured into the balance part of the year. But, Moiz, how do you look at the margins on a slightly longer term basis? Let's say, on a three to four year basis, do you think that your margins, which are, let's say, at 21, 22%, they can, like, structurally go up to 25, 27%? I mean, most of your categories can actually do much higher margins than that. And, of course, the food's margins are pulling that down. I understand that. But your categories are such that not too many products have direct comparables. So from that point of view, the niche product, so to say, so can the margins not be higher on a three to five year perspective? Firstly, we embarked on a journey of innovation and launching NPDs and now trying to get into categories so much larger than where we are already existing in because COVID taught us a lesson that we don't have to restrict ourselves to discretionary categories of high margin. We also have to pivot our business to categories that are larger and, which will give us the scale leverage. So therefore, we have to invest upside into advertising. And like I told you, there's a improvement required in our advertising. So in terms of long term, two to three years horizon, we are wanting to invest in advertising and not increase the margins to a level of 25% we are using. It's more maintenance of margins and little bit upside. If it happens, it happens. Right. So my question is on the growth of the health care business. Now, that business is doing very well. Of course, there are COVID tailwinds. But once this kind of growth anniversarizes, do we look at growth going ahead? Do we say that on the back of this 50% kind of growth, the growth in FY '22 will be sort of low single digit or even negative in those categories because the base is just too high? Or do we say that this is a new normal base, and on that base, we will now have a normal growth. Yeah. So, you know, I can't give you a very straight answer on that. I don't know as to how the business will trend. I can only tell you the trends going forward. I cannot forecast what's gonna happen next year. But I as I told you when I answered to Agnes that the penetration levels of health care are going up in the country, and we are saying this is we are seeing it happen, like and multiple players are coming in, and therefore, the categories will expand. As the categories expand, the market leader only gets to capitalize from this kind of a tailwind, which will continue. Now in terms of absolute growth rate, whether we'll be able to sustain, answer, maybe no, because it'll come off a very high base. Now if you look at Seventhrash, in last quarter, there was a low base. And in the coming quarters, the winter quarter, now we've lapped over the high base of last year of winter because summer was off season. In off season, on low base, we had a high growth of two x three x. As we enter into the new quarter, now I've come off a high base, but still I'm seeing a growth because the number of consumers are actually going up who are using Chamantras. So therefore, they are new customers. And when the new customers come in, that's a delta growth. It happens, although your base is higher. So therefore, the overall category and the pie increases and the market leader with 60% odd share, which is us, will only expand. So but exact quantification of the number, I'll not be able to do. But I feel the habits have got ingrained. Profileptic health care has become more salient. It's got ingrained in the consumer buying behavior. So therefore, health and hygiene is not gonna disappear from the country even in f y twenty two. So I will not say that it will be a low single digit or a negative sort of a growth rate in the category, and we are doing and it's just not the base or, what the market does. It is also what you do yourself to take the business forward. So therefore, we are cognizant of the fact that there will be a high base, and we are planning for that. And therefore, maybe more better format will come in. More NPDs will come in. We'll get into better categories. So I have we have full twelve months to actually work on the same initial work to prove you wrong that to be less than big single digit. Right, Mohit, ma'am. May I be permitted to ask one small sub question on Javanprash? Please. Please. Please. So if you can just tell me what was the household penetration of your brand in Javanprash in the season last year, so that would be q three last year versus what is the household penetration today? Is it higher than the q three of last year? Yeah. Definitely. It's higher by at least a percentage point, and we've seen it from first quarter to now the third quarter also as we enter into the season. It's gone up from two percentage to three and a half percentage points, and penetrations have gone up. And I still don't have the data as yet, but around one percentage point increase in penetrations have happened. But that said, it's still very low in the range of around 3%, 4%. Okay. Okay. That's it for me, Mohit. Thanks a lot. Yes. Yes. Thank you. Thank you, Varshi. Thank you. The next question is from the line of Latika Chopra from JPMorgan. Please go ahead. Hi, Mohit and team. Congratulations on a strong print. My question was on the Foods business. We saw 6% growth excluding the enterprise business. Is it right to assume that this quarter won't have the benefit of any festive related loading and we should see the full contribution of festive only in Q3? And on some of the new launches here, like low cal juice, frappe, you have launched a high pill variant at $10. Kind of distribution these new launches have? And how do you think the contribution of these new products will be in the overall sales mix? And if I could just check, do you think now this business is geared to move to about double digit for growth? Right. As far as beverage business concern, you're absolutely right, Latika. Beverage business ex of Horeca, ex institutional enterprise business is growing at 6.5%. If you look at the food business, ex Horeca is growing at 8.5% for us and driven by culinary portfolio. In culinary, the homemade. Homemade, if you see the culinary portfolio, is growing at 12%. But if I exclude Horeca, culinary is growing at 45%, for us. There is a tailwind on the culinary in home consumption that we see. So that's so I think the food business is back on recovery path very strongly. In beverage business, there are two subsegments of beverage. One is the in home and versus out of home. If we look at out of home, also, there's a sequential recovery, and out of home, which contributes around 35, 40% of the total business is growing at three and a half percent, which whereas the category is declining by around 34%. So that is on growth path. The in home consumption is growing by around 12%, 11 and a half to 12%, which is significant around 70% of our portfolio, which is a one liter pack. That has staged a recovery of around 11% growth now. Although off season, but then the growth is happening, and I'm sure this growth will continue going forward in the first quarter next year also when we come into the season because people are shifting from carbonated beverages to more healthy drinks and juices are considered healthy, and carbonated beverage is a big market of INR25000 As here, we are talking about only including drinks, INR6000 crores to INR7500 crores market. So there is a source of business, and people are moving from that source of business here. So I have no doubt that juices will trend back to growth trajectory. Today, it's minus 35, but the growth will happen. And if we gain share, we should get back to a double digit on back of all these NPTs of getting into the drinks market and crappie and local and restaging of brand, etcetera. So I don't think there's any doubt that we'll get into a double digit growth