Ladies and gentlemen, good day, and welcome to Hindustan Unilever Limited Conference Call for the results for the March Quarter and Financial Year ended 2022. 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. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. A. Ravishankar, Group Finance Controller and Head of Investor Relations. Thank you, and over to you, sir.
Thank you, Stanford. Good evening, ladies and gentlemen. Welcome to the Conference Call of Hindustan Unilever Limited. We will be covering this evening the results for March Quarter and Financial Year ended 31st March 2022. On the call with me from HUL is Mr. Sanjiv Mehta, CEO and Managing Director, and Mr. Ritesh Tiwari, Chief Financial Officer, HUL. We hope that you're staying safe and healthy. We'll start the presentation with Sanjiv talking about our performance in this financial year and the progress we have made on our strategic priorities. Then Ritesh will share deeper insights into our in-quarter performance and share our future outlook as well. Before we get started with the presentation, I would like to draw your attention to the safe harbor statement included in the presentation for good order sake. With that, over to you, Sanjiv.
Thank you, Ravi. Good evening, everyone. Always a pleasure to interact with you all. Let's first look at the FY 2022 performance and what a year it has been. To begin with, I'm absolutely delighted to report that we have crossed the INR 50,000 crore turnover mark in this fiscal. Our growth at 11% was significantly ahead of the market. We consistently grew our consumer franchise and gained both value and volume market shares in a large part of our business on L3M as well as on MAT basis. Our EBITDA margins for the year were at a healthy 24.8% and almost flat versus last year. An extremely commendable performance of balancing growth and profitability. Profit after Tax and earnings per share grew 11%.
In such a challenging context, o ur robust performance is reflective of our strategic clarity, the strength of our brands, our execution prowess, and our agility and adaptability. Our belief that sustainable and purposeful business drives superior performance is clearly reflected in the strong performance that we have delivered, while also making significant progress on our sustainability agenda. In calendar year 2021, we have become plastic neutral. That is, we have collected and safely disposed more plastic waste than what we use in packaging our finished products. We are building a strong business. Even in such a difficult year, we made good progress on our strategic thrust area. This has not only helped us deliver a solid India performance, but have also made us a much stronger business, which is much better prepared to win in this fast-changing world.
In the next few slides, I'm going to talk to you about each of the thrusts. The first is, of course, winning with our portfolio. We have a wide and resilient portfolio of more than 50 purposeful brands spanning 15 FMCG categories. In more than 80% of our business, we are strong market leaders. In such difficult times, consumers tend to stick to large and trusted brands that offer better price-value equation. Another distinguishing strength of our portfolio is that our brands straddle the price-benefit pyramid, offering consumers the choice at relevant price points. This ensures that we are able to cater to the needs of consumers looking to upgrade to products with higher order benefits, and also to consumers who are trying to manage their household budget in times of inflation. While we already have a wide portfolio, we are tapping into new demand spaces.
A strong marketing and R&D capabilities enable us to quickly pick up consumer trend and address them. Our ability to do market development at scale, positions us well to build these categories of the future. In the last couple of years, through sharp focus on portfolio choices, we've expanded our play in premium beauty and hair care, functional nutrition, foods, detergent capsules and dishwash products. These are great products from trusted brands and are already finding good traction with consumers. We have 16 brands with turnover of more than INR 1,000 crore, and together those brands make up more than 75% of our top line. Surf Excel and Brooke Bond lead the pack, with each contributing more than INR 5,000 crore. Surf Excel has also become the largest fabric solution brand in India. Three of our brands, Vim, Rin and Dove, joined the INR 2,000 crore club this year.
Further, ice cream brand Kwality Wall's crossed the INR 1,000 crore turnover mark. Overall, we added a very sizable INR 5,000 crore to our top line this fiscal year. Importantly, INR 900 crore came through innovations, clearly showing our agility in responding to the evolving consumer trends. Consumers continue to be increasingly discerning, looking for highly effective products. To meet the growing consumer needs, we are creating more superior products, bringing the best of our marketing insights and R&D together. We now have 2x more superior products when compared versus 2019. It does not mean that the rest of our products are inferior. It just means that the others are at par with competition on functionality. Bringing alive the magic of marketing, we created impactful campaigns which not only helped strengthen brand salience, but also won many external accolades.
Dove Stop the Beauty Test won a Silver Lion at the Cannes Festival of Creativity. We were the most awarded advertiser at EMVIES, winning a total of 31 awards for various media campaigns. We're also recognized as the Best Media Client of the Year. Three campaigns from HUL were part of the WARC 2022 World's Most Awarded Campaigns, and we won 7 awards at the Festival of Media. Clearly, we are winning with the brands as a force for good, powered by purpose and innovation. Let me now talk about execution. With 29 factories, 35 depots and over 3,500 distributors, we sell our products to 9 million stores. Our operations are spread across the length and breadth of the country. It is important that despite the massive size of operations, we remain agile, adaptable and resilient.
We are de-bottlenecking our capacities and increasing the number of formats manufactured per site. Through shorter production runs and smooth changeovers, we are able to manufacture 80% of our SKUs every three days. Almost our entire production happens locally in India, providing supply certainty and cost effectiveness. We are manufacturing closer to where the demand is. As a result, the distance traveled by our products is down 8% on a YOY basis. We have expanded our distribution and assortment, taking it to 1.15 times the pre-COVID level. With the increase in footfalls, modern trade stores are bouncing back, and we are partnering with them for a joint marketing plan and providing consumers the best shopping experience.
Now this chart summarizes the challenge that we have been facing in terms of material cost inflation and how we navigate this with the agility to grow our consumer franchise and at the same time protect our business model. These are the two most important imperatives at this stage. Till now, our practice has been to quote market inflation numbers with external numbers before any cost savings that we make. However, with the dramatic inflation, we thought it will be useful to give you a sense of material cost increase that we see in the business through the lens of NMI or Net Material Inflation. NMI is net absolute inflation after adjusting for the benefit of our buying efficiencies, hedging, product design or redesign to value and other savings. NMI that we have seen in March quarter 2022 was 4.5 times of the NMI in June quarter 2020.
In fact, the NMI in FY 2022 has been higher than the cumulative NMI we have seen in the last five years. Despite this unprecedented level of inflation, we've been able to keep our margins almost flat versus last year and have grown significantly ahead of the market. In fact, our market share gain this year is the highest YOY market share gain we have seen in more than a decade. Through Dynamic Financial Management, we grew our consumer franchise and protected our business model. We reduced costs by driving savings harder, which stood at 7% of our turnover. Using a WiMI strategy, we captured opportunities to premiumize, resulting in 2x growth for the premium portfolio versus rest of the portfolio. The strength of our brands enabled us to take calibrated price increase.
We also ensured our brands are well supported by investing competitive levels of A&P and ensuring that the share of voice remains ahead of share of market. Reimagine HUL, as all of you know, has been a key pillar of our growth strategy. We have spoken about in detail in our earlier conversations, and today just want to give an overview of the key actions that we have taken in this space. Let's talk first about consumer ecosystem. As part of our digital first journey on Lakmé, we are leading brand building online, whether it be through influencer marketing at scale or pioneering new initiatives like Influencer Commerce. We're already India's number one beauty brand on Instagram with 2.3 million followers. Lakmé is also leading the charge on making beauty shopping easier online through beauty tech solutions like a virtual try- on, foundation finder or skin analyzer.
