Dabur India Limited (NSE:DABUR)

Q1 20/21

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Jul 30, 2020

Ladies and gentlemen, good day, and welcome to the Q1 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. Gagunaluwalia. Thank you, and over to you. Thank you. Good afternoon, ladies and gentlemen. On behalf of the management of Dabad India Limited, I welcome you to this conference call pertaining to results for the quarter ended thirtieth June two thousand twenty. Present here with me are mister Mohit Panhotra, chief executive officer, Dabad India Limited mister Adash Sharma, executive director, sales mister Lalit Malik, CFO mister Ashok Jain, senior vice president, finance and company secretary and mister Ankush Jain, head financial planning and analysis. We will now start with an overview of the company's performance by mister Malhotra followed by a q and a session. I now hand over to Mohit. Thank you. Thank you very much. Good afternoon, ladies and gentlemen. Thank you for joining us on the Navarinda Limited conference call pertaining to the results for the quarter ended thirtieth June twenty twenty. I sincerely hope that all of you are safe and healthy. The COVID-nineteen pandemic continues to impact our lives and livelihood across the globe with number of confirmed cases increasing to sixteen point three million globally and one point three million in India. While the world waits for the COVID vaccine to become a reality, the global community is adapting to this new normal and lockdowns are being gradually eased across the globe. COVID has impacted the economy significantly and the world GDP is expected to decline by 5% during '20 twenty calendar year. In these challenging times, our company has stayed true to its vision of being dedicated to the health and well-being of every household. This is demonstrated by our recent launches that are anchored on growing consumer need for immunity, health and hygiene. Coming to our performance for the quarter, we saw a 12.9% decline in consolidated revenue from operations. Our domestic FMCG business saw a decline of 6.9%. While April was complete washout on account of lockdown, we saw sequential improvement in the month of May and June with business returning to a near normal level. While our consolidated profit after tax declined by 5.9%, the standalone profit actually grew at 12.3% in net profit aided by aggressive and proactive cost management in India business. Our range of relative relevant immunity building products and innovative new product launches helped the health care portfolio record a strong 29.2% growth. This was supported by a series of topical marketing campaigns, localized sales activations, and sustained investments behind our power brands. The health supplement business grew by 52.6%, led by 7x surge in sales of Dabur Chawanprash, strong double digit growth in Nabur Honey. Nabur Chawanprash and Nabur Honey saw an increase of around 600 basis points and 300 basis points in their market share respectively. Digestive category recorded a decline on account of restricted outdoor activity, minimal outside food consumption, and closure of restaurants and Horeca business. OTC business reported a strong growth of 34.4% on back of robust performance of Haritas and NPDs like Fulfidrops, Haldidrops, Ashwagandha, Tablets, Daver Immunity Kit, etcetera. The Ethical business also performed very well, reporting a 10.7 growth on back of strong demand for immunity boosting products such as Dabur, Ayush, Kvaat, Ashwagandha, Gloyi Ganwati and expansion of our tuna range. Within HPC business, toothpaste portfolio recorded a growth of 2.6% with double red toothpaste continuing to outperform the category and growing at 8.1%. Our market share in the toothpaste category witnessed a 60 basis point gain vis a vis last year. The quarter also marked the test launch of a new Ayurvedic toothpaste, Dabur Dantrakshat, in select markets where the equity of Dabur Red Paste is weak. Hair oils reported a decline on account of continued slowdown in the category. Nabar Subpo Amla posted a high single digit growth during the quarter. Our market shares increased by 20 basis points in the coconut oil category and 40 basis points in the value added hair oil category. We are witnessing a higher demand for economy offerings in the hair category as we continue to pursue the flanker brand strategy with investments behind our power brand, Babur Avla. The shampoo portfolio recorded a 9.3% decline. In comparison, the overall shampoo category recorded a decline of 25 during the quarter. Our market share in shampoo market increased by 120 basis points, touching 6.4%. Our focus continues on increasing the bottle's resiliency and widening our portfolio on Ayurvedicherbal platforms. Home care and skin care categories reported a muted performance during the quarter due to the discretionary nature of the portfolio. That said, our recently launched products with the sanitizers, hand sanitizers and the cleaning and disinfectant range under Dabber Sanitizer and Dazzle brands, bolstered a strong performance. In fact, the newly launched Dabber Sanitizer brand has registered a growth of 90 crores during the quarter. With the institutional, Vareka, enterprise, and CFC businesses shut down due to the COVID lockdown, the food business reported a decline of 34%. The minimal out of home consumption and consumers staying away from cold beverages due to the fear of getting cold and cough further hurt this business. That said, our market shares in J and N category saw an increase of 300 basis points, reaching 60%. We have expanded our food portfolio with the launch of Real Mango Drink in the PET bottle and Milkshake under the Real brand, which marks our entry into the value added milk category. The culinary business under homemade brand recorded a growth of 6%. We are expanding our portfolio under homemade with the introduction of chutneys and pickles, which was launched during the quarter. International business recorded a decline of 21.6 during the quarter, while markets like Turkey, Bangladesh, and US witnessed a strong growth, the overall business was dragged down by declines in MENA, SSA, and Nepal markets. MENA continued to face macroeconomic headwinds due to lower crude prices and outward movement of expats, which has led to shrinkage in the population and hence decline in categories. We are trying to mitigate these headwinds by tapping into newer categories, driving sales aggressively. We are also looking at cost optimization initiatives across the business, which should help us manage our profitability. We have stepped up innovation across the categories. In addition to the products I mentioned in the last call, we have launched a range of new products to address emerging consumer needs in the health and hygiene segment. The new launches during the first quarter include Tulsi and Ashwagandha variant from Dabur Honey, Dabur Ashwagandha tablets and capsules, Ayush, Guat and Kala, Hanitas, Edulsa, Cup Syrup and Lal Shirt, which is ayurvedic calcium supplement for kids in the healthcare space. In the household and personal hygiene category, we have expanded the Darbar sanitize brand with the introduction of antiseptic liquids, germ protection soap, air sanitizers besides launching a veggie wash under the Dabo brand. Going forward, we intend to drive our business by staying focused on health and hygiene, driving innovation, broadening our play in select markets, focusing on e commerce and modern trade, besides expanding and enhancing our efficiency in our distribution network. These initiatives will be further coupled with cost and cash flow management to ensure healthy margins. I would like to take this opportunity to acknowledge the superlative efforts of each and every member of the Dabert family from our plants to the sales organization who have gone above and beyond their call of duty to ensure uninterrupted supply of our products to consumers in these extremely challenging times. The pandemic has also transformed Dabur into a stronger, more agile enterprise with the entire organization working together as a cohesive team to ensure profitable growth. We have significantly enhanced our risk taking ability as an organization, moving from a fearful to a fearless attitude. COVID has, in fact, acted as a catalyst for change. Going forward, we will continue to build on this transformation and take our business on a stronger trajectory growth trajectory by leveraging our power brands, exploring new opportunities and broadening our portfolio potential across categories. With this, I'll 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. Participants are requested to use handsets while asking a question. Anyone who wishes to ask questions, please press star, then 1. The question is from the line of Manoj Menon from ICSA Securities. Please go ahead. Hi, Modis and team. Absolutely brilliant performance actually in the context. My question is actually on the new launches which you had had. Now two ways of looking at it. One, there's a lot of new launches which you had, which appears tactical, quite a few of them structural and quite a few of them possibly for the medium term. Just wanted to pick your brain on two things. One, with these number of launches that you have done, is it now one more of the consolidation for the rest of the year and maybe even for a couple of years? Is that one way to look at it? And question here is some of the launches, specifically, let's say, toothpaste launch, just trying to understand what is the need gap which you're trying to address? You're right. Hi, Moolosh. Thanks for your compliments. I think indeed, it's a really good work done by the team here, like I mentioned. So all the new product launches, I think new product contributed to 6.1 of our overall turnover that we registered in the first quarter. I think this is completely stupendous. Since I took on the business here, I wanted to embark on innovation in which is taking its time. But I think because of this COVID time, we could really usher in this fearless attitude of doing innovation. So doing innovation in the company is very structural. It's very planned. It's extremely strategic. It is not at all tactical. I think in all product categories, wherever we are representing, we have to innovate. Innovate whether it's in agencies or innovation in packaging or innovation in appeal or innovation in improvement of products, that, in any case, any company has to do if it has to survive over a longer period of time. So now coming to your question over the tactical structure, think we have launched NPDs in the areas wherever we saw contextual relevance here. So we saw contextual relevance happening in immunity based products. So you see the entire health care portfolio that we have launched during this period is extremely immunity led. It's very relevant, and therefore, it's extremely structural and strategic. I don't think post COVID, it will disappear in any which way. Giving you some illustrative examples, like Tulsi Drop, LD Drop that we launched, this market was already there. And the way Seven Plus came into Davos portfolio some years back, so has Tulsi Drop now come in. So whether it's Tulsi Drop or Tulsi Tablets or Tulsi Powder, this is very, very structural for us. And it already existed in our ethical portfolio. So what we've actually done is we have expedited the transition or the movement from ethical range to OTC range and started giving it a facelift and making it available