rate going forward in the season next year. NPD contributions will be around 56% on the beverage business. We have a lot of potential there in terms of we are hardly scratching the surface and utilizing the equity of Real. Real has a huge market equity, and we will keep expanding that. As far as distribution is concerned, we are very small with NPD. So NPD distribution is going on, seeding operations are happening as yet. And as we scale the business, we'll have to embark on new distribution network. Our existing distribution food network is not e and d outlets are not doing justice to the drinks market. But as we scale up the business, we'll get on to more five dealers and more network of the drink space, and that's where we'll be able to grow the business. As far as our separate infrastructure of distribution is concerned, we are putting in more feet on streets and more SSMs. And today, we were a separate distribution network in metros and only in North India. Gradually, slowly, we are expanding that also, and we'll have exclusive distribution network across India as we scale up the new businesses. Sure. If I could check a little bit more on toothpaste, could you take the toothpaste growth in the quarter? I probably missed it. And what is really driving this this? Is it also supported by some kind of channel inventory normalization? Is there a big difference between the primary and secondary offtake here? And, also, are you happy with the traction for Dantrakshar? Right. As far as the oral care category is concerned, oral care category, if you see, is growing by around 5%, and it can show our growth at around 10%. If you look at the overall category, it's growing by 5%. The natural based toothpaste category is trending at around 8%. So natural toothpaste segment, which is around 27% to 30% of the market, is growing at 8%. Overall market is 5%. That means the chemical based toothpaste or calcium carbonate based toothpaste are actually doing much worse as compared to the natural segment. And the beneficiaries of this growth are Patanjali, are Zico, and other natural players. So this natural subsegment of oral care is actually growing, and this is growing across different benefit segment also. Today, it's limited to anti cavity, but tomorrow, there'll be more benefits of segmentation also being carved out here in natural as the segment becomes more and more attractive. And therefore, you see, for us, all the entire portfolio of oral care has done well. So we've revamped Misswak, and we've revamped it. We've revamped Babul Toothpaste. And on back of Babul Ayurvedic, Babul franchise is doing well. Misswark is doing well for us. Dabur Harwal Toothpaste is limited to Kerala. They're gradually slowly expanding it beyond Kerala to South Of India. Therefore, we launched Clove Toothpaste as one of the variants there. That's doing that initial early days yet, but it's a NPD. Dantrakshat has been launched in areas where Dabur Red is not very strong, which is the North Belt, where Dabur has a lot of equity because Patanjali is a player which is very salient there, and it's coming at a price point of around 40 rupees per 100 gram as compared to double red, which sits at 50 rupees. We've got a sweet spot of price point, which is very attractive. I think it should gain strength there. We've got a turnover around $6.07 crores yet, but that's small. But I think the initial feedback from the market is around 20 to 30% repeat, which is good by any standpoint. So I think we will continue to push this brand, and the initial feedback is pretty positive. And we are very hopeful on that structure. Sure. Thank you so much. Yeah. As far as I think I missed out primary and secondary, we have actually connected our pipeline by almost nine days. So and overall and including oral care for us. So there's no pipeline loading, which has actually happened. There's a pipeline correction happened, and 24% growth in primary is also a 25 growth in secondary. So we've actually connected the pipeline. So secondaries are higher as compared to primary. The next question is from the line of Prasad Deshma from Bank of America. Congratulations on the 2Q results. So two questions from me. One is of the raw material exposure that you guys have, how much is linked to agriculture? And do you have any opinion on how the new reforms, agri reforms will impact these costs? Right. So, Prasad, our results are very close to what you had estimated, closest to what you had estimated in terms of results. So I think you predicted it very well. I don't know how you predicted it because we could also not predict it, but you predicted it. And we were startled when we saw your estimates very closer to us. So that's that's aside. On raw material exposure, yes, we have three buckets of raw materials. They have one of petroleum and crude linked, and one is agri linked, and is specialty chemical, and is juices portfolio. So we have around 50% almost purchase happening on herb prices, agriculture linked commodities, even more than that. So that is seeing significant inflation going forward, and we are contemplating judicious price increases in selective subsegments and to see how we can mitigate that inflationary trend, which we are seeing. As far as quarter one, quarter two was concerned, we saw deflationary trend on back of crude and also on agriculture. But with m MSPs and the government reforms coming in and which is more linked to agri only, we are seeing inflation hitting us. CPI is already sitting at 7% plus, and even WPI is seeing a growth of around two odd percent. So that we are looking at how to offset it by way of pricing increases. So Are there any are there any efforts in terms of getting into, you know, contract forming or, you know, bypassing the APMCs completely so that cost structure reduces permanently? We are evaluating. We've made a cross functional team in procurement, and we are seeing that in selective raw materials, we can actually go to large scale farmers to bypass the EPMC. But at the moment, not really because still it's a very new act, and we have not come across, you know, suppliers with whom we can engage directly. So at the moment, we are continuing with both the APMV. But that said, we've made a core committee, and, they are still thinking and evaluating the major raw materials in the in which we can go directly there. Got it. Got it. And the question is on your new launches in food. These are these look like mostly in ready to eat or cooking essentials. So is it that you know, could you throw some light on how you are selecting these categories? So especially especially something like, you know, mustard oil is not is not something that one could have expected otherwise. So how are you selecting these categories? And how do you plan to scale up these products in terms of in terms of distribution? Right. So we are looking at opportunities which are existing in the food business, which are high business volume, wherever we have the right to win, where competitive intensity is low, and where the margins are actually higher. So there's a three way framework that we evaluate every category, that the scale of business should be high, competitive intensity should be low, our margins should be high, and we should have a right to win. So if all these three, four criterias are actually made, that's when we look at the category. And then we look at selective channels that do we only get into ecommerce. And if ecommerce is a cradle of innovation or cradle of where we can test market our brand, if successful, then we extend it to modern trade and then subsequently to GT. So we will do a proof of concept check on ecommerce. And if it, does well, then we extend it. So it's almost like a test pilot that you do when we launch it on ecommerce. You saw mustard oil is only available on ecommerce. We