All of these technologies use artificial intelligence to help consumers find the right products and even try it on virtually replicating an offline experience. We had more than 2 million unique trials of our beauty tech in the last year, and the conversion and average order value for these consumers is 2x of average. We are scaling up e-commerce capabilities. Our D2C website already has 25 million annual websites and website visits. Together with the e-commerce platform, our annual, our online sales today contribute 30% of our Lakmé business. From a customer ecosystem lens, we are leveraging technology and digital solutions across channels and customers. You have heard from us about our eB2B app, Shikhar, and the work we are doing to digitize general trade. As of March 2022, we have crossed more than 800,000 stores, adding 1,000 stores every day in this fiscal.
Our e-commerce business continues to grow ahead of the rest of the channels. Design for Channel is a key strategic priority for us as we increasingly design our portfolio to meet the requirements of different channels. We're also reaching out to consumers directly through our own D2C platforms, providing them with a unique shopping experience. It is good to see that our digital initiatives are scaling up fast. In March quarter 2022, digitized demand capture across our future-ready platforms was more than 20%. This also gives us a unique ability to run our demand generation activities in a disruptive way. Talking about digital operations, our home care factory in Dapada has joined the World Economic Forum's prestigious Global Lighthouse Network. It is the first FMCG manufacturing site in India to have received this status.
The network includes sites that have implemented end-to-end digitization across the value chain, pushing boundaries of technological advancement. This recognition is testament to our sustained focus on making our supply chain future fit as part of our Reimagine HUL agenda. Our nano factories help us to produce niche and on-trend products in smaller batch sizes. We now have three nano factories which can produce around 100 SKUs. These provide us with greater speed and agility. Samadhan, our Advanced Fulfillment Center, is a classic example of how we are rethinking about each node in our operation system to find efficiencies and optimize the process by integrating data and technology. Samadhan allows us to reduce our end-to-end fulfillment cycle time. These are some examples of the significant progress we are making in our Reimagine HUL journey. Let me cover a bit more on the progress of our sustainability agenda.
We are decarbonizing operations by using alternative sources of energy, such as wind, biomass, solar, and have completely eliminated the use of coal across all our manufacturing operations. Further, we are deploying energy efficient technology, leveraging our load more, travel less strategy to reduce distance traveled by our products. These actions have helped us achieve a 94% reduction in CO2 emissions across operations when compared to our 2008 baseline. We all know that India is a water-scarce country. Through the Hindustan Unilever Foundation, we are supporting and amplifying scalable solutions to help address India's water challenges. Till date, the foundation has delivered a cumulative and collective water potential of over 1.9 trillion liters across thousands of villages. To underscore the importance of the water potential created by HUF, it is more than the drinking water needs of India's entire population for a year.
Promoting good health and well-being is another focus area for us. During the year, we launched three more Suvidha centers, and we now have seven such Community Health and Sanitation Centers in Mumbai. The recently launched center in Dharavi is one of the largest community toilets in India, catering to the needs of 50,000 people. These centers provide a life of dignity to our slum dwellers. We have further expanded our Shakti initiative and now support over 160,000 rural women entrepreneurs. We are creating a larger social impact by training them on nutrition awareness, waste recycling, women empowerment, et cetera. We are helping them become a beacon of social change at the village level. These are only a few examples of the extensive work that we are doing in the area of sustainability.
We will shortly be sharing a full suite of ESG commitments across the three compass pillars of improving the health of the planet, improving people's health confidence and wellbeing, and contributing to a fairer and more socially inclusive world. Now, before handing over to Ritesh Tiwari to take you through our financials in more detail, I would like to say that this has been a remarkable year. Despite a very challenging external environment, we have delivered strong all around performance, crossed the INR 50,000 crore turnover mark. I'm sure that is one of the many milestones that we will continue to cross in our journey. I'm equally happy to report the excellent progress we have made on our strategic trust areas to build a purpose-led and a future fit organization. This suits us very well for long-term value creation for all our stakeholders. With this, over to you, Mr. Tiwari.
Thank you, Sanjiv, and good evening, everyone. I will now walk you through our in-quarter performance and our future outlook. We had a strong close to the year with a good all around delivery in March quarter. Turnover grew 10% with flat underlying volume growth. Growth was competitive with more than 75% of our business gaining value and volume share across both MAT and last three-month basis. Talking about underlying volume growth, let me reiterate the impact of price point packs which we had spoken during our December quarter results. Almost 30% of our business comes from packs that operate in magic price points like INR 1, 5, or 10. In these packs, our preferred mode of taking pricing is by reducing grammage. As a result, even the same number of units sold leads to volume decline.
This had a circa 2%-3% impact on our UVG. Moving to our bottom line performance, sequentially inflation has worsened in the quarter as we had anticipated and called out earlier in the Q results. This has resulted in a 290 basis points sequential and 330 basis points year-on-year increase in our cost of goods sold. In the backdrop of this unprecedented input cost inflation, I am pleased that we have dynamically managed our business to deliver a healthy EBITDA margin of 24.6%, a marginal decline of 20 basis points year-on-year. Our laser-sharp focus on driving savings across all lines of P&L, coupled with calibrated pricing while investing behind our brands competitively, has been driver of this strong performance. Profit after Tax but before exceptional item was up 9%.
Our net profit of INR 2,327 crore increased 9% versus MQ 2021. Now let me give you a breakdown of the growth across the three divisions. Home Care sustained its very strong double-digit growth momentum, growing at 24%. Beauty and Personal Care grew ahead of the market at 4%, led by skin cleansing. Foods and Refreshment delivered a strong performance, growing at 5% on back of an exceptionally high base. We will skip down to talk about performance within each of the division in subsequent slides. Now let me talk about some of the innovations we landed in the quarter. Lifebuoy has launched powder hand wash at a price point of INR 10, which makes 200 ml of liquid hand wash. It is our country's most affordable liquid hand wash.
Dove's new hair therapy helps prevent hair breakage and is made without sulfates. That gives gentle nourishing care. Sunsilk has added onion and jojoba oil shampoo to its franchise, while Lakmé Absolute has launched new eye makeup range that includes long-lasting explore pencil, a range of pen pencils with matte and metallic finishes. Ahead of summer, Kwality Wall's has launched exciting new ice cream flavors like Trixy Blueberry Cheesecake, Royal Kulfi, Black Forest Feast, and Cassata Cake. Talking about a few marketing campaigns this year in IPL, Boost is celebrating newcomers and emerging superstar of the game for their grit, determination, and relentless perseverance. Lux activated its new campaign on body wash while Dove and Comfort activated campaigns in South India. Surf Excel came up with its new Holi campaign and Cornetto to launch a delightful film, Making the First Move, featuring Alia Bhatt.