to the grocery channel and the mainstream chemist channel rather than going through a doctor prescription tool. So health care is extremely strategic. The hygiene products that we've rolled out, sanitizers in which we've got a sale of roughly around 80 odd crores on the global business, that is also structurally done because it was extremely contextual at this time, and most of the FMCG companies went into sanitizers. Whether sanitizer as a business will perpetuate and sustain, I cannot say. But the way COVID is going and the cases are increasing, I think hygiene as a habit will get more ingrained and will sustain over a longer period of time. Not to the extent sales we've seen now, it will mute, but it will sustain as a habit. In the home hygiene, whatever we've launched personal and home hygiene, some of them are structural and some of them are tactical in nature. So broadly, I think it's more strategic the way we've gone. If you look at our power brand strategy also, in oral care, we saw a gap sweet spot of around INR40 price point, which we were not there. Our average is at INR50 price point for 100 gram. Patanjali occupies this INR40 sweet spot with the consumer, which we were not plugging the gap. So we have just test marketed in the Hindi speaking well with our rate happens to be weak, and we are testing it out offering. The product is extremely good. The initial response is around 20% to 30% repeat, but we just started advertising. So early days yet for us to talk about it. In hair oil business, we've introduced a lighter format under Dabur Amla, strengthening the Dabur Amla franchise. This is also extremely strategic for us. So I think I've answered your question. Yeah. Understood. Understood, Mohit. In fact, I I just when we were speaking, I was, you know, thinking about the meeting I had with you maybe a couple of years back or even before that when you had just come back to India. I think a lot of those which you told me just reverberated as you were speaking, actually, just playing in front of me. Good luck. My question on top down, and then I have a few brand questions, which I'll take separately after the call, is on your thoughts currently on, let's say, the new ways of working, new ways of, let's say, looking at calls, new ways of reaching the consumer, the customer, the tele calling, the new CRS. Just some thoughts at this point in time on three or four big changes which you would think will stay with the organization and potentially a complete advantage after the noise of COVID hopefully gets over in a few months. Yeah. So I think I'll talk to the GTM. In GTM, there are some structural changes that we've made. I think I'll talk about immediate changes, which has came into being and some of the changes that we were planning for a long run, which has happened to classify right now. The immediate change will actually happen post COVID is actually post March. In March, we could not actually do a preseason loading, so therefore, we connected our pipelines in March, and we further connected the pipelines going forward in the month of April due to the lockdown and then in May and June. And we've not filled up the pipeline. Our pipeline used to be in the range of around twenty one to twenty two days, and now we're connected to around sixteen days. I think there is still a further scope of correcting the pipeline. This is what we wanted to maintain our hygiene at this time because we wanted to ensure ROI of the distributor because liquidity is in a big crunch with the distributor. So we wanted to correct the pipeline, and it happened so that we've been able to correct the pipeline while increasing secondaries with the NPDs coming in. So the turnover did not suffer, and we could correct the pipeline in our regular power brand. So that's the structural change that we've done by reducing the pipeline. Because we could reduce the pipeline, we've embarked on secondary based sales monitoring system. When we say secondary based sales monitoring system, this has been implemented because the pipelines have got reduced. Now we are monitoring the secondary and we are maintaining a norm of the inventory and secondary translating into primary, and this is a CRS that we are implementing on a system basis, a continuous replenishment model. That's the change that we are doing. The change, what we have done is we have upgraded our Dristi. Dristi is the retail app in which the salesperson actually books the order, we have the visibility. We had a old system called the core Stockey. We've actually based Stockey to Coarse Stockey. We've actually upgraded our Drishti system. So that is the change which has actually happened for us. The change has happened is because we were monitoring the debtors very closely, earlier we were dependent on the stockist check lead. We should take the checkbook from the stockist, and we have converted that physical transmission of payments to digital mode of transmission of payment by implementing NSEH, etcetera, and digital payments through the system that we have already implemented. Around 75% of the stock is already moved on, That is 25% also we are closely monitoring and will actually move on. Then we are settling the claims, which used to be paper based. Completely paperless claims will be there. During the COVID situation, what happened? Demand was yo yoing. We did not really know that where the demand would be. And to estimate the demand, it was very important for us to indicate the supply chain as to how is the demand moving so that the production capacities would be spruced up, manufacturing could be spruced up to suit the demand. Therefore, we embarked on rapid S and OP meetings. Instead of doing a sales and operation planning meeting every month, now we are doing sales and operation planning meeting every week. That is really helps us to understand the parts of the business and to be able to deliver on time in full to ecommerce, to modern trade, and also to the stockist end. Then we are also putting up a system wherein we are monitoring the inventories at the stockist level, at the SKU level. So minimum quantities will be kept at the stockist level and the norms would be formed. These are some of the structural changes which will endure over a period of time as far as SMB is concerned for us. The big structural change within the organization is that we've become very nimble and agile. Now we've found a formula on how to grasp the new product launch timeline from maybe one, one and a half years to almost, like, two months and not to compromise on the quality of the product, thanks to COVID. So we become more agile and nimble as an organization and also more fearless in terms of the culture of the company. So these are the broader changes. But there are a lot of other changes also in HR that we have done, etcetera. But I think we can take it offline from here. Understood. Thank you. Thank you, Mohit. That was extremely detailed. Just only one one aspect. Thanks for covering the printed part of it. Just also, if if any comments on the you know, anything on the cost side side, is going to stay with you for longer for longer. Yeah. So we have embarked on a project called project Samridhi. So what we are doing in Samridhi project is we are looking at all aspects of the value chain in the company, from sourcing to raw materials, to packaging materials, to supply chain, direct cost, indirect cost, fixed cost, variable cost, infrastructure cost, CapEx, everything is being seen fine tooth comb here. And we are trying to benchmark ourselves to the best in class. So we are seeking some expertise from outside consultants and we are actually benchmarking our raw material, packaging material prices and we have already budgeted a INR40 crore of saving in the budget that we've taken, and we expect around INR 100 crores to INR 120 crores saving coming out of some of the deposit. All that will not flow into the operating margin that will be required for deploying it back in the brand building. So this exercise of some of the fees also not one off. This is an ongoing activity. So we have started right now because we had to become very cost conscious because of the deleverage happening from top line depression. So we had to embark on cost saving activities. So but this will endure over a period of time. So this could be some of the one, some of the two point o, etcetera, etcetera, keep perpetuating going forward. Even in some of the international business, we've take taken on cost saving projects there. Thank you. Thank you so much, Mohit. Thank you. All the very best. Yeah. Thank you so much, sir. Thank you. The next question is from the line of Latika Chopra from JPMorgan. Please go ahead. Hi, Mohit. My question was on the revenue growth momentum. Clearly, in this quarter was supported by health care portfolio. Sustainable you think, you know, these trends are, particularly for Chavintraj? And how much of this growth would be opportunistic in in the sense that you would have brought new consumers in onboard? And how much of this demand you think will stay sticky? What I'm just trying to understand is, you know, you've typically always highlighted that eight to 10% is a more normalized, you know, growth momentum for Dabur. Do we see a case now with all these initiatives in place where this could be increased? Yeah. Oh, yeah. As far as I already added some color to it, health care in my mind is not all the new initiatives that we've taken in health care, they are not practical in nature. They are more strategic in nature, and we are also trying to get into more mainstream categories. I did not add here. We propose to get into value added teas also, which is extension of thoughts from our Honeyters brand and our launching Agala. So we are, therefore, introducing a value added immunity tea also. So these traits will endure because categories are huge, and we will only gain share in those categories. And also, we might take seven plus into a different format. So that is also being explored in that in the next quarter, you'll see some action happening on that. So these trends will endure, and they are not tactical in nature. As far as German crush, surge of sales is concerned, yes, this is all season for German crush. Last year, around 10 odd crores, and this year, we've done a 7% kind of growth in German crush. So the huge surge that we've seen, this may not sustain over a period of time, but this will get compensated by a lot of new other entries that you guys are doing. So that will structurally sustain in the business. But overall, I feel the health care's contribution to business will increase. In this quarter, it can it's gone up by eight percentage points. So from 30% contribution, it's almost like 40% contribution now. And I think health care contribution, which is also profitable and more accretive margin accretive to us, will only go up from here. Sure. Then just next one on the you know, you mentioned about you want, you know, inventory levels, you know, to be lower in the channel structurally. Are you now back to comfortable inventory levels, or is there more to go at a retail level, you know, as the full reopening of economy happens? And, also, any comments on your direct reach impact? Yeah. So inventory levels are actually okay. So we are pretty much at the, you know, peak of hygiene levels that we could have. Sixteen days of inventory is fine. But if you ask me, is this the best in class? Answer is no. I think there is a fair amount of inventory correction