had apple cider vinegar only available on ecommerce. Baby range only available on ecommerce. Amla Kids was only a ecommerce launch. So that's what now you got a test marketing platform available to yourself. Therefore, there's no, you know, flip side of getting the stocks back from the marketplace. And Amazon and other platforms also help you co create them, and they are very keen to stop all the innovations that you may have. Got it. So that's it from my side, Mohit, and many thanks for your kind words. Thanks a lot. Thank you, Prithad. Thank you very much. Yes. You. The next question is from the line of Arnav Mehta from Credit Suisse. Mohit, congratulations on a brilliant quarter. My question was on the NPDs from your side. So if you could help us in terms of the top five, six NPDs, which you would say you've seen very good traction in and where you see scalability to, let's say, a minimum threshold of INR50 crores, INR100 crores of turnover over a few years, wherever you've seen strong traction and you've moved from e commerce to general trade and you're seeing the rollout continuing there? Right. So in terms of NPD, if you ask me, our five, six will be PET bottle is a very So Riehl's entry into the drinks market with PET bottles, so I think that's doing significantly well. is our Health Drops are doing pretty well. Then is our Health Juices are doing reasonably well. Then our amla plus juice is doing good good business. Because chutney is early days yet, but I think that's doing well. Apple cider vinegar, I would find that that's got established. So that's the the big one, which I should say are doing reasonably well. So we've not really entered into very, big categories. While it may seem that Dabur has gone into a lot of NPD, but we've chosen our battlegrounds very carefully. And and wherever we've gone into bigger categories, there, we've been very channel focused and got into. For example, our Vedic Suraksha tea, we've gone to tea category, but that's more of a kala variant of a premium tea, which is a junk to dabber where we have a right to win is what we've launched. It's almost like a, you know, tea replacement, by a kala. So I think those are the big ones. And where the competitive intensity will you, you will see that it's low. Margins are pretty high for us, and, we have a right to win here with our our brand lends its credibility to us. Okay. Thanks, Mohit, for that. And the question was when you started this quarter, at that time, I think the growth in Dabur had come back to a high single digit kind of territory, and you ended the quarter at high teens. So obviously, you've gained some momentum through the quarter, while one would have assumed possibly that with the reopening of the economy, COVID, the fear kind of slightly going down, the traction in some of the categories may start tapering off. So have you not seen any tapering off in terms of the broader trends on things like Chawanprash, which are very immunity driven? And actually, would you say that the business is continuing to grow very well because absolute distribution profile of the category has changed quite a lot. And despite the COVID share going down, it becomes it's becoming more of a necessity in the current environment? Yes. So sequentially, I know the business has definitely turned better and turned round the corner, I should say. But that said, most of our channels are doing well. So our stockist channel is doing well. Urban growth has come back. We are growing in urban by around 80% odd. Our rural growth, which is a super stockist being a barometer, all the performance is growing at around 25%. Our e commerce business is doing well. Our institution business is still down. Horeca is still down. It's declining by around 30 odd percent 25%, 30%. This is yet to come back. CSD is still declining. And the CSD Horeca both contributed 3%, 3% last year to the business contributions. It's a very significant tool, especially our food business. Parler channel is not doing well. Therefore, is under issue. Modern trade is only growing by around 1.7% because of the future group issues. And as the future group issues with Reliance gets sorted out, I think modern trade will also come back. Then Reliance is reconfiguring itself in the cash and carry. So cash and carry growth is also only around 10 odd percent. Had Reliance been doing well, 50 stores, etcetera, we would have registered a growth of maybe 20% plus there also. So I think a lot of channels and a lot of categories like home care, skincare, traditional categories, hair oils, they are still not firing to their potential. So I think going forward, they should improve the channels in the portfolio. And health care business, which will come off a high base, will mute a little bit. But in my view, they should balance each other going forward. More than one last question on the international business. Any comments on how that is tracking the Non Middle East recovery recovered very strongly, but would there be some element of pipeline in the Non Middle East part of the recovery? And Middle East itself, do you still see the current headwinds continue into the half? Yes. So Middle East, in the current quarter, in the last quarter in which we saw the results, obviously faced macroeconomic headwinds on account of crude oil prices being low. And therefore, that having a pressure on the economy and disposable income of the people and all of thoughts were drawn by the local MRT and by local Saudis because they are the true consumers of our business. Plus, high per capita consumers for Dabur brands are expats actually moved out of that market. That had issue with our Middle Eastern business. But as we go along, I think we come off a low base now. Our Middle East business should recover, and the categories are also going back. As now, lockdowns have been removed, and people are getting used to the new normal. So Middle East business should be back on recovery from current quarter onwards. And besides Middle East, other businesses under pressure are the Sub Sahara business there, which is Nigeria, and, you would know the issues, in Nigeria. And, but, because of the COVID, I think Nigeria also gradually and slowly should trend back. Barring that, all our pockets of international business, are doing reasonably well. So I don't think there's a problem. SAARC is already back. Bangladesh, Nepal, Turkey, America, UK, Europe, all the businesses are doing well. Sub Sahara and Middle East are only two pressure points out of which Middle East should recover and Sub Sahara should also recover in due course. Okay. Thanks, Mohit. That's it from my side. All the best. Yes. Thank you, Anam. Thank you. Thank you. The next question is from the line of Tejas Shah from Spark Capital. Congrats on a good set of numbers. Sir, last September, at the Analyst Meet we had in Gurgaon, you had to read the strategy of Powerbrand and then COVID happened and like many other companies, we also use tactically our brand into many health and hygiene platform. And now we are talking about changing the DNA of the company on NPD's platform. Now if you can just elaborate, are the two strategies of Powerbrand and then the new NPD strategy, are they mutually exclusive or part of the same broader construct? Right. So they just they are not mutually exclusive. They're actually subsumed in one. It's actually innovation is a strategy we said then and we are saying now. It's innovation across our brands only that we guys are doing. Like, Real is our power brand. So what you see innovation in Real, we've launched a Real Pet bottle. We've launched a Real property. We are launching everything under Real. Homemade is a separate brand altogether, so that is separate. But innovation is happening in Real. Similarly, in Amla, we've launched Amla Alluvara. We launched Amla Badam. So