Home Care had another strong quarter of double-digit growth enabled by robust performance in both fabric wash and household care. Both categories grew in strong double digits with all part of portfolio performing well. Home Care grew volumes in mid-single digit, reflecting the strength of our brands to price up in inflationary conditions. Liquids and fabric conditioners continued its exceptional momentum and grew handsomely. Further, Surf Excel has become the largest fabric solutions brand in India in this fiscal. With more input cost inflation, we have continued with our calibrated pricing approach in both fabric wash and household care. Beauty and personal care grew competitively at 4% amid slowdown in market growth due to impact of high inflation on discretionary consumption. Skin cleansing delivered double-digit growth driven by pricing and led by strong performance in Lux, Dove, and Fair & Lovely.
Hair care continued its strong competitive performance in the quarter with all brands gaining shares. In skin care, premium portfolio grew in double-digit. Glow & Lovely, Talc, and color cosmetic had soft quarter due to COVID wave three and market slowdown. Let me now turn to foods and refreshment. F&R grew 5% on a very high base of 36% in MQ 2021. Tea continued its robust performance and grew competitively on an exceptionally high prior year comparator. We expanded our value and volume market share in the quarter. Coffee grew in double digits. In health food drinks, we continued our focused market development actions to build category relevance and penetration. During the quarter, we did more than 10 million home-to-home connects. We also launched new persuasive communication in both Horlicks and Boost.
In the context of moderating market growth for the category due to its discretionary nature, these actions have helped us continue gaining market shares and penetration. Foods delivered a high double-digit growth with all parts of the business doing well. Our recent foods innovation, peanut butter and mayonnaise, continue to gain traction and with consumers. Ice creams had a very strong quarter with high double-digit growth. I'd spoken earlier about exciting range of innovations we launched for this year's summer. In summary, our performance has been strong both on top line and bottom line. While I covered most lines, let me give you quick highlights on few other items. We continue to invest competitively in A&P. Sequentially, we stepped up A&P by INR 100 crore or about 60 basis points.
Our marker has been to ensure that our share of voice is ahead of our share of market and our brands are well supported. Both employee costs and other expenses see the benefit of turnover leverage going in, apart from benefits of various savings programs. Exceptional items include gain from sale of an old factory land offset by non-recurring restructuring expenditures. Our ETR for the quarter was 25.6%, which takes our FY ETR to 24.9%. Sanjiv has already spoken in detail about our full year delivery. Let me quickly recap the numbers. Top line grew 11% in financial year 2022. Our turnover crossed INR 50,000 crore, and we added more than INR 5,000 crore during the year. Underlying volume growth for the year was 3%.
Moving to bottom line performance. Despite unprecedented levels of inflation through the year, we have dynamically managed the business and delivered a healthy EBITDA of 24.8%, declining marginally by 20 basis points year-on-year. We delivered a net profit of INR 8,818 crores, translating to a strong double-digit EPS growth. Our track record of strong cash generation continued. We delivered about INR 11,700 crores of cash from operations. This chart gives you a snapshot of our segmental performance on a FY basis. As you can see, growth has been broad-based and overall segmental margins also continue to be healthy across the three divisions. Considering our strong performance, the Board of Directors have proposed a final dividend of INR 19 per share. Along with interim dividend of INR 15 per share, the total dividend for this year is INR 34 per share.
The total dividend amount for the year is INR 7,989 crores. Now, before moving to external context and our outlook, let me summarize what we have covered till now. It was a solid all-round performance in the year. We became a INR 50,000 crore turnover company, grew top line at 11%, significantly ahead of the market. Our dynamic financial management helped us strike the right balance of competitive top line growth and managing healthy margin in the face of unprecedented input cost inflation. We delivered double-digit EPS growth. We continued to strengthen our market leadership with highest market share gains that we've had in more than a decade. It was comprehensive market-beating performance with share gains in all three divisions across price segments, across region, both in urban and rural. We have made excellent progress on ESG and on our digital transformation agenda.
Now moving on to external environment and our outlook. Operating environment remains challenging. Commodity inflation continues to be a significant headwind for the industry. The recent developments have added further volatility to commodity markets, pushing prices for various commodities, including Brent crude, vegetable oils, agri commodities even higher. CPI inflation has also been increasing, has now breached RBI's threshold for last three months in a row. Latest inflation survey by RBI clearly indicates that households are feeling the pressure of inflation, with 71% respondents expecting more inflation in the coming months. This is also influencing consumer behavior as they try to manage their household budgets. Consumers are looking for better value across their purchase basket, and food and kitchen items are being prioritized over discretionary categories. They are titrating volumes and preferring their trusted brands.
Due to unprecedented inflation, FMCG market value growth has significantly slowed down, and volumes are declining in high single digit. The impact is more pronounced in rural, where even value growth has started declining. Consumers are titrating volumes, and essentials are being prioritized over discretionary categories. Let me spend some time elaborating about the impact of inflation on our material cost. We use a measure called Net Material Inflation, which is net absolute inflation after factoring in all savings and efficiencies. Our NMI in March quarter 2022 was 4.5 times of June quarter 2020. This does not take into account the recent surge. If things remain same, we expect sequentially more inflation in next two to three quarters. We will continue to dynamically manage the situation in a similar way we have done in the past several quarters. As you know, we have a very robust savings program.
Let me give a few examples of what we're doing to bring it alive for you. We are generating buying efficiencies by leveraging our global scale and strategic partnership with suppliers. Our media deployment is sharply focused on attributing every spend to driving more growth. We are de-bottlenecking capacities in our supply chain to drive manufacturing efficiencies. With better planning and producing closer to the market, we are reducing our distribution cost. We're light-weighting our bottles, which not only reduces packaging cost, but will also be good for the planet. Using our principles of net revenue management, we will continue to take calibrated pricing actions while ensuring we remain competitive and provide the right price-value equation to the consumers. We are revisiting our offerings at certain price points and are adding bridge packs to provide better value to our consumers while ensuring affordability.
Our WiMI strategy helps us find opportunities for driving faster growth in premium portfolio. Looking ahead, in near term, operating environment will remain challenging. We expect to see more sequential inflation. Growth will be predominantly price-led. We will continue to drive savings harder and take calibrated pricing actions while ensuring we protect and grow our consumer franchise. Our margins will decline in short term as price versus cost gap increases. Strength of our brands, a wide portfolio straddling the price benefit pyramid, and a robust business model will hold us in good stead. We remain confident of, A, outpacing FMCG market growth, and B, recovering our margins in a phased manner. Moving to mid to long-term perspective, Indian FMCG sector continues to be very attractive.
Favorable macros, like large young working population and rising affluence, coupled with low FMCG penetration and per capita consumption, continue to provide huge runway for growth. For HUL, the drivers of value creation remain the same. We will grow our top line ahead of the market by growing core competitively, premiumizing our portfolio, and doing market development at scale. We will deliver modest margin expansion and continue with our track record of strong capital discipline. At the same time, we will continue to build a purpose-led future fit HUL by delivering on our ESG commitments and leading digital transformation. We are focused to deliver 4G growth that is consistent, competitive, profitable and responsible. With this, let me hand over to Ravi to begin the Q&A session.