still required of around four, five days of inventory still needs to be corrected if we really need to be operating as best in class inventory management company with the stock case. So but for that, we have to improve our SKU level availability, our range level availability of the stock case end, which is what we are looking at. Today, our RA level availability of the stock is in the range around 70%, 75%. The moment it goes up to around 90 percentage point level. We'll be in a position to reduce this inventory by another five days and bring it to around eleven to twelve days level so that the market servicing is not impacted and there is no loss of sales because we have such a huge portfolio. So there is a bit of inventory correction. We will try to do that during the course of this year. But depending upon how the business trends and how our new products fare, we will have to look at the inventory corrections more so. What is the part of the question? I was just trying to understand. So what you're saying is sequentially, you feel, you know, from a channel selling perspective, there is no further scope in the current quarter for you to grow? Because, you know, April, you would have seen a correction in inventory levels, and you would have, you know, increased it through the course of the quarter quarter? Yeah. So whatever downside that we had in the month of April, not compensated. So whatever SDR, the loss of the retail level, that got more than filled in in the month of May and June. And even if you look at July, we are almost trending at the levels of June business. So whatever we lost in terms of inventory that already got plugged in, And in July also, we are seeing similar trends. But that said, there are pockets where all disturbances and there are pockets of channels where still things have not really come to any normal, like PSC has not opened up, like cash and carry has not opened up, like it's too soon, Vureka channel, that is impacting our food business. So that is still yet to get into the recovery path. And whatever pipelines that we have lost there will get plugged in, in those channels as and when those channels also open. Sure. Thank you so much, Mohit. Thank you, Radhika. Yes. Thank you. The next question is from the line of Persi Pantagi from IIFL. Please go ahead. Hi. Good afternoon, Mohit and team, and congrats on a good set of numbers. My question is on your gross margins. So your gross margin has on a Y o Y business sorry, Y o Y basis remained flat. So just wanted to understand if, I mean, there is any adverse mix effect which has led to this because crude is down and across the board this quarter promotional expenses are down in FMCG. So gross margin should have expanded also the fact that your food business is down much more. So that's actually a positive mix, at least on that count. So why is it that your gross margins are sort of flat Y o Y? So firstly, if you look at the India business, the gross margin actually expanded by around 126 basis points, and that expansion is on account of benign raw material prices. And to your point, also the crude prices have been low, and that's the benefit that we've had in our HPC business. That said, HPC business actually declined about 15% for us. So it wasn't too much exaggerated, this impact. And also, the consumer promotion and trade promotions have been lower. To that extent, gross margins have got increased. Plus, there was a 1.5% of price increase carryover, which happened from last year, that has also led to this 125 basis points of gross margin increase in the India business. Now when you look at international business, the things reversed. In international business, our TPTP actually went up because there was so much pressure in the market. We had to give consumer promotions, so therefore, gross margin came down. Plus, the MENA business, which is a high gross margin business, went down to around 42, where other businesses like Turkey and US, which are low gross margin business increased. So country mix unfavorably impacted the gross margins in the international business. So the sum of two, you see almost, flattish sort of gross margin, but in India, margin definitely expanded, and that has slowed down to the operating margin. That's why you see operating margin growth of more than 200 to basis points. But, Mohit, the fact that even in India, pricing is up a 150 basis points, and even if costs were flat, that should have given one fifty basis points. The fact is cost is down, pricing is up, mix is favorable, and promotions are lower. So it should have been much higher than 01/25, isn't it? Not really. Our agri commodity basket has actually gone up. We see we are seeing inflation in our agri commodity because Amla, because of the surge in Chamundraj, Amla fruit wasn't available, and there's been a surge in prices of dabar Amla fruit, and this happens to be off season for us. So that has led to an agribosket increase inflation happening. So we are seeing a 3% inflation, whereas 1.5% was a price increase. So to that extent, there was a dent. But your point is right. Even the food business, which is a low margin business, was dilutive. So that's also happened. Plus, there were some other impact of area based exemption also, which we lost. That's also impacting our gross margin in the India business. So how do we look at this number going ahead? Because this quarter, as I said, you had several tailwinds. Going ahead, your food business will improve, so the mix will actually, from a margin point of view, worsen. Your promotions will increase from a very low base that you've seen in June. No further benefit will come in terms of cost. So unless you are going to increase prices in the near future, this one twenty five basis points will sort of disappear going ahead. Is that right? Not really. The crude prices still remain benign. So a part of our portfolio is definitely impacted, which is going to be margin accretive to us in gross margin. Foods portfolio, yeah, there will be improvement, so that will negatively impact the gross margin. But our our health portfolio continues to see a surge. So I don't see Chamundraj and the season of Chamundraj is approaching and season of honey is approaching being winter. So there also, this is a high margin season for us because our health care portfolio goes up. That's the piece. So we see a 3% inflation happening in agri commodity, but that will be, to a certain extent, offset by the price increases that we will have to do. And we don't have so much of competitive intensity in the health portfolio that we cannot take up this price increase. We are the price makers in the marketplace. So we will take up that price increase also. So that is the factor. Plus, we told you that we are embarking on similarity as a project, and we've already budgeted INR 40 crores of savings on account of similarity. That will also kick in as we speak of savings will come in. So I will see an increase in the gross margin for sure. Now that will not flow down into operating margin because I have to fund ad pro also for new products. So it will be partially funded and partially, there will be a flow through into the operating margin. So we are not overtly worried on this operating margin, be that the moment at least. Understood. My question is, could you give some idea on what is the secondary sales growth, in June in India? Secondary sales growth in June in India will be in the range of around, seven to 8%, roughly. 7% will be a secondary sales growth. If we look at the whole quarter also, while the business has gone down by around 6.8%, our secondary business is only down by 5%, and we've done that pipeline correction to that extent. So secondary business is trending at around 7% despite Horeca, institutions, CSC, modern trade, all not firing. Okay. And this 7% growth that you have seen in June on a secondary basis, again, here, the data is not very clearly available. So I will go with whatever your best estimate is. How much of that is pipeline fill into the retail or wholesale? You know, very difficult for us to estimate. As I told you, there is not much of pipeline fill because we see a similar secondary trend happening in the month of July also. I don't think it's too much. So I think it may not be sustainable, but there are a lot of channels that are still not operating at the near normal level. Like, the modern trade is not operating at a near normal level. It's still short. It's still down. TSC is not opened up. So, you know, broadly, I think we should be in a position to sustain around, that kind of other can be level. And on the point of channels, could you give some idea on what is the online channel now as a percentage of your sales and what kind of growth you are seeing there? Yeah. So online has been a star in this period, like, 7% is in a star in our portfolio in channels. Online has been a star. E commerce percentage of business from 1.5 has gone up to 5.6%, and it's only trending up from here. So that's doing exceedingly well for us. Okay. And, also, I mean, if you could give some granular granularity, this 5.6, is it, like, split across different channel partners, or is it that sort of only one strong player is actually taking all the gains? So I think it's across. So it's very secular growth that we're seeing across different platforms, whether it is grocery channel, which is big basket and grocers or pharmacy channel, is pharmacy or NetMed and others or we see the likes of Amazon and Flipkart. So all the three channel types are seeing a growth and it is secular across. So the reason why I asked this is that a lot of people are scared that if online becomes large enough, then sort of they have power to squeeze margins or launch their own private labels, etcetera. So I'm just asking in that context because if online is big as a whole, but each individual player still remains small, then I think that risk is not there. Right? Yeah. Because there's so many players, but, see, there's no risk of, they are pushing us and, you know, bargaining power shifting in their hands because there's so many players unlike in The US market where there's a complete monopoly of one Amazon, which is handling Big Boy. Here, there's Gopher, there's Big Basket, there is Amazon, Flipkart, there's NetMed, there's OneMg, there are so many players here. So I don't see that risk happening at all. What we've actually done during this period is that earlier, were dependent on a stockist to service these online platforms. Now we go direct with them. When we go direct with them, we have a saving of around 5% of that margin that we were giving to the intermediary. So all these channels have now become very profitable for us. Right. So I thought that's just a good point to address because there's a lot of sort of questions coming across on this in a five year, seven year view. What can happen if online becomes really big? Do we see bargaining power shifting away from FMCG consumers, etcetera? No. I I don't I don't think that will ever happen in a country like India, which is so entrepreneurial, and private equity investment keeps flowing into this country. So it will not happen. Right. That's all from me, Mohit. Thanks, all the best. Thank you. Thank you. Thank you. The next question is from the line of Arnav Mitra from Credit Suisse. Please go ahead. Yeah. Hi, and congratulations on very good performance in this context. My question was on, again, on the new launches. It seems like very well thought out, you