we are strengthening that only. In Hajmola, we've launched Hajmola Chaturkula. We are launching a Hajmola Limkula. So we are strengthening the Hajmola brand. So in Hanitas also, we're launching honey Hanitas hot sip. And then there's a Dabur Healthcare brand under which you have a Duraksha tea coming up, and you have a, you know, eventually, a MFP coming up, and then then honey variants coming up. So the power brands and NPD, they are not mutually exclusive. The power brands will grow on back of line extensions of these brands, of brand extensions of these brands. So it will be line extension, brand extension, SQ extensions of these power brands, and therefore, a brand which is thousand crore will actually become a 2,000 crore. And we will get synergies of investments also on back of this. So in my mind, they are just not mutually exclusive. They're actually a similar strategy. But what happens is when you enter into a new category, which was opportunity presented to us in COVID, sanitization became very big. Sanitization could not be subsumed under our Odonald brand or Odonald brand or any other. So therefore, it's called for a creation of a new category called double sanitize, which would cut across the home hygiene and personal and home hygiene. That's why we created that brand. It's opportunity. We can't be slaves to one strategy that we save. The environment is so dynamic, so we have to keep continuously changing or tweaking our strategy. That's what we have done during these times. Fair enough. So just to follow-up on that, Dabur brand is now in line to from pickle to apple cider. So how should one look at Dabur as a brand architecture? And how is this strategy different from what Patanjali attempted three years back and then they saturated and and and their growth as well? Yeah. So Dabur stands for health, basically, for us. And that is the area where Dabur will get extended. Apple cider vinegar is also like a health platform, and this will only strengthen the equity of dabber as we get into it. It is a little different than Patanjali. I don't know how to compare it with Patanjali or not to compare it with Patanjali. I don't think it's Patanjali. It's our execution excellence, which actually makes us different from Patanjali. And, to my mind, Patanjali also, did a very good job, out of mainstreamizing, Ayurveda. I think their execution and their fund management somewhere led to the demise, especially acquisition of Ruchi Zoya now and therefore cash flow problems that the company is facing and the quality issues, which came as a big hurdle to their growth. Otherwise, the environment strategy wasn't flawed. It was okay. That's my take as a professional. Great. That's all from my side, and happy to value to the whole team. You. Happy to value to you too. The next question is from the line of Prakash Kapadia from Anivet PMS. Please go ahead. Hey, Mohit. Thanks for the opportunity, and congrats on a good set of results. Hello? Thank you. Thank you. Yeah. I had two questions. Excuse me. This is the operator. Mister Kapadia, may we request you to use your handset, please? Yeah. Yeah. I'm Thank you. Yeah. Now am I legible? Yeah. Yeah. Yeah. Yo, can you help Yeah. Now is it better? It's better now. Yeah. Yeah. Yeah. What I was trying to understand is, you know, despite increased contribution from, you know, the health care portfolio and especially the one price, our gross margins have not actually, you know, seen an increase. So is it because rural contribution from other product has increased or that has some bit of offset this gross margin? Because I guess rural would be low LOBs and lower margin. Am I reading it correctly? No. India gross margin has actually gone up by a 100 basis points, Prakash. So that's a right analysis on account of product mix. So in favor of health care, it's actually the international business wherein the gross margins are lower because Middle East business, the high margin business did not do well. If you look at India business, gross margins have indeed have gone up by a 100 basis points. Right. Right. Right. And on on, you know, the health care segment, on the OTC and the ethical side, which is largely, you know, a channel focused. Is there a lack of distribution from, I think, the two lakh kind of outlets which we had earlier? And, you know, can you give some sense on the mix between the ethical and the OTC portfolio in terms of value? Right. So as far as the distribution is concerned, Prasad, we are distributed, like you rightly identified that the distribution is essentially with chemist outlets. Ethical portfolio is distributed more in Ayurvedic chemist outlet, and the OTC portfolio is more available in the elopestic chemist outlet. So Ayurvedic chemist outlets are much fewer in number as compared to allopathic chemist outlets. Ayurvedic chemist outlets will be roughly around 100,000 is where we guys go to. It has gone up drastically. And our OTC chemist outlets are in the range of about 275. It is going up from two forty five thousand to $275,000, and we are working on the same. So we are working on special channel programs across four, five thousand chemist outlets and trying to do visibility there to drive demand even in OTC chemist outlets. This is the part of your question. Some value mix between OTC and ethical portfolio driven toward direction. What was it historically? What is it now? OTC is a a little larger, and it is growing at a faster pace. And I think our presentation has the numbers, so you can check from there. The ethical business will be growing at around 26% for us, and ODC business is growing at around 56%, 55% on that business, which is almost, I think, double the size of our ethical business. And what we do is, we guys cross pollinate, products from our ethical business as they become scalable. We bring them on to OTC and make it available in larger set of chemist outlets, and that's how we grow before it becomes available in grocery also as it becomes FMNT. So value sale wise okay. 95. Right. Okay? Fine. Fine. Thank you. All the best. You. Thank you. The next question is from the line of Aditya Sohman from Goldman Sachs. Please go ahead. Hi. Good evening, Mohit and team, and thanks for the time. So hello? Yes. Yes. So just quickly on any sense on how sales have been post the quarter, particularly in October as we sort of enter the festive season? And secondly, you launched several new products on this Amazon Big Day and and some of some of these other ecommerce events. How is the sort of response been to those? Aditi, can we be a little away from the mic and speak? It's actually blaring. We are not able to understand what you say speaking. Oh, sure. Sure. I this is enough enough. Can you repeat, please? Yeah. Yeah. We just wanted to get a sense on October sales also sales on some of these Amazon Big Day and and events like that where you launched some of your new products? Yeah. So I think the business is I can't tell you the exact numbers, actually, but the business is trending okay as we enter into the festive season. So it's okay because this time, Diwali is later. So therefore, we did not stock too much in the last quarter, and the stocking is happening now in this quarter because Diwali has got postponed. And Amazon, big days have been really good for us and, for the ecommerce. And as I was mentioning in my phone call address also, we've gained market shares across our different categories on ecommerce, and we are gradually slowly looking at increasing our market shares with the offline on e commerce portals as well. That's why we are offering our a lot of NPDs, which are time ecom, as exclusively to either Amazon or to a big basket so that we are able to get traction from them. So far, so good. Think October also, things are only improving from what we saw in the second quarter. The