Thank you, Sanjiv. Thank you, Ritesh. With this, we will now move on to the Q&A section. We request you to kindly restrict the number of questions to a maximum of two at a time. In case you have further questions, please rejoin the queue again. In addition to the audio, as always, our participants have an option to post the questions through the web, and we will take these questions just before we end. With that, I'll hand over the call back to Stanford. Stanford, go ahead, please.
Thank you, sir. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may please press star then one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star then two. Participants are requested to use handsets while asking a question. Anyone who wishes to ask questions, please press star then one. The first question is from Abneesh Roy from Edelweiss. Please go ahead.
Yeah, congratulations on good numbers in the current context. My first question is on palm oil. Yesterday, Indonesian Minister had allowed CPO. Today it seems that there is a flip-flop. The Chief Economic Advisor of Indonesia has said that CPO also is likely to be banned. My question is, if the ban is there for, say, a few weeks, in the extreme situation of that ban, what happens to your soap business? It's a sizable business. You are the number one player. Secondly, on the smaller players, what could be the impact on smaller soap players, if you could elaborate on these points?
Yeah. Abneesh, thank you so much. On palm oil, the situation has been volatile and as you know that the conversation which happened first on restriction of sales, which was later on called out only to remain and remain localized to the cooking oil component, which is palm olein part of that and CPO supplies to continue. Overall, as a context, if Indonesia produces 100 kg of palm oil, the country only consumes 1/3 of it. Two-thirds of the volume country ends up exporting, and this is one of the largest source of revenue for the country.
Overall, if I see there might be impact in short term, but, looking at the amount of excess production compared to the local needs that Indonesia produces, I do believe that the sales of palm oil ex Indonesia will continue. Number one. Number two is, you know, what we consume, and the largest component of our input ingredient is PFAD. PFAD gets manufactured the moment you refine CPO to produce ultimately, palm olein or palm stearin. The PFAD which gets consumed, there are few sources only where PFAD gets utilized. One of the large source of that is soap industry. Hence we do believe that, PFAD supplies would continue for us to get. That's number two.
Overall vegetable oil market is tight in terms of pricing and as you have seen, the amount of significant inflation this basket has seen over last couple of years. I do expect the price volatility to continue as the situation gets completely bottomed out. Last but not least, as you know, of course, in long term India has leaned in terms of giving more amount of support to what we need to do as a country to achieve in times to come, palm sufficiency and investments have gone into this area. At HUL what we are doing is to also look at various other avenues. There are more than one way one ends up making soap. Looking at alternatives, looking at our own efficiencies and the mix that we end up using in terms of producing soap.
In summary, I don't expect this to be a long-term issue given the amount of excess palm that Indonesia produces, given continuity of supplies from other palm producing nations, and given the flexibility that we do have in our formulations and our alternate methods of producing. In my mind, this should continue. What is given in my mind, Abneesh, this point in time is price volatility, which will continue. We are also in the season as we speak of palm and palm production. As you know, starts peaking from April onwards. Let's see as to where the season comes out and what kind of volumes are getting produced. That will also be a good determinant of overall demand supply situation and the price tables of this commodity.
Sure. That's helpful. My second and last question is on the recent development in the ad campaign, HUL not to target children under 16 in ad campaign. How much relevant this is to India? I understand the Unilever global relevance. In terms of India relevance, how much is it relevant? What's the impact on food and ice cream? And doesn't your ad campaigns become a bit competitively disadvantaged given your competition doesn't face this issue? How do you overcome that disadvantage?
No, I think, Abneesh, this is all about responsible marketing, and it is not that we are going to stop, advertising. Our focus would be on mothers and, fathers, the parents. We don't see in any way getting disadvantaged.
Okay, that's all from my side. I have more questions, but I will come back. Thank you.
Thanks, Abneesh.
Thank you. The next question is from Chirag Shah from CLSA. Please go ahead.
Yeah. Good evening, guys. At the outset, congratulations on navigating through such a tough backdrop so very well. My question is on the BPC segment. Can you just touch upon the progress on the digital-first business segments that we have? Staying on BPC, if you can just also touch upon the other two levers, which is basically growing the core and premiumization and market development, please.
Thanks, Chirag, for the question. Starting with digital-first brands. Overall, we have spoken in last few quarters of results that, on digital-first brands, we have launched our own D2C brands, be it Simple, be it Love, Beauty and Planet, or Baby Dove. As I called out earlier, there are two very clear objectives out here. A, a portfolio which is digital-first brand, and B, set of capabilities which help us to drive digital-first brand. Be it performance marketing, be it the analytics which go behind generating online revenue, and all of that is very clearly installed with us. Along with that, as I talk on digital-first brand, let me also then go back to talk about our own digital sales footprint.
Between e-commerce, eB2C, eB2B, D4C website, and Shikhar, where we do directly sell online to many of our retailers. All this put together to give a digital demand capture, it has now, in this quarter, gone beyond 20%. More than 20% of Hindustan Unilever sales gets digitally captured. In times like this when a lot of channel transformation happens, in my mind, one of the most significant way to look at are we making progress, is to look at how much amount of sales are getting captured digitally. This then also provides us platform to do demand generation and demand fulfillment in a very different manner. That's on the digital-first brand. Now coming to the portfolio, both core, premium and, market development, our growth algorithm is very clear. First clear focus is to grow the core.
Growing the core comes from various fundamentals of growth that we have called out many times. Be it designing our portfolio for channel, be it making innovations in the portfolio, or for that matter, driving distribution and reach of the products that we have, number one. Number two for us is very clear focus on making a portfolio more premium. In this financial year, our premium portfolio has grown at twice the pace as rest of the portfolio. That's the second clear component of our growth algorithm. The third component of growth algorithm, exactly to your point, is market development. The categories that we operate in, many of them still have low penetration and low per capita consumption.
Hence there's a huge runway for us for growth going forward, which is why we do focus at scale to do market development across our portfolio. I hope that give you a sense about the kind of approach we have on driving growth and profitability in the business.
Yeah, that's very helpful. Thank you. The second question is on the nutrition part of the business. Now that the integration largely seems to be behind, what is the direct coverage target that we have for the nutrition business? Also, is it now a good time to start looking at getting into the adjacencies?
Yeah. On nutrition, we have now completed the entire transition. From all elements, from people, from factories, from capabilities, from manufacturing, and also our go-to-market operations. Across all elements, we have completed our integration. Where we are today with our direct distribution is twice the number of outlets now we reach directly as compared to pre-integration. That objective is also very clearly met. The single biggest source of growth and value creation, Chirag, for us, is to do market development at scale. We have called out that it's a very attractive category, but low penetration to start with, and which is why one of the fundamental driver of growth will be market development. We are doing market development at scale.