know, the launches, the products look quite good. I was just concerned that because you've won so many launches in such a short delay of time, is there a risk that you're asking that some really good products could actually fizzle out because the consumer needs to be aware that such a product is there, like, let's say, flavored honey, the distribution has to be there, which you will find it when you want to buy. Retail distribution channel has to handle a lot of new things. So how are you kind of I guess, that you do a lot of good launches, but actually, it's too much bunch together that it's kind of many of them fail. Yes. So, Adam, you're right. But I think we have to be otherwise, we waited for two decades for the time to be right for a NPD to be launched. After, I think, around one or two decades, we've seen the time is right for our NPDs, which are there in the ethical business for us to actually launch because the consumer mind is now quite skewed or inclined towards adopting these NPDs, which are more immunity led. So I think rather than looking at our focus, we looked at more consumer space, and I think our sales force was hungry for MPDs. So you're right. MPDs, rate is generally in the range of around 20%. For us, I think even if it is around 60%, we are fine with it. Yeah. And to add to that, Adnan, we also have the ecommerce platform, which makes the product available. It's otherwise, you know, it's very hard to ramp up the new product. So that is one benefit which we will channel, which we will utilize to scale up these entities. And to point, a lot of entities that we've launched like veggie wash, etcetera, they're exclusively for ecommerce, and they'll be scaled up. And we're launching an entire baby range also with ecommerce exclusive. So what's happening is Amazon and Flipkart are also also asking for exclusive brand launch. Like, apple cider vinegar that we rolled out is also exclusively for Amazon on Amazon. So only when it scales up do we extend it to modern trade, etcetera. So that gives us a cradle to actually test the all the NPDs Right. And in terms of just making these products aware to the consumer because they are relatively small and you have so many of them, is it a difficult approach to make people aware that such a product exists? I mean, I'm just trying to see how you break that gap, like, Or is it still for mass media or other routes that you think this will this job will be done? No. So we are using definitely mass media and digital to advertise and also ecommerce platform. So one, I think digital is really helping us. The digital investment has gone up from 4% to 14% as we speak. So a lot of these NPVs, which have been played out in e commerce are being activated digitally and we are spreading the awareness on digital. Also for the product, which is showing promise, and like we'll see growth in one quarter has become INR 7 crores for us. It's showing a very good promise for us. Since we have immediately shifted to mass media, toothpaste will be mass media. So the products in which we don't find too much of traction, they will be more digital initially. Once we scale up, then we'll shift the investments to mass media also as and when we see the turnover coming in. Okay. And my last question was on this recovery in June and July that you spoke about to positive detail. Is it across the board or are you seeing your weaker segments like food and personal care, which were deeply negative for the full quarter, come back much more while the health care business is similar to the full quarter level? And any sense of the recovery in the weaker parts of the business? You're right, Adnan. We are seeing recovery also in shades. For example, in hair care, the recovery of brands and the categories are still in the negative trajectory. In home care, also it's negative. In skin care, also negative. In health care, we are seeing even positive trajectory happening. In home and hygiene, there is a positive trajectory. But in the areas where there was negative trajectory, there is definitely a recovery. In food, which was down by almost 50%, is now down to a level of around 17 odd percent. In hair care, which is down, hair oil, which is down by around 25%. Now we see the business down by around 12 percentage point level. So that's the kind of recovery what we've seen, but in not in every category have we seen green recovery, which is completely impositive. Okay. Okay. Thanks. That's it from my side, Mohit. All the best. Yeah. Thank you. Thank you, Andam. Thank you. The next question is from the line of Prakash Kapadia from Anivit PMS. Please go ahead. Yeah. Thanks for the opportunity. I had, you know, two quick questions. On health supplements, we've done wonderfully well. Congrats for the new new and, you know, the new purchase. My question was, you know, what is the consumer behavior, you know, which you are seeing? Because historically, what I understand more is, know, Chawan Prash taste acceptance was always, you know, a big challenge for us. So, you know, now what are the trends you are seeing in consumer behavior based on, you know, our leadership in this category? And so is there a plan to launch smaller SKUs, induce trials, and then get consumers to migrate to larger SKUs, especially in. Right. So, Prakash, consumer is actually shifting towards ayurvedic based health supplements as the prevention and prophylactic sort of prevention for COVID, and therefore, Jawantrash comes in to expand immunity or help the immunity aid for sure. So therefore, what's happening is penetration of seven plus is to be low single digit. I would add this with the results are yet to be out from a computer panel, but I think the penetration of seven plus would have drastically gone up and these are these black swan events, which actually take up the penetration of broad categories like seven plus and honey. So definitely that behavior change has actually happened and now people have got used to the taste and if there's a barrier to try a brand, and once the barrier is released because of the COVID or whatever the situation is, then the continuity will be established and the penetration actually go up. The point to your question is, are we launching newer formats or affordable SKU? Yes. We are launching newer formats, which are which will bring the price down. So I can't talk on that right now. But, yes, we are planning newer formats, which will take down the prices and also make available in better formats. Powder, I alluded to the board, but there are other formats also in the pipeline that we guys are planning also in person. This is the best time to exchange our own parts into other convenient format for the consumers to try. And if I look at the foods business from a longer term perspective, I would say, here now, you know, we've been around that thousand. So what is the biggest challenge? Is it, you know, repeat purchases from existing consumers not happening, which is why keep that kind of a trend. And, you know, what has been the contribution of product lines here, the because, you know, that can have a near to midterm impact given what is currently happening. So what's happening in food, the category is actually declining more than 50% in food, and we guys are I mean, they are increasing our market share. Our market has actually gone up by 300 basis points in the real brand. So we are definitely ahead of the curve as far as other companies are concerned in beverage business, especially J and N business. What's happening to the beverage business, why the business is down is people are moving to cheaper alternatives and also moving to milk based alternatives. Milk is really seen as surge during this time. And because people were not moving out, out of home consumption got impacted. And 200 ml, which is a SKU for out of home consumption contributed to more than 40% of our business. So that got impacted quite a bit. And people were also not wanting to drink cold beverages and juices are in which we had cold. So therefore, they were avoiding those also and sugary drinks also people were avoiding. So this is not completely sugar free. So that's why that also took a toll on our food business. As far as channels are concerned, Oreca, Enterprise and Modern Trade, Horeca, these businesses contribute around 15%, 10% to 15% of the turnover in quarter one, which happens to be a season comes from these channels. They were completely shut down. But now if I have to give you what is the future of this, if you look at three, three months back, the growth of beverage business in the month, in the last quarter before March was around 10 percentage points. Now we think we should go back post normalcy to this trajectory of around 10 odd percentage point levels when these channels normalize in foods. And not just to operate in J and N category, we've also extended ourselves into larger categories, which is a pet bottle and also 10 rupee price point in coolers, and now we've gone into milk based beverages and also launched a real apple variant in 10 rupees. So I think on back of all these initiatives and innovations, we should turn the bend on food. I know I've been saying that since many calls, but we get interface with these one off events like COVID and all, and nobody could help that. And and, you know, is it is this purchases not happening by existing consumers of bigger talents, or is it more newer consumers not getting next year and this category a bigger size? Sorry. I didn't I didn't get the last part of the question. Right? I'm saying in the food business, is, you know, repeat purchases not happening a bigger issue for growth or newer consumers not coming in a bigger sense? So I think it's both. It's both. It's just not one. Annual consumers are not coming and existing consumers are downgrading to cheaper alternative, which prior to COVID was more soft drinks and more others. So I think an out of home consumption has got severely impacted because people are not moving out, existing consumer base is not moving out. So if they don't move out, 200 ml as a pack gets impacted. While one liter has seen recovery in the month of June and July, we are seeing a major recovery happening in one liter, which is in home consumption. But out of home consumption of 200 ml is still, you know, declining for us. So it's both in a sense. And lastly, you know, we see all of these products. One is RVs available online across the country? So, you know, we can expect experiment and, you know, feedback is much faster across wide spectrum of market. For still, they are, you know, to be done in certain are on Amazon or Flipkart or BigBazaar. How is the order? Yeah. So the NPDs will be available. So we are giving a priority to ecommerce because that's the board of call for any consumer to go to ecommerce channels and purchase. So that we are doing. And but distribution expansion will only take its own time. So while we are making the boards available to 40,000 to 50,000 outlets, but to go to 1,200,000 or 1,000,000 outlets will definitely take its own time, but we are making an attempt to make them available on online platforms for sure. So if you see majority range will be available on Amazon. And to add it up, we've also opened up dabble.com. So dabble.com, you can also go on to dabble.com and place an order there. And that order is redirected to Amazon if the product is available there. And if it's not available there, we are also opening up e commerce service through dawba itself. That will take another month or so, but that's also being gonna open up. Yeah. Great. Thank you. All the best. Thank you, Prakash. Thank you very much. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in this conference call, please limit your questions to two per participant. For any further questions, you may come back for a follow-up. The next question is from the line of Vivek Maheshwari from Jefferies. Please go ahead. Hi. Good evening, Mohit and team. Hi, Vivek. Hi. My question, both the questions are on new launches only. Mohit, you mentioned about inventory days going down, the endeavor to use this as an as an as an advantage. But when you're launching products so aggressively, is it possible to actually, you know, prune down the the overall channel inventory? Because there will be a build out phase, right, when you're launching product across the basket. So why and how will it happen? You know? Yeah. So the inventory is more so in the existing product. The new products have just come in. So I think that's what, we are trying to do. We are trying to cut and bring the hygiene in the existing, product portfolio that we have, where the inventories were very high and it was impacting the business and the distributor ROI. The NPDs that we are launching are more healthcare, so they are actually ROI accretive to the distributor. So we will also be willing to add inventory of these products as existing inventory of products goes down. Only then will be we are unable to get into the the newer inventory. So that's what we are trying to balance, and we are putting in a CRM system in place that's what which is also gonna be helping the NPDs as well. So whatever secondary sales happen will be the primary sales. So it's both for the existing products and also the NPDs going forward. Okay. Okay. And the other bit is, you know, philosophically speaking, let's say, the way in which I look at your portfolio, at least the one that you had, you know, in the past, let's say, Real in foods and, let's say, Odomos in home care. In both these cases, Dabur was not at the center, the brand Dabur, but it was, you know, it was more the real and the Odemos. Whereas when I look at your home care and even homemade portfolio, Dabur is right at the center. Do you see any risk to Dabur as a brand? You know? What it stands for? Because, you know, let's say, a pickle and a chutney is it doesn't fit into that Dabur, you know, Dabur architecture. So how do you think about is there any risk whatsoever from that perspective? No. Not really. We've kept Nava away from brands where we feel they could be an issue. For example, Odo Nils or Odo Mode, and that's why and Fame brand, which is a definitely brand. So, therefore, barring that, I think we are existing in all the categories which are more health and wellness than food. And health and wellness extends to foods also. So Homemade is a brand, is a brand in itself, but Dabble provides credibility. It provides the trust. It provides that legacy of trust to the brand. So it only adds to the Dabble, the brand introduction also adds back if the product quality is good. In health care, definitely, it makes eminent sense for us. In real, we've kept it real, but the new Amla juices and other juices, the health juices that you see, they are coming under the Dabur brand. The Dabur Amla juice is what we've introduced. So I don't think in homemade, Dabur is played up as much. Homemade is a brand in itself, and Dabur is just providing that kind of umbrella branding or trust in it. We have no intent of getting away from homemade and only having Dabur, actually the other way around. Once the brand is established gradually, slowly, we will move Dabur out and it will become an independent brand called homemade. That's the way it happened in Dabur Vatican, also an international business. Earlier, was Dabur Vatican, Dabur providing trust. As the brand becomes bigger, we release the Dabur's name, and we get the clutches out of the brand, and the brand becomes independent. But in the beginning, before we want to establish the brand, we definitely want to keep the word dabber here as long as there is no negative impact of the category on dabber, and which is a study that we do. Only if dabber lends credibility to the brand and the category where we are rolling it out, we put dabble. Like in sanitize, we have put dabble because sanitizer, the brand, is all about health and wellness to the consumer, whether it's antiseptic liquid or it is a sanitizer or it is a soap. So we are very conscious and cognizant of the fact that we don't dilute equity of the brand dabble. Sure. Sure. And lastly, what in terms of, you know, measuring the success, what are the milestones that you're looking at for all your launches? Is it a and and where do you see n you know, NPD as a percentage of overall revenues in the next three years? The NPD as a percentage of revenue used to be around 1%. From 1%, we've actually moved to around 6% in the quarter because we just launched. We'll be okay if we move to around 34% of the total turnover coming from the new product launches, that should be fine because a lot of entities may not be successful. And we are conscious of the fact that it may not be, but that's fine as long as it's 3% to 4%. But we want innovation to be right across the portfolio of the company, whether to reposition or to revamp or to repackage or to improve the formulation, etcetera, that will happen. We have not given ourselves threshold level of turnover for it to be successful or not to be successful. So we want to gain share in the category that we are entering. That's the milestone that we keep ourselves that are we gaining share from the category. Earlier, what used to happen is we used to look at if a brand does INR 100 crores or 10 crores only then will it be successful. So we have taken off those guardrails now of turnover for a brand to be successful because if you put those guardrails, then there is an internal reluctance on the brand team and the marketing team to launch the product. If the product doesn't click and doesn't do 10 crores, and then they would be reluctant to launch it. I think this is a little bit of Sure. Sure, Mohit. Thank you, and wish you all the best. Vivek. Thank you. The next question is from the line of Tejas Shah from Spark Capital. Please go ahead. Hi, Mohit and team. Thanks for the opportunity. What, Basu, just if we move to if we go back to pre COVID days, we were working with the power brand construct and then COVID opened up new tactical opportunities in health and hygiene. So to date, looking ahead, obviously, and hygiene has priority in everybody's strategy. But where does it leave the Powerbrand strategy now? So the thesis Powerbrand strategy still remains. In my conference call address also, I mentioned that Powerbrand are doing better. If you look at the total turnover of the company, we declined by 12.9%. And but power brands were almost at around 1.2%, 1.3% decline. So Charmin Plus happens to be a power brand. Honey happens to be a power brand. Honey does happen to be a power brand. Real is a power brand, which is under pressure, and so is Dabur Amla under pressure. So we continue with the power brand strategy and the flanker brand strategy on hair oil. Dabber Red happens to be a power brand that has actually grown by 8%, whereas the overall portfolio is only grown by 2.6%. So across the board, if you see, we are focusing on power brands, and power brands are the ones which are taking our growth forward, and we are increasing our innovations in power brands. But to your point, hygiene has come in as a separate, and we did not have a power brand in hygiene. Not that we are introducing sanitize as a power brand, but we've to capitalize on the existing offices. It's important for us to get into this category. And therefore, our sanitize and and does this yeah. The one too which has come up. I hope I've been able to answer your question. Sure. Yeah. This is helpful. Mohit, you spoke about being fearless. Hello? Hello. Am I audible? Yes. Mohit, you spoke about being fearless and going for goldness and NPD also, and that is very much visible in last year or so. So what are the stencils? So how are we going about this in terms of how can we improve the strike rate of new products? what is the GM stencil or benchmark, gross margin benchmark that we are using to select or eliminate potential new launches? This is we are very conscious on the gross margin levels and the categories that we are getting in. So if you look at, Dabur is existing in two categories or two portfolios of products in which we gain market share, in which we create market. So if you see the new product launches also that we've done, we've done it very consciously in the two portfolios. One portfolio Yes. Hello. Yes, Tejas. I answered your question on the power plant. So you're just talking about NPDs and gross margin and the strike rate improvement? Yes, that's right. So as I told you that we don't have a strike rate target right now on these NPDs because there are so many NPDs that we guys are rolling out. So but on the gross margin, gross margin, there is definitely a guardrail that we put in place. So we are looking at, major apologies for this connection disturbance. Coming back to your question. So on the NPDs, if you look at the covered portfolio, we have two types of portfolios. One portfolio in which we identify the market in which we enter and therefore gain market share, the market size which is sizable enough and which is essentially our HPC portfolio and the food portfolio. The part is where we are market creators. Like in Healthcare, we are market creators. Like in Chawan Prash, we are the market leader and we are the ones who create the market there. So if you look at the NPD launches, there also we've done the same thing. We have identified the key markets of home and hygiene, which are big enough markets and we've entered those markets, be it a sanitizer or antiseptic soap or antiseptic liquid or air sanitizer, etcetera. These are big markets in which we'll take share. And health care, we are market creators, like Kulsi drop market doesn't exist. Haldi drop market doesn't exist, our used co op market doesn't exist or in tea where the market is existing and we will be gaining share. So therefore, that's our strategic approach to go after those markets. Great, sir. Sir, last one question, if I may squeeze in one. Sir, two quarters back, you had touched upon opportunities of non linearity margins coming from employee cost. So any update on that or any firm plan there? Sorry. I didn't quite hear your question. Sir, you had called out that there's an opportunity to expand margins to employee costs or con not controlling, but rationalizing that line item. So any firm plan on that? Yes. Parul, the Samrithi project, what one is actually doing is we are looking at a span of control in the organization and looking at and benchmarking ourselves in terms of employee cost to sales and cost to profit ratio and trying to do some rationalization. So that's also very much a part of the Samaritvi project and redefining the span of controls in the sales and marketing and across the board all the functions. Very helpful. Thanks, Sandeep. Thank you. Thank you. The next question is from the line of Sanjay Maniyal from ICICI Direct. Please go ahead. Hi, sir. Just two questions. One specifically on hand sanitizer or double sanitizer you mentioned. If I'm not wrong, you mentioned INR 90 crores sales in the quarter? That's