next question is from the line of Shereesh Pardeshi from Centrum Broking. Please go ahead. Yes. Hi. Good evening, Mohit, and thanks for the opportunity. And congratulations for the excellent execution and solid volume growth. My my larger question is that in case of when I look at last ten quarter performance, the revenue growth and volume growth doesn't fall in in between you give also the explanation that there is a loading for the season which happens and retail sales happens in the subsequent quarter. Now does that mean that if the strong growth which we have seen in quarter two, we have more challenges on our hand for the winter portfolio also if the winter doesn't pan out? And what is your thought on the core categories? You sounded a bit cautious saying that health supplement or OTC may not repeat in the similar range of growth. Sorry, Suresh. I did not get the part of your question. Can you please repeat again? I'm saying in the past, have been guiding us that there is there is always a different skewness and pattern in terms of revenue and volume growth. And I think last year, fourth quarter, you explained that there is a the seasonality factor where the loading in the trade happens in the beginning and then subsequently, the retail sales happen in the next quarter. Right. So is that, one should read from this quarter number? No. Not not not really, Suresh. Now as I told you, Diwali has got, shifted, got postponed to the loading, which used to happen in the previous quarter, has not happened because of postpone of the, festive season so that we did not do that loading. We have done some loading, but the loading has been, literally much lower. Despite the loading, we have corrected the pipeline by around nine days, as I told you. So we have corrected the pipeline by nine days. So there is no loading of increasing the pipeline that the secondary sales will happen later than the primary sales. So that is not the case this time in the quarter. I understand what you're saying. My my bigger question, I'm I'm listening in my mind, saying that 50% growth on a Y o Y in one quarter, what has changed if the industry dynamics has changed or the regional players like Sandhu, Vedana, these people have not grown, and that's where we have got the market share, or is the whole market is changing? I mean, you explained partially saying that the penetration level has gone up by a percentage. Now with one percentage increase, our sales has gone up by 50%. And if the penetration goes another 5%, would we grow five x? Absolutely. If the penetration goes up by 5%, we will definitely go at five x or 10 x for all. You know? So because our market shares are only 60% today in Chavan Prash, so as the penetrations go up, I think the market leader is the one who actually grows, but that's not the reason why our growth is there. Health supplement growth of Honey and Chavan Prash is only one part, or I should say only a 10% part of the picture of the growth that you are actually witnessing. If you see the entire portfolio of DAWN, there's a growth across portfolio. So I would not say that it's only a supplement. It's an OTC portfolio, which has grown. It is a ethical portfolio, which has actually grown. It's NPD, which has come in. It is even the foods portfolio in domestic, as I told you, has grown by around 8.4%. Our oral care portfolio has grown by 24%. Our shampoo portfolio has grown by 18%. So it's actually the GTM and the innovation and a lot of other strategy pillars that we have put in place that are actually all firing, and the execution engine is doing fairly well for the company. So I think and plus to add it up, there's a tailwind in health care, which obviously is the case, which is leading Chavantras and Honey growth to where they are. You're not worried about the competition who has jumped in in Chavantras and Honey? No. No. We are very worried about it, and I think we should be very worried and not be very complacent about it. But there's little I can do for it. I think it's only a brighter side of this to look at that they will improve the penetration levels in the market, and we will do whatever it takes in the marketplace to protect our turf. Yeah. Competition is a part of the landscape, and we can't do much we can't do much about it. So except that we will keep charting our path of innovation and improving on premiumization and creating economy portfolio so that we are able to utilize our, rural infrastructure that we put in place, which is a entry barrier for people to come in. And nobody can take away from Davos' equity and legacy and heritage that we have in a consumer's mind. If a edible oil company launches a Chamundraj, I don't know whether a consumer wants to buy oil in honey or oil in a Chamundraj, or how does it go in the consumer's mind? That is what US consumers should choose. Yeah. Well, you said nicely. My last question on if I may squeeze in on Orecare. You have done for many quarters, you have been beating industry numbers. What is working in your experience? And now you have got two more ammunition, which is last year, you had ayurvedic launch, and then now you have Dantarakshak, and you have now Clove, which is coming. Could you able to tell us what's changing in the market? I mean, obviously, nonwhite segment is picking up faster as a natural base. But then how long do you think this trend or this cycle will last? Yeah. So I think when we take a category, you see the natural and the herbal subsegment is the one which is growing, as I was telling you, 8% versus 5%, and that's the case. And this has become almost like 27 to 30% of the overall market, which never used to be there. So definitely, there's a tailwind with the inclination of the consumers to shift out from white and shift into urban, natural, and ayurvedic kind of platforms because they are the value added forms. And, you know, if do I want to use a calcium carbonate, or do I want to use a calcium carbonate plus a globe or a magistar, which is much more effective when you do clinical trials or when the efficacy happens. Obviously, you want to use a value added, and value added is here coming at a cheaper price as compared to the calcium carbonate. So it's a cheaper, better value to the consumer, which is what is working here and working for the entire segment. So Dabur is just trying to plug the gaps that we are seeing, geographical gap, and also the benefit positioning gaps, and also the consumer gap. So that's what we will be very soon wanting to revamp our gel portfolio, which we launched as Dabber Redgel, which didn't do very well, but we are completely revamping. In next quarter, you will see a revamp of Dabber Redgel happening. And we've got all these products somewhere, I think, either the execution or the proposition did not work, but then we will keep improving. Like, I keep telling you, progression is the way to go and not perfection. We will keep progressing and keep repositioning the brands in the time they do well. Like, now Lal Dansmanjan, we had written it off. There is a two powder category not growing at all. Since we started investing, we've seen a, LDM growth of around 30% coming on Manjan. So Manjin is back as rural is growing, and Manjin is growing because rural is growing for us, and that is only enhancing the equity of red. In fact, you you tried to partially answer my question on DLDM. The Dantamenjan business, have purely grown because of your investments, or is there the down trading which is happening towards rural consumers? No. It is really not down trading. It is a habit of the rural consumer to use the margin format, actually, if if you ask me. If you look at the price point if I look at the price point of Manjin is as much as the price point of the toothpaste format being different. So the price points are very similar. So, actually, it