Sans couple of quarters where we had very peak of COVID wave one and COVID wave two, we have continued our job of market development. Even in this quarter, March quarter 2022, we have done more than 10 million consumer connects. Now talking about again, adjacencies, what we have done is the entire Plus portfolio, which has been activated on high science, be it Protein Plus or be it Diabetes Plus, that is one clear portfolio, that we've activated and ensured that that starts to do the job of more broadening the offering that we have under Horlicks. Equally, both Horlicks and Boost, we have launched our media campaigns, very clearly focused on food equivalents and driving the point of, how does both Horlicks and Boost ends up doing the job of fulfilling the gaps in micronutrients in consumers. That job for us absolutely continues.
The growth strategy for Horlicks is all-encompassing all three elements. Activating the core that we have, number one. Number two, market development, and then keep growing portfolio around it, including the Plus range.
Got it. If I can just slip one small question. On the LUP side, you mentioned that, reducing grammage is the first option for any pricing action. Now obviously we have a very large LUP portfolio, and given the inflationary pressures, I'm just wondering how much more leverage do we have in terms of, taking pricing actions, through reducing grammages?
Yeah. Overall, when it comes to pricing, before I come to LUP, as Sanjiv called out earlier, that the first port of call that we have is always to drive savings hard. Drive savings hard across all the lines of the P&L so that the net cost that we need to deal with is a smaller number, and which is what when we end up taking calibrated price increases. Now coming to price point portfolio, we have roughly 30% of our portfolio which is price locked.
We have done action, we had spoken about it earlier as well, that to an extent we can titrate volumes, we have done that. The second job that we started to do now is to start developing bridge packs and activating that portfolio. Let me give an example of Lifebuoy. We have a Lifebuoy soap at INR 10. The next price point in Lifebuoy is at, say INR 35-INR 36, the soap bar. What we've now done is we launched a price point in between these two price point, both in volume, in terms of grammage and in terms of price. What this does, the unit economics of this bridge pack gives, A, a better value to consumer, and hence consumer is still able to source good brands at an affordable price point.
For us, it gives a scale and also the unit economics gives us better value as well as manufacturers and producers and sellers. Bridge pack is what we're trying now to do across all the commodity impacted categories.
Sure. Thank you so much. I have more questions, but I'll join the queue. Thank you.
Thank you, Chirag.
Thank you. The next question is from Latika Chopra from JP Morgan. Please go ahead.
Yeah. Hi. Thanks for the opportunity. Sanjiv, I just wanted to check, you know, your thoughts on the rural growth trajectory. We saw that the March quarter on an aggregate basis was lower than the previous quarter. But are you seeing any green shoots sequentially in the agri economy as you exited the quarter? Any thoughts?
Yeah. No, thank you. Thank you, Latika, for that question. You know, if you were to look at the hard numbers, we are clearly seeing that the last three months, both the value growth and volume growth in urban and rural has been lower than the MAT growth. Yeah. While there is, you know, one has to understand that there is a base period impact, but on a total basis, we are seeing the decline happening. If you were to recall, in the first year of the pandemic, rural growth was going ahead, growing much ahead of urban, and because urban movement was curtailed, economy was more or less closed. In the second period, second year, we saw urban picking up when they came back as things started to open up.
Now, your question on rural, are we seeing green shoots? You know, I believe that there are a few factors which could contribute to rural recovery. First is a good harvest. We are seeing that the Rabi harvest should be good from all counts. Second is the indicators are that the rainfall should be decent. The third is, with the Agri prices moving up, there would be benefit to the farmers. What we need to assess whether that will get neutralized by input price increase or there would be a net benefit to the farmers. If it is a net benefit to the farmer, it would be fabulous because we are seeing that the government procurement has been much lower because farmers are selling it in the open market. Last but not the least is government spending of INR 7.5 lakh crore on CapEx.
If that is front-ended, which I believe it should be, then we should start seeing a recovery happen. If the geopolitical crisis settles down, then we will definitely see a tapering of the commodity price increase, which all together could result in the revival of demand and revival of growth. I am hopeful, but very difficult to put our finger on when this will happen.
Sure. No, that's helpful. My second question was, you know, you definitely talked about market share, you know, improvements across 75%+ of your portfolio. Could you tell us, you know, how are market shares, you know, across the three segments behaving for you on the e-commerce front? I remember earlier you talked about e-commerce market shares are more than, you know, modern trade, more than general trade. How is the trends now there, particularly on the e-commerce front for your key segments?
Yeah. No, thanks for that question. First is, we are growing market share from a Nielsen perspective in urban and rural, in value and volume. We are increasing market shares across the three divisions, beauty and personal care, foods and refreshments, and home care. We are increasing our market shares in large packs, mid packs and small packs. We are increasing our market shares across geographies, and when you look at it from a lens of premium, mid-tier and BoP. It is a market share gain across segments, and both from a width perspective and from a depth perspective, it's been a great story. Now, as far as e-commerce is concerned, whatever we measure, we get information. We are very pleased with the progress that we are doing as far as e-commerce is concerned.
Sure. That's good to know, Sanjiv. Thank you so much.
Thanks, Latika.
Thank you. The next question is from Percy Panthaki from IIFL. Please go ahead.
Hi, team. Good evening. My first question is, generally when there is a lot of pressure on the consumer wallet, in the past, we have seen some amount of down trading, as in not just the pack size, but the customer goes for sort of slightly more affordable brand in the same product category. Have you seen that happening because you have brands across price points. Within your portfolio, have you seen people moving from a brand to a lower brand within your portfolio or outside your portfolio?
Thanks, Percy Panthaki, for your question. India is, as you know, not a homogeneous country, and we're seeing more than one shopper behavior and consumer behavior in this point in time. The overall trend of downgrading, where consumers are seeking value, that is very clearly established. With inflation where it is now extremely significant, and consumer wallet size getting compromised, they are clearly putting more priority to essentials and against over-discretionary. When you look at our own sales at Hindustan Unilever, our premium portfolio in this year of 2021-22 across quarters has grown at twice the pace as the rest of the portfolio. Which means there are still consumers who are able to buy and who are spending to buy our products, which offer higher order benefits.
As we called out in the past, our premium products are at price point at 120+ index. We have seen traction in that space as well. Now, the advantage of running a extremely good WiMI machinery, Winning in Many Indias machinery, we are able to surgically find pockets of opportunities across the country, across channels and across price segment where we can drive growth disproportionately. This is what has really helped us in times like this to grow not only in premium but also in mass and also in popular. Growth has been broad-based, where we have gone a little differently on different pockets of growth opportunities. Overall trend does remain this point in time that consumers are seeking value. If the small price points are seeking value, they're going there. If the large packs are giving more value, they're going there.
We've seen value-seeking behavior across categories.
Just to Percy, it is absolutely the right question you pose to us. You know, increasingly what we have done, we've also made our premium pack accessible. In, say, laundry, one of our fastest growing brand remains Surf Excel.
Right. Got it. My second question is a continuation of what Latika asked in terms of a market share within sort of the D2C brands. Some work I've done on this and rough understanding I have from media articles, et cetera, is that if we take the top 7-10 D2C brands in India, they're clocking a turnover of somewhere in the region of about INR 2,500 crore+. This works out to approximately close to 15% of your BPC ex- oral care sales. These brands were close to zero, five, six years ago.