right. That's right. Almost INR 90 crores sales across India and IBD and international business. Okay. So where would it fit in the subcategories in India? Yeah. We fit it into skincare. Otherwise, that's what I said in skincare, a decline is actually 50% odd. Because of sanitizers, you see a decline of around 12.5% in skincare. Okay. Okay. Which means that, you know, current sale is 72 crores, so a large part of it is only the sanitizers now? Yeah. Quite a bit of sanitizers here because the Fen brand and the Gloveri brand had a major headwind in terms of there being discretionary categories and out of home consumption and salon visits were quite restricted. And that's the reason hand sanitizers really came in as a savior. Right, sir. So secondly, you as you mentioned that this is an off season for John Fish, how it has been for the honey because and what would be the growth rates in honey in this particular quarter? So honey has actually grown by almost 69% for us. And again, off season for honey, honey also picks up during the winter season. But because honey is adjuvant and actually used as a junk with all the insurance and ayurvedic products. That's why there was a surge in the honey market also. And we did all tactical, topical marketing campaigns in honey and honey being used as a big immunity booster. So that has helped. So honey has really done very well. We actually had a shortage of honey in between and glass bottles of honey were not available and we had to approach the government and get the permission. And finally, we had to get it going. So we lost some sales in the bargain around a week or so because of the lockdown period. But behind us, we've grown up 70% on here. I'd say if if I just can ask last one specifically on the rural growth, Are you really seeing some impact of the pandemic spreading in the Himalayan? We're not seeing an impact. Actually, we see a positive impact because the reverse migration happening to the rural areas, see rural business actually growing by 1% and urban business declining by 13% for us. So rural is showing a surge after the Nielsen figures also, we see a surge in the rural by around 12.5%. I know how correct those numbers are, I think those numbers with a lot of doubt because all the surveys of New Zealand happened by staying at home by telephone calls, so there could be an issue there. But that said, the rural recovery is was much faster as compared to the urban recovery, and because all the population scarcity or population spread out in the rural area, social distancing is very natural there, so spread of COVID wasn't as much in rural. I understand the instance of COVID spreading now in Bihar and the situation is exacerbated by the floods and all. So at the moment, we are not seeing too much of impact. Our super stock is our stock is network is doing far better as compared to the urban business. Okay. Thank you. Thank you very much. Thank you, Sanjay. Thank you. The next question is from the line of Rahul Maheshwari from Ambient Asset Management. Please go ahead. Good evening, Mohit and entire team. Fantastic set of numbers in terms of time. I have Excuse me. This is the operator. Mister Maheshwari, your voice is breaking. Right now, I audible now? Yeah. Yes, sir. Thank you. Good set of numbers to entire Dabo team. So my two questions are there. as you in last one year, you tried to fix the domestic portfolio in terms of the new product launches and the distribution and across the projects within there And as Mohit, you have spent most of the time into the international division more than a decade. How you would be changing the structural thing at international because there is lot of inconsistency. I am not talking from just one quarter point of view, but throughout the many years and going forward in terms of the launches, in terms of the contribution to the overall consolidated and also from the capital allocation point of view. Any color on from a long term point of view, how international business will be looking from an overall journey for Dharam? See, international business continues to trend well, except that MENA region, wherein we are market leaders in most of the categories where we exist in, is facing severe headwinds because of the crude prices being low and the economy being dependent on the crude prices. And moreover, what's happening because of COVID, lot of population shrinkage is also happening where expireds are leaving this country. And but that said, our market share is because of local Arab population, and we are entering into newer categories and looking at TPs and CPs to expand those categories and get into newer ones. So I think that business should recover on its own. We are in a very good space as far as MENA is concerned, and we are used by the captive population there. I don't see it's a momentary issue. So which I think once the macroeconomic headwinds, which are not controllable by us, Once they are not there, I think the MENA business should trend back. As well other pockets are concerned, in Egypt, we are market leaders and Egypt continues to grow except for this COVID, wherein declined by twenty six percent again because of corona pandemic, I think post that we're back on recovery. Our Turkey business, which wasn't doing very well has now started doing very well, it's turned the lead, it's grown by around 33%. Our U. S. Business, which is also not doing well because of the headwind of the category due to corona, what happened there, people have resumed the usage of relaxers, because the salons are shut, so people are using relaxers at home now and we are the market leaders in relaxers and that business has picked up. As we speak in the quarter, while all of the businesses declined, our U. S. Business actually grew by 12.5%. Our Subsara Africa business is also doing reasonably well. In the COVID, it declined by forty percent because of curfew in a lot of markets in Sub Saharan Africa. So then our Bangladesh business, we've done a management chain and Bangladesh business during COVID times also has grown by 14%. Now Nepal's business was the one who suffered quite a bit more than 50% decline in COVID because of the juice reliant and out of home consumption being very big there and there was a curfew situation which has just got lifted in the month of July. Barring that, I think our international business is in a good space and extremely profitable. I don't see there's a long term problem there. And there's a huge headroom for growth because our oral care market shares are still in the range of low single digit, low double digit there, our shampoos into low double digit. And hair oil, we are the market leader and hair creams, we are the market leader. And we are getting into a lot of other categories where we will only gain share. If you look at America also, we've gone into styling category where also we are into low single digit market share. There's a huge headroom for growth in all the markets for us. So I think it will trend up long term pretty well for us. There are pockets, but those pockets will be corrected. And that said, we are now being very cost conscious on international business also because if the headwind persists in MENA region, then we'll have to curtail our cost to ensure profit protection. So from ROI point of view, basically from international business, it's equivalent to India business or it's how's the trajectory in return on investment or the capital which is being deployed for international business? Any highlighting? also, you told about the Nipal business because of the curfew and as a food, the juice business is one of the good part of our domestic business. Earlier also, there was issue and we had some facility in Sri Lanka. Can you give some color that how much dependency is there from Nepal? And in case if there are further more restrictions or any such uneven, how much impact can be there or if we have created a backup and there won't be any such kind of supply chain problem for the G Suite business? Sure. So I think I'll just talk with regard to ROI perspective. If you look at MENA Region, I think in view of the product mix categories, the ROI is much better because it is less capital intensive. And therefore the ROI wise it is better. And even when we look at Namaste because it is outsourced, ROI wise it is much better. It is Nepal, which is a juice category, where it requires a high capital investment in terms of the plant and machinery. That is where the ROI is comparatively lower than the other categories. Now coming to the question with regard to Sri Lanka. Sri Lanka has been as a backup plant for us in case if there is any supply constraint, And we observed that a couple of years back when Nepal was shut down, we were able to get the supplies from Sri Lanka, and that has been very useful for us in terms of export to India. And at the same time, now we are also utilizing the capacity to export even beyond India to other countries, including U. S. Other countries also. So therefore, Sri Lanka is a very useful plan for us strategically to derisk in case of any eventualities in other markets for the manufacturing. And therefore, that works very well in those times when it is required. Though having said that, we are not utilizing the capacity at current level to fullest and we are trying to utilize by exploring other markets, but it certainly acts as a very important backup in case of Nepal or any other manufacturing units. Thank you so much to the entire team and Mohit especially to you the kind of agile and fearless attitude which you brought to the entire company. That's phenomenally encouraging. Thank you, Rahul. Thank you. Thank you. The next question is from the line of Krishnan from Modi Laloswal. Please go ahead. Yeah. Thanks for taking my question, and congrats on a very good set of numbers in the current environment. Mohit, my question was more on the the the range that you talked about, where you're future lodging for ecommerce. I know you've spoken in the past that this was a bit of a lost opportunity for you given the space vacated by Johnson and Johnson and which Himalay was able to successfully capture. A, will this be under the large deal brand? Has this been already launched, or is it in the plan? It's a big plan now. Yeah. So as we speak, we are waiting for the big day in Amazon, and we'll be rolling out this as an exclusive Amazon launch on the big day of Amazon. So it will be rolled out. So earlier, the problem was that we only had one brand last sale as compared to J and J, which is the full range of Baby, and when the mothers buy, they buy into the full range, whether it's a soap or a powder or oil, etcetera, they're a gift hamper. So we didn't have that range. We had created a range in international business, so we have rolled out that range in India also, and we'll now launch in Amazon, and if the traction is there, then we'll roll it out in modern trade and in general trade also, and it's a very big place to rightly identify as Johnson a little weak player as compared to Dabur. But we will not have a new brand, as Baby Care is also extension of health care for kids. Therefore, we are extending Dabur. It will be called Dabur Baby and not Lal Pail or any other brand. So it will be under the Dabur brand with that draft and quality assurance. Understood. Thanks a Thank you. Thank you. The next question is from the line of Abhish Agarwal from Prabhudas Steel Azhar. Please go ahead. Yes. Hi, Mohit. There is a set of numbers in the current