could be a little more expensive, than, our, toothpaste business. So there's no question of down trading. It is a habit that the consumer is used to using a manjan in rural areas, and the urban consumer is used to using a toothpaste, and he can upgrade. And our margins are higher in toothpaste as compared to manjan. But that said, manjan is a habit, and it's a very effective format. So, therefore, if you've seen the recent advertising of Dabra Red, we are, promoting the use of, powder as a sprinkler on paste, also on white paste. If consumers 50% of the population is using a white paste, we are telling them to sprinkle our Dabad Lal Banjan as a vitamin or a herbal supplement on top of their pure calcium carbonate to fit and make it more effective. So that's the new communication that we've put on place. Can we move on, please? Sorry. We have other people here. And all the best. Thank you very much. Thank you. The next question is from the line of Naman Jain from HEM Securities. Congratulations on the good set of numbers. I just wanted to ask you about the supply chain and the management that you guys are doing. I just wanted to know how many new suppliers have you added in this quarter, and what is your target going ahead to reach new, demographics and geographies? So supply chain vis a vis COVID times actually improved now. So I think there's no disturbance happening in our supply chain. Only some localized lockdowns, happen. And, that besides that, I think it's complete streamlined operation that we have, Norman. We have added a lot of party vendors in our supply chain base in terms of vendors. They must be around six, seven vendors that we may have added during the course of the quarter. Okay. And one just one more question. What is there in can you tell me about the pipeline of the new products that you're gonna launch in the coming quarters? I mean, how many are there in the development phase? Right. You know, as I told you, there will be there's no pipeline. As such, we have to establish the products that we've already launched. And as we go along, the the percentage NPD will be in the range of around 5% for us going forward quarter after quarter. I can't give you the list of products and the numbers that we are working on. Okay. Okay. Okay. Thank you. Thank you. The next question is from the line of Bharat Kapoor from Investec. Please go ahead. Yes. Hi, good evening. This is Harit here. So just two questions. One was on the hair oil side. If I look at the decline of 6%, if you could just give us a sense of what's happened there? Is it a downgrading impact you're seeing in the category or something else? Right, Harit. So in hair oil, there are two subsegments for us. One is the Perfume Hair Oil segment and the Coconut Oil segment. In Coconut Oil segment, which is growing, we've gained market share by around 10 basis points. And the perfume hero segment, if you look at if you discount the CSD and the institutional business, then our business is almost flat in line with what the category category of perfume hero declined by minus one, but our sales is almost flat. That said, we've lost around 10 basis points in, perfume hair oil segment. Our flanker brands are doing well. This is Arso Amla has grown by 10 percentage points, so they are doing better. So this is clearly illustrating that there's a downgrading happening. That's why you find a lot of economy based companies doing better than Dabur, Amla, but our flanker brands continue to surge well there. So that's one. And and the part was on distribution. So if you could just talk about the half, you know, what the distribution expansion has been like? So distribution expansion, so we are very much on course on the strategy to increasing our distribution. So we've gone up from last year of 1,200,000. We've gone up to around 1,300,000, and next year, we'll go forward to around 1,400,000 outlets totally in urban and rural. In terms of number of villages, we lost a couple of villages because we we could not serve them due to the COVID impact. But by end of the year, we will go to our targeted number of 60,000 villages. And, for next couple of years, we'll make a plan to take up the 60%, ground 80%. That said, we are now appointing village level entrepreneurs and, which is like a village Yodas, what we call them. And, we are appointing them in some remote villages where there there is no threshold level of business coming in. As and when we appoint them, they will become a inventory points, and there is that's where we will try to do some gym demand generation and gather inventory. As the business scales up, we will convert them into a top stock kit. So that's what we are doing. Also, what we have done in distribution is we have split our HPC line into two parts, HPC one and HPC two because there are 450 SKUs carried by our woman personal care guy to give a focus. One, we've made it a hair care centric line, and other, we've made it a oral care centric line. That's what we are dividing. We started a pilot project in one or two urban markets, and if successful, then we'll extend it in other urban markets also. That's very helpful, sir. Thanks and all the best. Thank you very much, Bharat. Thank you. Next question is from the line of Vivek Maheshwari from Jefferies. Please go ahead. Hi, Mohit and team. Hi, Mohit. Hi, Couple of questions. One, you comment about A and P spend? You know, you are looking at best in class 12% number. Is that what directionally, you know, what you want to, you know, what you wanna achieve or, let's say, hit over the next or in the medium term? I'm guessing that, you know, there is a portfolio difference also, so that 12% number may not be comparable as much. But, incrementally, is it what you are, you know, what you're kind of planning to invest at a broader portfolio level? Yeah. So that is the number that we are working towards, and we know that we are around 8%. So we should gradually slowly increase our advertising spending looking at our diversified portfolio. I think we've got too many amounts to feed and too little resources. So therefore, we have to get into a higher degree of investment for demand generation. And our products are also pretty seasonal, so I think we can do it. So we have to get the monies out from other avenues of cost line items, and that's what we are working there for them with the and all that. So therefore, going forward in medium term, our advertising spend will definitely go up vis a vis last year, Vivek. I don't know by what Verizon will I be able to achieve 12%, but we will at least make an attempt of investing higher amount. Lalit is right here. He's my guardrail for increasing the advertising investment. As in when he allows me, I will do it. We'll maintain the efficiency and the returns of that. Yeah. Let's go on. Thank you. Participants to ask a question, please press then 1. Anyone who wishes to ask questions, please press then 1. Yes. That's it. Sure. We take the question from the line of Naman Jain from Haim Securities. Please go ahead. Sir. I just wanted to ask what is the volume growth in the multiple segments that we have? Can you give me the specific about each of the segments and the volume growth? No. Sorry, Naman. We don't really disclose category by volume. Okay. No problem on that. Thank you. The next question is from the line of Richard Liu from JM Financial. Please go ahead. Hi. Thanks for taking my question. Hi, Mohit. One broad question. In the context of the way higher growth that you did for Q2 versus what you sort of projected and alluded to earlier and your prognosis of what you plan for the months ahead, how would you align the 5% to six percent growth objective for the rest of the year that you had been spelling out thus Yeah. Richard, we've not spelled out a five to 6% objective for the balance of the