I mean, there is obviously some amount of opportunity in the market which is being taken by these brands, and they are no longer small in the aggregate. What are your thoughts in terms of how do you sort of plan to increase market share in this space? Do you want to like you've launched Simple and Love, Beauty and Planet. Will it be through brand proliferation, or will it be through launching subcategories within the existing brands, et cetera? How do you approach this entire sort of space which is really exploding and you need to get your fair share of growth there?
You know, first, I think, Percy, people often forget, but it's worth reminding that we have added INR 5,000 crores of turnover this year. When we talk about digital landscape, all the growth that you see in digital is not always incremental. Yeah. Many of them are the channel shift that happens.
Sure.
Our play today is not just the digital-first brands only. Because I think one must remember that we have great mega brands, and you have seen how we have progressed to INR 5,000 crore, INR 2,000 crore, INR 4,000 crore, INR 1,000 crore. Our first port of call will be to have the consumers access these brands. What we are doing is, for us, Design for Channel is a very important initiative. How do we design our products or even existing brand, not just the Simple and Love, Beauty and Planet of the world, but existing brand, so that they meet the needs of the digital consumer? That's the first port of call.
The second, the way we look at it is brand extensions of existing brands, where we are catering to the needs that we are able to capture and, with speed of many of the digital-first consumers, for instance. Then we are looking at the digital-only brands. Ours is a multi-faceted strategy that we are going to play. Just like many of the digital brands, after a while, they look at moving to offline, yeah. Because after that, the footprints gets reduced if they just remain to digital. For us, the play is going to be multi-channel. The important bit is on an aggregate and in the channels which are growing fast, we would want to have not only a fair share but improve our share. I think that strategy for us is working pretty well.
Got you, sir. That's all from me. Thanks and all the best.
Thank you. The next question is from Kunal Vora from BNP. Please go ahead.
Yeah, thanks for the opportunity, and congrats for a good quarter, sir. My first question is on the digital demand capture which you mentioned. From 20%, now, where do you see yourselves getting to in next two, three years? Can you talk about the benefits as these numbers move up? Would it mean lower employee requirement at distributor level, and are there any other cost benefits? How are you ensuring that Shikhar is like continuously remains preferred over eB2B competition which is coming in?
Yeah. You know, that's a good question. Thank you for that question. You know, I've always maintained that good competitors keep us on our toes. You know, we are now into our fourth version of Shikhar. When we did the benchmarking study on Shikhar's use by retailers and ease of use and the functionality, it came in right on top. We are very pleased with the way Shikhar has progressed. By far it would be the biggest app adopted by the retailers. Now our thrust is how do we customize the assortment for each store so that for a store owner, it makes it much easier to navigate, and we can give them the offering which we feel rightfully should be sold through those outlets.
The other important bit which I want to harness about, you know, for us, it is not just about demand capture. We want to be the, very clearly the most intelligent consumer goods enterprise. The way we are harnessing the three ecosystems of consumers, customers and operations, and the entire idea is that across the value chain we need to use data technology and today, whether it is decision-making, whether it is S&OP planning, whether it is factories, whether it is demand capture, whether it is our fulfillment centers, which are highly automated, across the value chain, we are bringing in technology. Even the decisions that we make on pricing, on promotions, on investments, increasingly we are using intelligence so that.
Excuse me, this is the operator. Sir, we can't hear you. Your voice is breaking.
Yeah, it became suddenly mute from here.
Okay. We can hear you.
All right. You know, increasingly we want to ensure that across the value chain we are able to use technology, and on every area we are bringing in the principle of attribution to growth. We are, as far as technology and all is concerned, we are highly focused and these are what we are creating would be the new moats around us.
Sure. Sir, second and last question. On the LUPs, you mentioned that you're introducing some bridge packs. But will you also be vacating some of the price points? And, how do you see the net impact of this introduction of bridge packs versus, a vacation of certain, LUP price points?
Yeah, this is a very good question again, because first is, you know, let us be very clear, we are not going to lose consumers. We are going to do it in a manner where the consumer gets incentivized to move to a bridge pack. Yeah, that's what we would do. Moving to a bridge pack for the consumer would be creating value.
Yeah. Okay. That's it from my side. Thank you, sir.
Thank you.
Thank you. The next question is from Harit Kapoor from Investec. Please go ahead.
Yeah. Hi, good evening. My first question is on the margin side. You know, just trying to kind of crystal ball gaze into the next 12 months. You know, on one hand, you know, you have a challenge of a weaker demand environment and you know, you still have to keep you know, passing on pricing through this albeit calibrated. On the other hand, you also have a challenge where you know, some of the discretionary categories are a bit weaker you know, as compared to the base categories, which again implies a slightly weaker mix, you know, something that we saw in Fiscal Year 2021 also during COVID.
I just wanted to understand, you know, how do you know, then kind of take pricing decisions in such context? Is there a kind of a margin band that you look at, you will look at to kind of maintain based on which you will take a pricing call? I just wanted to get your sense on, you know, how you will navigate this environment from a broader perspective. Because, over the last three years you've seen a 24%-25% margin. In the past it's been even lower. So, is there a broad margin band that you look at?
You know, it's going to be very market related and, you know, you'll just keep taking a call every month or two depending on, you know, how things are panning out from a demand perspective.
Hi, thank you so much for your question. Absolutely a very important question in the times that we are in, this point in time. Our strategy has two component. Number one is to protect our business model, and number two is to grow our consumer franchise. If these are the two objectives achieved, we will know that all the work that we've done has been successful. This has been done in last several quarters as we have been in a very challenging atmosphere, be it COVID, be it the latest geopolitical crisis or be it inflation that we have seen unprecedented, and the number which I quoted earlier, from a JQ 2020 of 100 basis to 4.5 times in MQ 2022.
In all this period, what we did was the first port of call is to keep driving savings hard across the length and breadth of the P&L.
At Hindustan Unilever, we have a very strong savings culture, where savings is generated and done by everybody in the organization, be it colleagues in supply chain, be it colleagues in marketing or colleagues in sales. All lines of the P&L, we try to bring maximum efficiencies. I quoted certain examples earlier to you of supply chain, even on product, where we design to value. If there's more amount of weight to a bottle, can we manufacture a bottle with a little less weight? It'll help the environment, it will also help the cost. Media contribution to growth and hence the kind of ROI we want to generate. That's the first port of call. After that, as you rightly called out, we do and we have taken calibrated price increases.
Now, the kind of inflation we have seen in commodity, as you've seen, the very fact we've been able to negate a good portion of that, and hence we have been able to maintain the margin in healthy range and do price increase of a scale of 10%, which as you can see, is much lower compared to amount of commodity which has increased. That's number one. Number two, this is also where portfolio comes into play, where we have portfolio across price points from mass, from premium, from mid. I called out earlier that even these times, there is a segment of population in premium where we are able to sell higher price, higher, you know, other benefit products. The growth of that portfolio has been twice the growth of the rest of the portfolio.