situation. I have a couple of strategic questions. If I look back at the history of numbers, the number always had a lot of products under its belt. But somehow the other, the issue always was to support so wider portfolio. Now the kind of launches we have done, I think perhaps this is a maximum number of launches that we have put together last five, ten years. So how much of these launches do you think are strategic and you would like to scale them up in the long term while some of them may be a sanitizer or even in some of these are surface sanitizers and some of these, they may, as an industry only, they may try to sizzle out, say, after a few months? Yes. So therefore, have two sets. If you look at the categories where we've actually launched, we launched either in health care, which is immunity led products, or we've launched products in personal and home hygiene. So if you look at the health care, most of the products that we've rolled out are category creators like Cusi Drops, Healthy Drops, Single Herb Ranges for us, Ayush Quartz, they will all be very strategic for us and we will want to create categories out of these. The way Javencrash became a category or Giloy Ganvati will become a category in our mind. So like that, they will be very strategic and we don't require high decibel advertising or resources behind them because competitive intensity is not there and we will be category creators. The one advertising is 100% share of voice here. So we don't see an issue in these brands and potentially they are very, very big in terms of scaling up. So I don't think that's an issue. Now number two is other tactical efforts like personal care and personal and home hygiene category where we've rolled out. If sanitizer mutes as a category, we will also mute, but I think we've capitalized on the situation and we've established ourselves as mover in sanitize. But that said, the habit of personal and home hygiene has got ingrained now with the consumer because COVID has lasted and it's going to last for almost a year, it's not disappearing. So these habits will get ingrained in the consumer behavior. So I don't think they will disappear overnight. And home care is a very strategic part of our business. So to that extent, they will live under our portfolio, may not be under the power brand architecture, but definitely will live under the portfolio the way the other portfolio is existing. That said, we are looking at a lot of rationalization of portfolio of the tail products and SKUs that we have with the company. The company will undertake the exercise of reducing the tail, which doesn't have a turnover or which are not margin accretive to the company. We would be embarking on a project of cutting out on the tail, so that there's not too much of pressure as far as the back end is concerned. But a lot of products also would be e commerce work for us, which will be margin accretive, which will be exclusively for e commerce. In the past, when the outbreak launched, there was no e commerce as a channel. Now e commerce contribution is almost 5.6%. I think we'll end up the year with also 5% contribution, which is a very sizable contribution. And that calls for a lot of e commerce exclusive products, like Veggie Wash that we've introduced as an e commerce exclusive, Baby Rains will be e commerce, apple cider vinegar will be e commerce. And as and when it scales up on e commerce, when it scales up, the way we scale up products in ethical business, we will scale up the products for upmarket consumer or urban consumer in the e commerce as and when it scales up, we will roll it out in the GT business. Where we see immediate traction, they will be rolled out in GT, for example, Ayush, Kala or Kwat, which is desired, immunity kit was desired, two, three drops, healthy drops were desired, single herb range was desired, they will be rolled out to mass market. So I think we should have a 40% to 50% acceptance rate in the marketplace even for our new product launches. Okay. My question is regarding the international business, where particularly two of our acquisitions, one is Jobeen, Turkey, and one is Namaste. So there it is more like a switch on and off sometimes. This seems to be coming on track and then again they go off track. So I would like your comment on whether do you see now them moving strategically in any particular direction where we can see higher amount of profitability and growth over there? Thank you. Yeah. So, you know, it's like any other business of niche. The businesses are cyclical. So when there is a headwind, business gets into a trough and whenever there is a tailwind, the business gets into a crest. So you can't have a constant business surge happening in any business. So at the moment, what we see in the hobby, we are seeing a tailwind because of COVID. It's a hand wash, body wash kind of a portfolio, so that's doing exceedingly well, and the profitability is also improved in the hobby business. So that's trending very well for us. Even the Namaste business has got a tailwind. As I told you, relaxer business is now on a surge in between. There was a trend towards new naturals. So therefore, relaxers are out and naturals are in and now relaxers are back again. So I think the market dynamics and the consumer sentiment dictates as to how the business is doing. And we keep recalibrating our strategies basis what the consumer behavior demands. So we launched styling products under the curls unleashed when the relaxers were down. And now the relaxers are up, we are now focusing back again on relaxers. So I think that kind of a cyclical dynamism will happen in the consumption as we speak. But structurally and strategically, these two businesses have improved their profitability now, and they are trending at very good double digit profits for us. Okay, thank you. Thank you, sir. Thank you. Thank you. Ladies and gentlemen, as there are multiple participants in the queue waiting to answer their waiting to ask their questions, we will move to the next caller soon after the question is answered. The next question is from the line of Harit Kapoor from Investec. Please go ahead. Yeah. Hi. Good evening. So my questions were regarding the innovation intensity. So the thing was on, you know, if you look at the India business for the last four, five years, their ad spend as a percentage has been in the 8% to 9% range, actually more 8% to 9%. So just wanted to get a sense on how you're looking at it going forward, given the intensity has been so sharp on the innovations over the last two, three quarters? Is there a material step up on the ad spend side which we expect going forward and stay there from there on? So Arul is absolutely right. So I think our ad spends are low and we are cognizant of the fact that our ad spends are low and we are making attempts to see an increase in the ad spends going forward. So the budget also, we've now planned an increase in ad spend, especially to support the entities and also the power spend, and the part of the complete fee saving would be used for increasing our above the line spend and generate the demand for our power brands and also new products. So we are cognizant, and we are investing in the same. In COVID situation, you saw a depression of around twenty two percent in the ad spend. That is because, structurally, the media changed. We stopped spending in outdoor, we stopped spending in print. We focused all our resources on electronic media, that too outside of GEC in the dual session because that's where the eyeballs were, that's where the GRCs were, and that came at a much lower cost. While we spend low minus 22, our GRCs went up by 70 percentage points while spending 150. So that's how. The next question is from the line of Suresh Pardeshi from Centrum. Mohit. My personal compliment to you for good execution and banking on the opportunity. I have one question, I mean, that is related to distribution. Could you give some color how the GTN Modern Train has performed in the month of July? And to what level of recovery we are seeing in these two channels? And related question is that what is the CST doing in this quarter? Or maybe you can give how July has performed in here. Yes. So what happened is, GP has actually recovered quite a bit. GP, which declined by around 13%, is back on the recovery path now. Modern trade is far away from recovery. Modern trade declined by around minus 28% and still we see modern trade not recovering. So there is a pressure in modern trade. TSB continues to be down and declined by around minus 50%. And even in the month of July, we do not see too much of recovery, but recovery is expected going forward as the government releases fund for the CSD and they'll be able to buy and also pay their debt going forward. But monetary is a concern, which is still at minus 25 of patient level because of Big Bazaar, which is a big boy, and even D Mart not doing as well to the way they were in pre COVID levels. But CT definitely has recovered. Thank you. The next question is from the line of Prasad Deshma from Bank of America. Please go ahead. Yes, good evening. So, Mohit, we hear about these clinical trials for ayurvedic products across multiple universities by Ministry of Ayush. So this is like to check the immunity boosting properties against COVID. Would you have an idea as to what is the status of these trials and what part of Dabo's portfolio would benefit from this if there is a favorable outcome? Yes. So we've already put our products into the clinical trials, Prasad, but the results are still awaited. And I think part of the study is over and the part of the study is yet to come. We've not even got the initial findings, so it will be incorrect for me to comment at this point in time. But Chavantras, Ashwagandha, Tufi Drops, Ayush Kvaas, all that are a part of the ministry trials and also trials are initiated by others. So there are trials happening at all ends, but the result is not yet out. Thank you. Yeah. The next question is from the line of Kalpesh Jain from Ambit Securities. Please go ahead. Yeah. Hi, Mohit. Congratulations on a good set of numbers for Q1. Mohit, you mentioned somewhere when one of the participants asked him on June growth, he said that June growth had bounced up to 7% positive territory. So now that a significant portion of July has also expired, what is the kind of a growth traction we are seeing in the month of July? Sorry. You're talking about the recovery, countries in the month of July? Right. So I just wanted to have a broad sense on the indicative growth numbers for July. So July, our growth is roughly around 5% to 6% or secondary levels of growth is what we are looking at. But that said, our modern trade is still under pressure and so is cash and carry, so institutional and wholesale channels are still not opened up. That's why it's in the range of low to mid single digit kind of growth rates that we are seeing. So it's not significantly different from June? Not significantly different from June yet. And one more question. So on your market share, so as far as your hair care category is concerned, we had the medical posting it quarterly numbers a couple of days back. They said that their decline was about 12% in the tariff's portfolio. Value added portfolio is in the decline of 30%. So have you seen some sort of a market share gains as far as your hair care portfolio is concerned, or it's been flattish? So see, we exist in two parts of our portfolio, coconut oil portfolio and value added portfolio. Coconut oil, we've gained 20% market share. 