year. We not say. But that said, I can't give you any sort of a guidance on the numbers going forward. The situation happens to be very volatile and continuously influx with COVID wave kind of hitting us. So one really doesn't know as to how it will pan out. But, just to let you know, there is a recovery, and there is a recovery that we see across all channels, across all categories, especially the depressed categories like HPC and foods are also seeing a recovery now coming back, and we are seeing growth. As far as health supplements and health is concerned, we are now coming to a quarter of winter, which is of a high base. So those exponential growth that we saw may not come in. But that said, it can get compensated by the HPC and foods portfolio. But I will not be in a position to give you a guidance because the situation is very volatile. I would also really not know as to how the business will turn out to be, but we'll target ourselves to deliver a healthy growth. Yeah? All right, Moit. Thank you. Wish you all the best. You. Thank you. The next question is from the line of Ayaz Motivallo from Nivallo Partners. Please go ahead. Yes. Hi. Good evening, Mohit and team. Thank you for taking my question. A little late in the queue. Thank you. So my question to you is on the point you alluded to on, in general, the categories are a little bit of down trading and the value segments of some of your business is taking off, in particular hair oils and a couple of other categories that you called out. So in terms of the contrast duration that we've talked about in the last few years, would you be sort of tweaking your strategy to launch some of these, as you said, flanker brands or warrior brands in categories where your core is very strong, but you have some customers down trading or competition nibbling to your market share? Right. The trend that we see is definitely down trading across our segments. So if you look at the food business also, so a one liter pack has gone 200 ml has gone down to one fifty ml, 20 rupee pack to a 10 rupee pack. So we've launched LUPs, the low unit price points or accessible price points. In toothpaste, also, 20 rupee has gone down to 10 rupee, and $50,100 rupee has gone down to 10 rupee. Here also, we have a 10 rupee price point. And 10 rupee and 20 rupee, these are cash rings, which are very important for us to ride our rural infrastructure. And in rural business, which is only trending up at around 46% of us alien is in rural business. It's important for us to augment capacities in these accessible price points, and that's what we have been doing. Although, there'll be little margin dilutive, but that's okay for us because it will provide us with the scale and the heft on the top line, and that leverage our other, line items as we are able to scale up, the business. In some larger health care categories, it is not very easy to launch, LUPs because the ticket size required is big. But, we are looking at improvisation of format, which permit us to launch sachets or tablets, which are more, at 10 rupee, 5 rupee price points. Yes. Good. And so just to follow-up on the same sort of down trading and and related to to modern trade. You getting requests from specific sort of modern trade companies to have a unique uniquely designed or uniquely packaged sized products for them to compete in the marketplace? How are you sort of treating this versus a possibility that they would be potentially launching white label brands any which way as a way of doing business? So far, we've not seen a private label threat coming in more than three except for couple of categories like home care, which are more commoditized. Rest of the places, we are not seeing a threat of white label happening. That said, there's a channel called cash and carry, which is almost like a surrogate of wholesale. There, it's important for the company to launch different SKUs or different products so that it doesn't undercut your regular GT. So we are trying to promote our non KVI there to ensure that undercutting doesn't happen there. So that is the need of developing new products for those segments of business. I really thank you very much. And it's been a very, very open and sort of transparent conversation that you had all through this meeting and in the last few weeks. So really appreciate that. Thank you very much, and happy Diwali to the team and all the very best. Thank you. Thank you very much. Happy Diwali to you and family as well. Thank you. The next question is from the line of Kunal Shah from Jefferies. Please go ahead. Hi, Mohit. This is Vivek again. Hi. I just missed, know, on the A and P bit. Basically, I was I just heard halfway, so you are talking about reaching 12% at some point of time? Yeah. Correct. So, Vivek, we want to inch up to that level, but it'll not be immediate. It'll be very slow and gradual process of inching up as and when the p and l permits us. Like, this time, p and l permitted us. Therefore, you saw growth of around 50%. So we'll have to we can't erode our bottom line for increasing our A and P. So we'll have to account the right balance between the operating margin and increasing our A and P spends also. So it will be a very prudent approach in the way that we increase. Principally, we are aligned as a philosophy to increase our A and P and investments investments behind our brand, and the entire management committee is completely on board. But we'll have to see the situation of the business so that we don't erode profitability in the bargain. Right. Right. And what what's going be roughly the BPL today in terms of as a percentage of sales? BTL for us will be in the range of around eight to 10%. Eight to 10% BTL? Yep. So that will go down as ATL goes up? What you see, what is visible to you, Vivek, is only ATL for you, which is around 8%. The BPL which is there is getting knocked off from the gross sales as to the new index. So I understand that part, but I'm just saying that, you know, as you push up ATL, the 8% BTL looks very high to me. So does that mean that, you know, as ATL goes up, BTL starts coming down? Yeah. BTL should BTL actually is driven. That's a philosophy and principally sounds right, but BTL is more driven by competitive intensity in the marketplace. If you were a wholesaler and there were two companies and one giving a 12% scheme and if one doesn't want to give a 12%, then you lose out the wholesaler investment to the competitor. That's not what you want to do. So BTL is more tactical in nature, and ATL is more long term and more brand building in nature. So they can't replace each other. Ideally, in PNL, we want to replace it. That's what every management does it, but I think the forces which work for each one of them are very different. One is a demand building force, and one is a supply force. So they can't actually replace each other. You know what I'm saying. Right. Right. Sure. Sure. Sure. The other question, Mohit, I have is on the sanitizers sales, which has gone down from 80 crores to 12 crores for you in between first and second quarter. Is there a pullback in the industry revenues pool also, you think? Pullback in the industry? Revenue pool, basically. So there is a pullback. So because so many players are doing it, but I think consumer habits are changing. We we actually ask. Consumer has got used to this kind of a disease or infection now. So the use of sanitizers has actually gone down, and the use of liquid soaps and soaps has actually gone up in the marketplace. So it was an initial thing to carry sanitizers, but now we don't see so much of use of sanitizers. That's what and I think there is a industry pullback also coupled with it because people have seen the margins eroding here because so many players have come in and the prices are falling. The reason I asked about sanitizer was, you know, is