That is something which has also helped us in times that we're in today. Strategy is mix of that pricing and of course, driving in terms of cost and of course, holding our consumer franchise. But what we're not blinking in times like this is to invest behind our products, invest behind our brands. One of the example I quoted earlier that our product superiority today is twice as much as it was in the base of 2019. Two times we have more superior products compared to 2019. Media, we spent INR 100 crore more in this quarter to ensure that our salience and our media reach is not getting compromised. And we continue to remain our share of spend ahead of our share of market. That gets very squarely done.
Now, in short term, as I called out, we will see stress in margins and margins will decline in short term. Why that will happen? Because the price versus cost gap, when you have certain huge amount of inflation in input cost, it takes a little time for us to then mitigate that through cost synergies and pass on the incremental impact through calibrated price increases. Which is why what we mentioned that there will be short-term impact on margin as price versus cost gap increases. We are very confident that we will build it back in a phased manner back in the P&L. We are very clear what will not get compromised is our own will to ensure that we're able to grow our business ahead of FMCG market growth. That's the overall strategy of the business.
I'll just add a bit more flesh to the bone, to the comprehensive answer that Ritesh has given. We also measure the elasticity. Yeah, how much is the volume impact that we would have? We must remember that there is nothing like a perfect elasticity or perfect inelasticity. The second important bit is that when your brands are superior, whether from a mental reach perspective or a brand power, or from a product superiority, then your capacity to take price increase is much more. Because the consumers don't always look at absolute price, they always look at price value equation. That factor also gets into account.
We look at a portfolio from a lens of how do we, from a capacity to pay perspective, how do we protect the low price point packs and where do we have more capacity where people would be having more disposable income in their wallet to spend on our brands? That's where we take it. There are many variables that get into it, and increasingly, we are using a lot of data and analytics to help take our decisions.
Right. Thank you very much for this. The second is a much shorter question. Actually, just wanted to get your sense on, you know, in your view, do you expect, say, media intensity over the next, say, few months also to keep trending downwards? I'm not talking about your share of voice, but from an aggregate perspective, given probably, you know, players who have lower market shares, regional, et cetera, might be even more stretched than you are, who don't have some of these levers. You know, do you expect that media intensity impact will also keep coming down, progressively, at least until, you know, the inflation impact is severe?
See, it has come down by nearly about 20% if you look at the GRPs on a total basis. Let me be emphatic. Our share of voice is more than our share of market. For us it is, we play for the long term, we don't play for the short term. If we see media intensity goes up, we will unblinkingly invest more behind our brands.
Got it. Thanks and wish you all the best. Thank you.
Thanks, Harit.
Thank you. The next question is from Shirish Pardeshi from Centrum Capital. Please go ahead.
Yeah, good evening, Sanjiv, Ritesh.
Good evening.
Ravi. Thanks for the opportunity and really congratulations for beating our numbers.
Thank you.
Two things. I'm referring to slide 30. On that is the FY performance I'm referring to. When you reported FY INR 14,000-odd crore for food and refreshment, and the growth is about 6.8%. Since we have completed one year of GSK acquisition, could you? I mean, I don't want to get into much detail, but if you can broadly tell me what is the growth and what is the contribution from GSK portfolio?
Yeah. Overall, as you've seen that the growth that we have in foods and refreshment is very healthy.
There are two dimensions to that growth. A, the growth is comprehensive in terms of the portfolio that we have. More importantly, as we called out, Shirish, earlier, that growth is extremely competitive. Wherein we have gained market share, and we have further improved penetration. I was speaking a little earlier about a tick down on Horlicks within that. We have successfully integrated Horlicks. Our reach now, direct distribution, is twice what we had pre the period. Our market development and scale has been also done. Now, when it comes to growth of Horlicks, as I mentioned earlier, the key job to be done out here is to continue to do market development at scale and support the market growth. Now, Horlicks within that is a discretionary category.
The point I was making earlier, with significant amount of inflation that consumers are witnessing in their kitchen, they are putting more priority this point in time to essentials against discretionary categories like HFD, categories like skincare. Our job is very clearly cut out, which is to keep doing market development. Fundamentally, it's a very attractive category with a low penetration, and hence our idea is to ensure that we are doing the job of building a portfolio, improving penetration, and improving market share. Within March quarter and overall, as I mentioned, that our momentum is very strong there, and we have gained market share while the category has seen decline in terms of market. We have further gained penetration as well. It's a, I would say, good set of results, as we started to see impact of market development in early phase.
This is not a short one- or two-quarter journey. We will be at it because the runway for growth is much higher, and our job of building penetration is long-term. Overall, within F&R, if I again call out certain other categories, we've seen very good growth across our foods and refreshment or our foods portfolio. Tea, we've seen again very good competitive growth. We now have both value and volume leadership in our tea portfolio. You heard us speaking about coffee having a double-digit growth in the quarter. It's a pretty broad-based performance and in the foods and refreshment portfolio that we have today.
Okay. That's helpful, Ritesh. Just one follow-up here. You did mention in the beginning that the entire integration front-end and the back-end is done for the GSK full merger, which has happened. I did see from the margin perspective, the segmental margin for food and refreshment has gone up by 200 basis points. The question here is that, with the full integration now behind, do you think this another 200? I mean, I'm not saying number, but you see that the further expansion on the segmental margin can happen now onwards despite the inflation basket is different?
Yeah. Shirish, on the cost synergy front, we had mentioned earlier that we made very significant progress. During the first year and a half, we have already achieved our ambition that we had on cost synergy for the first three years in the business case. A good portion of that generation that we did of cost synergy, we have invested back in the business to keep driving market development and in the business. Now, if you ask me, is there a further headroom for us to gain synergies and grow further, in terms of margin headroom for Horlicks portfolio? Answer is absolute yes. The areas which we'll further get savings will be in the area of supply chain and distribution. What we have now finished doing is full integration of our go-to-market structure.
The point I was making that our today direct outlet coverage is twice what we had earlier. Areas like media, overhead, costs, those synergies we have already realized. In terms of distribution, may I say DCs, depots, in terms of factory manufacturing, there is further headroom that we have to realize, and we have clear line of sight as well of those. It's just that we've been sequencing also what we should first dial up and then which is the second and third port of call we should go in terms of driving synergies. Yes, there's further headroom for growth, and we have very clear line of sight over the next two, three years to keep driving that.
Wonderful. My last question. When I look back since the time I'm tracking this company, what I understand, you did mention that we are ahead of share of market in terms of spends and our SOV is much higher. Just an observation, having worked in the industry, what I find that when we have done the activation and the rural penetration and through the access pack, and you did mention that AUP is also a big number. What I'm trying to say here, in the volatile demand condition in last two, three quarters, Sanjiv did mention that rural is slowing down, so we did pick up that.
In the context of when the demand is not coming and when our prime goal is to improve the frequency of usage, do we think that to gain further market share or to maintain ahead of the curve, even if the rural is not coming back, at some point of time in next four quarter, we'll have to up the investments in advertising?