20 basis points, sorry, sorry, 20 basis point market share. And in value added, we've gained 40 basis points market share in both. So our declines are lesser than the category declines in both coconut oil and also value added. Thank you. The next question is from the line of Aditya Sohman from Goldman Sachs. Please go ahead. Yes, hi. Good evening, Mohit. So my question is on new product launches. So you indicated that 90 crores of your revenue came from sanitizer. And how much would the contribution be of the other new products in, say, health care? Health care products. Yeah. Health care products, NPD would be roughly around 50 odd crores, broadly. So 93. Yeah? 50 crores is what the NPD Other than global? INR 50 crores odd, Aditya. The next question is from the line of Rohit Dhania from IDFC Securities. Please go ahead. Hi. Good evening. Thank you for the opportunity. Thanks for giving us an idea of the sort of international business from a medium term perspective. Could you also talk about any recovery that could have happened at least in the month of July across the global market? Yes. So even global markets have seen a recovery. This is a recovery to an extent around 1.8%, which happened in the month of June, around 2% odd. And we are seeing the release of lockdowns happening and unlocking of markets happening there also. So we are seeing significant recovery barring Nepal, where the business is still down by around minus 17 odd percent. Rest of the places, we are seeing recovery in, again, low to mid single digits, even in international business. Thank you. The next question is from the line of Suresh Pardeshi from Centrum. Please go ahead. Yeah. Hi. Hi. Thanks for the opportunity. Quick question. We have seen two new players coming to the Hadi segment. What is it that exciting? Or if you can give me some color on what's happening in Honey in terms of competition? Yes. Think, in Honey, what has happened is we've actually surged our market share numbers. Prior to COVID, our market shares were in the range of around 30 odd percent levels, but whatever data that we have in consumer panel, we see our market share surge to 50 percentage point levels, while we've grown by around 60%. I think Honey penetration in the country has gone up. A lot of smaller players have vanished during the COVID because of supply constraints of Honey and they could not purchase. So we've been able to gain market shares from those players. But there are some organized players like Lion and Ithkari, which still remain in the market and there are a couple of multinationals who also entered the Honey market. So I think we are staying on course to depending our market share and gaining our market share and increasing the penetrations of honey in the country. That's why you've seen relaunching value added honeys in terms of Tulsi and Ashur Ghandai at one end. And also for e commerce, we are launching exclusive offerings like Himalayan Honey and Organic Honey. That's also being launched as we speak, I think, next month or month after, you'll see those launches also. And we will keep also making Honey in accessible price points as we go forward. So we are growing the market irrespective of what the competition is. The competition comes in, they will grow the market at a faster pace. The penetrations of Honey in the country are still very low. So the more the amount of advertising in Honey, the more the market will grow and we will be the beneficiaries there. So we'll be conscious that we don't lose share and we have to gain share from, a, unorganized and at the top end, keep innovating so that we keep growing the category as a leader too. Thank you. The next question is from the line of Rahul Ranade from Goldman Sachs. Please go ahead. Yeah. Hi. Thanks for the opportunity. I just wanted to understand out of this healthcare NPV that we said for 50 crores, how much of it would be mainstreaming out of the ethical portfolio where we already had products versus how much is completely new products? And question is, is it fair to assume that whatever we are mainstreaming from the Epicure, it should have a higher success rate since the efficacy of these products is kind of proven? So it will be I think broadly around INR 12 odd crores will be a part of the ethical portfolio mainstreaming and around INR 38 crores will be new, NPDs, etcetera. Like Ayush, Kvaat and Kala, for example, we were the movers in the market and this was our advisory given by the government. And we quickly turned out a formulation and we rolled it out as per the Ministry of Ayush guidelines. That was completely new to us. To see an RD drop, we had it in other format, but this was dropped, so the format wasn't available. So that came in. So that's around INR78 crores completely new, which wasn't there. But lot of other products have come in. Yeah. Thank you. The next question is from the line of Saxi Mehra from SitOnMine. Please go ahead. Hi. Excuse me. This is the operator. I'm sorry to interrupt. Saxi Mehra, may be requested to use your handset, please. Hi. So much for the opportunity. We have recently received a market stake in EverReady business. So can you please throw some light on it? So are we planning to acquire it or just keep it as an investment? See, I think this EverReady business is by the promoters in their individual capacity. So therefore, as a Dabber India Limited, we have no linkage or any role to play in that. So that is purely their personal investments. So we cannot comment any further on that. Thank you. Thank you. The next question is from the line of Subarna Joshi from Axis Securities. Please go ahead. Thank you for the opportunity, and congrats for a a good set of numbers in these tough times. So you mentioned about rural market growing by 1% while urban declining 13%. And now we've been seeing that, the number of COVID cases have been growing in the hinterlands. So, what is your assessment going forward in terms of the impact on the business that this will have? Or do you see that rural market will still remain resilient despite the rising number of COVID cases? That was one. And the bit was, is this growth also driven by the distribution expansion strategy that we have kind of, you know, given a year or two? Because we think that rural is likely to kind of contribute healthily to the growth going forward. Thanks for these two questions. Yeah, think rural continues to grow for us, and we don't see any sort of downside in rural even in the month of July. So we also hear news flashes saying that community spread is happening in rural India. At the moment, we are not yet impacted, except for the flood situation in Bihar and some few lockdowns have impacted us in some sporadic districts and cities Bihar and Madhya Pradesh and also Northeast, etcetera. But we see rural attending well and the difference between rural and urban is quite a bit as I was telling you that Nielsen is talking about a growth of 12.5% in rural as compared to 1.5% negative in urban. So the huge gap, think rural recovery is much faster. And I was telling you as a population is spread out in rural areas. So therefore the COVID cases will not spread out in the rural as much as they've done in urban. So I remain very hopeful as far as the rural is concerned. Plus, the rural traction will also happen because of population reverse flow, which has happened in rural, because of that also the demand surge has happened. And to Waratab government is also adding around 1.5 lakh crore package is what PM Modi announced for rural, there's a digital 40 thousand in Mandrega, support prices of crops have gone up, monsoon has been great, the crop initial crop has been fantastic. So I think all those tailwinds are going in favor of rural areas and tractor sales are also gone up in quarter one, which is a great barometer of the rural performance. So everything is going in the favor of rural. That said, we've also expanded our rural infrastructure in terms of number of villages. We were we've completed around 52,600 odd villages, and we are committed to going up to around 60,000 odd villages in two years' time. So in this year or a year and a half, so I think depending on the COVID situation and our accessibility. And also we are looking at now village level entrepreneurs to be thrown in in the rural so that we are able to really spread out deep into the hinterland. As you know, there are six lakh villages in India, and we are only talking about 16,000 villages here. So there's a huge headroom for growth as rural is becoming more accessible with the roads and the infrastructure going up. So I remain very hopeful as far as rural is concerned. Plus, we've also launched LUPs, which is low unit price points, which only helps the rural infrastructure that we build for us to build the business there. So I hope I've been able to answer your questions, Jussi. Thank you. The next question is from the line of Ankit Babil from Shubcom Ventures. Please go ahead. Good evening, sir. I have one question. You people are doing a wonderful job. I mean, launching so many new products, bringing in so much of efficiencies in your operations, trading for around 100 to 150 crores each year. And plus, you have a tailwind of the trend of shift from unorganized to organized, and we are giving you picture also. Now of all these happening, now is it fair to assume that barring any economic shock, going forward, Dabur is ready for a a mix kind of a growth with margin 23, 24% because of all the savings and improving efficiencies. Maybe next two, three years, Why is it Ankit, your voice is not very clear. Can you repeat? I understood the part, but the part, I'm not able to hear clearly. So my part was that with all these positive things happening into the company, is it fair to assume that barring any economic shock, Dabar is ready for a mid- to high teens kind of a growth with margins in the range of 23% to 24% going forward in next year? I can't give you all guidance, Akhiv, here as to are we ready or not, but we are doing all the right things in our mind, which should change the trajectory of the company and take it to the next level, And that's what I can say. As far as the immediate term is concerned, we're looking at something like low to mid single digit to compensate for the COVID impact with all these initiatives, what will happen for the full year. So that's the best guidance that I can provide you, but I think that's for you to expect what the growth will be. So we are doing all the right things, whether it's systems, processes, or IT interface or technology, launching innovations and the team is stretching and trying to make all the products which are available and get into mainstream categories and larger categories also as we speak going forward so that we are able to take the business to the next level to benchmark to the best in class in the industry and try to bridge the gap in terms of revenues in long term. Thank you. Thank you. Ladies and gentlemen, as there are no further questions, I would now like to hand the conference over to Ms. Dagan Alwale for closing comments. Thank you. Thank you for participating in this conference call. A webcast recording of this call and transcript will be available on our website. Thank you, and have a very nice evening ahead. Thank you very much. Ladies and gentlemen, on behalf of Dabur India Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.

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