that, you know, drop from 80 crores to 12 crores, does that worry you also from a health care perspective, you know, given that, you know, as customers become or consumers become more, you know, confident, they can know, the health care may not necessarily be be be in terms of quantum, but there can be there can be a a decline in revenues, you know, given as customers those are the most become used to the new world. Does that sound good? Doesn't worry us so much because the health care penetration in India is so low and their categories have been there here for so many years. It is not just, you know, Johnny come lately, like a sanitizer came in and it'll blow out. It's not like that. Seven plus and Honey have been there as a part of our tradition, and they will never vanish, Vivek. And, therefore, we're getting into more and more better formats under the same power brand strategy so that it doesn't dissipate or, you know, have a a same thing like a sanitizers. I don't think so that's the case with our overall health care portfolio. Sorry, Vivek. We need to move on. Can we go to the, yeah, last couple of Thank you very much. Sure. Thank you. Thank you, Vivek. Yeah. Thank you. The next question is from the line of Akshay Thakkar from Fidelity. Please go ahead. Yeah. Hi. So just a couple of questions from my side. One was to understand the gross margin moment this quarter, maybe just in time zone. So you've seen a 100 bps improvement while mix has improved quite a bit. So I'm just trying to understand that does the 100 bps fairly, know, reflect the mix improvement, or was there some headwinds you faced this quarter which would have impacted margins? Yeah. So I think the margin improvement of 100 basis point that we saw in the gross margin for India stand alone is primarily because of the favorable brand mix. When I say the favorable brand mix, that means that the the sale of our duties were lower compared to the high profitable products like health care. So therefore, the brand mix has added to the profitability. And at the same time, there have been some deflation deflationary impact also seen because of crude, etcetera, on the raw material cost. So that has also added. And there is a carryover of price increase that has also given us a favorable impact to some extent. And as a result of it, our margins have improved by 100 karate. Okay. The the next question was for Mohit. Mohit, when you say that, you know, you want to increase A and P, you know, let's say, double digits, and and your construct, like, you maintained over the last year, year and a half is to maintain margin, so so where does the cost saving come from? Are you looking at better gross margins in the business, or are you looking at taking out costs? Taking out costs, I think there's a lot of lab in the organization. There are other expenses which account for roughly around 9.6% of the overall p and l, and there are other elements of cost, cost cost is there, delayering is there, s and m is there. So there are a lot of cost line items, which is where we can get the saving and can be plowed back into the the thing. That's why we've gone to some RIDD project, which is looking at end to end value chain of the company and trying to take out the cost elements and get the savings from there. Okay. And the last question from my side was, you mentioned that your secondary sales in the quarter was higher than the primary sales. Any way to quantify that or maybe just help us understand how the channel channel inventory was in June and and how does it stand right now? Yeah. So the channel inventory, last year, this time was around twenty four days. It has gone down to around fifteen days. There's nine days improvement in the channel inventory across sub stock case, stock case, wholesale across the board inventory levels. We've consciously brought down to a level of around fifteen days, which is almost the best in class now. And we are trying to get into CRS, which is continuous replenishment system with keeping a 12 of inventory and whatever the secondary is there. That's how the projection can happen, for the primary. Okay. And this fifteen days would have been something similar in June as well? No. It was substantially higher. And then we have corrected the inventory from June to now by, I think, around two to three days. Rest, we corrected in the June itself. Okay. Got it. Thank you so much. Thank you. Thank you. Ladies and gentlemen, we will now close the question queue and take the last question from the line of Krishna Sambhumurthy from Motilal Oswal. Please go ahead. Yeah. Thanks for taking my questions and congratulations on a very good performance. My question is regarding the something that you highlighted in your annual report, but did not elaborate significantly, which was on the on project rise and the and the cluster based approach. Can understand that part of this is already being shown in categories like contract structure. Can you elaborate a bit on how significant will this be as a part of your future plan? So I think RISE is a complete change in the way we guys are operating. RISE, while it means regional insights and speed for execution, but it's also a structural change in which we operate in the organization. We are trying to empower our regional, heads, which are east, west, north, south, and, trying to create an organization under them where we'll, identify innovations and roll out the innovations, also looking at state level and region level, p and l to, increase the business in different regions. So that is what we are trying to do as a part of Rise. So it's actually pretty integral to the way we are working, And the organization is also getting structured so that, we are able to empower the channel heads as more p and l heads rather than only sales heads. Okay. Would would something like a contract check also be a part of the structure? Yes. Absolutely. Because the Dabur Red is actually very strong in South and weak in North India. In North, Patanjali is higher, so it's basically a North initiative that we rolled out with Dantrakshak. And it's not launched in South India. It's not a national launch. It's a regional launch for us. And there'll be many more to come on this Absolutely. So we are identifying products like, for example, if you see in the product list, we've also got Neelambu Kudnead, which has been launched in South India. This is also South India. What we launched in North India is called KARA. What we launched in South India is Neelambu Kudnead, which is basically a rise initiative for us. Okay. And and just just in the entry, does your health care portfolio have a more of a potential here, or do you think that it could see also you can do more work on this as a part of project price? I think across the board. So we're trying to identify insights across HPC, HC, and foods, all the three pillars, and also empower the organization leads there in different regions. And also HPC, HCM Foods leads because we got all the three segments in sales also. So that's how we are trying to create. So across the board. Understood. Thanks, Mohit. Congratulations and all the best. Thank you very much, Krishna. Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to Ms. Kagan Alwali for closing comments. Thank you, sir. Thank you all for your participation in this conference call. Due to positive time, if we have not been able to answer all questions, we can answer them offline. Please let us know. A recording and transcript of this call will be available on our website soon. Thank you, and have a nice evening. Thank you very much, sir. Thank you very much. Ladies and gentlemen, on behalf of Tower India Limited, that concludes this conference. We thank you all for joining us, and you may now disconnect your lines.

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