Yeah. You know, advertising, we look at it from a couple of lenses. One is, of course, competitive. Yeah. We want to be ahead of our market share. The second is we'll also look at it from a reach perspective. Because let's also accept that FMCG doesn't operate in isolation. We operate for the eyeballs with other industries as well. So we need to have a minimal reach to ensure that our brands remain salient. We do that. The third thing also, we must accept that market development, when we invest in it, these are generally first purchased by early adopters, and early adopters are people who have more disposable income with them.
Market development, we believe, will continue to grow at a pace faster than rest of the market, which we have seen over the last several years, and it will continue to be so. We will not cringe away from investing in market development. Yeah. We have very clear portfolio. While our overall imperative that Ritesh articulated remains, and which we have been very consistent, that in case of this kind of volatile hyperinflation environment, protecting our consumer franchise, not only protecting but growing and protecting our business model are the two big imperatives. We play for the long term, and we will not do anything which in any way will hurt our business from the long-term perspective.
Sure. Thank you, Sanjiv, and all the best. I hope, FY 2023 you will break the previous record. All the best to you.
Thank you so much.
Thank you.
We'll take some questions on the web now. I'll start with a question from Avi Mehta from Macquarie. The question is: We have traditionally looked to maintain EBITDA margins in the 24%-25% range as we play all lines of P&L to offset inflation. Would it be fair to expect margins to move to the lower end of this range in the near term and move back ahead ensuring that FY 2023 margins are in this range?
Yeah. Thanks, Avi, for the question. This is the point I was clarifying and giving more details earlier. We do expect in next two to three quarters sequentially inflation to further go up in terms of commodity cost and input cost inflation. As I mentioned, the strategy very clear, protecting the business model with a very clear objective to grow our consumer franchise. The point that we made that we keep investing for getting the job done. In the near next two to three quarters, we will see margin to decline. Why that will happen? Because the price versus cost gap.
When you have sudden increase in cost, and we continue to do the job in terms of reducing the cost impact through savings, but with the increase which is so substantial in short term, it will lead to in short term a price versus cost gap. That's what will end up impacting margins in short term. As I mentioned that, in our mind, it's very clear that we will build this margin back in a phased manner over quarters after that. That's our clear strategy of from a margin perspective. I hope that gives a very clear understanding of where do we see margins for next few quarters.
Thank you, Ritesh. Sanjiv, there's a question on how we assess product superiority.
Yeah. You know, product superiority, we do blind test. Because, you know, if we were to do branded test, we will have an unfair advantage. We do very clear blind test to test attributes which are most relevant for the consumer. That's how we assess the product superiority.
There's a question from Richard Liu. The question is on understanding the strong spike in other operating income in Q4. That is one part of the question. The second is, for a little bit of color on the CapEx numbers and how much of this is PLI related.
Yeah. Let me, Richard Liu, pick up the first question on the other income. There are three reasons why the number is higher compared to periods earlier. Number one, as we'd announced that, we do have now a participation in PLI scheme, and this is as part of that, this is the first year and to get revenue of OTC income, which again gets accounted in this line. Hence, with the business which has happened there, it has seen better income compared to the same period in the prior period. That's the second reason. Third, we, as you know, we host global cost centers and global capabilities which we invoice globally to Unilever, and that has further increased in the quarter in terms of investment in those capabilities.
Hence, since we host them, we also invoice and we earn income through markups. Other income is higher compared to what you saw earlier. CapEx, yes, very clearly we have stepped up investments. The investments we have stepped up in CapEx in few areas. To start with, you've seen UIL, we have a blown powder capacity that is setting it up. As part of that investment, as we had called out a couple of years back, that is accounted in UIL books and hence also comes in the consolidated P&L. There's a blown powder capacity in Sumerpur that is setting up. With the kind of growth that we've seen in Home Care, I'm saying there's no surprise that we're setting up further capacities to support the growth that we're seeing. That's one.
There are also other pockets of investments that we have done, be it our distribution centers, be it the nano factory which we spoke about, the way we have digitized that factory and we invested in those capabilities. Also, there's ice cream cabinets. This is also the time for us, with a good season for ice cream. As you know, you know, March quarter we called out, we had pretty good strong growth in ice cream. In fact, our business in ice cream now is higher compared to pre-COVID levels. Those are the areas where we have done investment in our CapEx, and hence you're seeing number inching up. In the COVID period, we were measured with our cash expenditure and our capital discipline.
Now with growth coming in, and we have appropriately leaned in to ensure that the last thing that we want is our growth getting compromised by not having invested. Investment be it in CapEx or investment be it in BMI, also this matter of product superiority, across the board, we ensure that growth in no way gets compromised. That's the reason why you're seeing increase in CapEx expenditure in this financial year.
There are a few questions on pricing and LUP which we have already covered, so I'm going to skip over them. There is a question from Chiragi on what has helped secure the strong margins in foods business. Also what has led to the strong performance in fabric care and home care?
So...
Yeah.
The margin in the food business I'll pick it up...
[crosstalk] the performance in fabric care and home care.
In the food business margin, of course, there are two broad drivers of that. One, as you know, the F&R business includes the nutrition business, and we give the narrative of the kind of margin we have driven because of cost synergies with nutrition. That is one clear driver. Of course, tea, we know that we had very high amount of commodity at one point in time. As we speak now, though commodity is still elevated over 2019, but year-on-year now the inflation is not as high as we have seen in the past period. In fact, year-on-year the costs have come down of commodity.
There are two factors, but I would say the predominant factor is the kind of work we have done in Horlicks. Beyond Horlicks, beyond tea, of course, overall, as I mentioned that the job that we keep doing in driving cost synergies across the board by driving various operating synergies, be it on distribution, by traveling less kilometers per product movement or for that matter, cost synergies or media or promotions or other supply chain elements. There's a lot of work which happens in the P&L across the board that also benefits you see within F&R as well. Those are the three reasons I would say why we're seeing better profitability compared to what we have seen in the past.
Just to add to what Ritesh had said as to why Home Care has done so well. I think first we need to sit back and take a bit of a macro picture that in the last about nine years we have added INR 25,000 crores to our turnover. Yeah, which is doubling our business and which is more than the absolute turnover of any other FMCG company. The second is we have tripled the EBITDA during this period. Market cap, you guys monitor more closely than I do. I'll leave it to you. During this period or even if you look at it during the last couple of years, you know, we have. That is the strength of our portfolio. Not any category will keep growing at a linear pace. That doesn't happen.
If you look at it in recent times, we've had a great journey with tea. We have taken not only value leadership, but volume leadership and phenomenal growth. You look at our hair care, where we have got record shares right now, and where we have created markets, an amazing journey we have. Similarly, on home care, it's been a consistent delivery of superior products with great brands and consistency of engagement platform. Now, Dirt Is Good is something that has a different manifestation. We have been running this engagement platform for years to come, and that is how we have built this great property.
Product superiority, brand power, brand salience, distribution prowess, our Reimagine HUL agenda, these are all contributing in different ways to ensure that we have a rhythm on growth and have ensured that we make such a robust business model. That's the reason I say that many times people talk about niche brands. They will always be there. At our scale and size, adding INR 5,000 crores as delta turnover in a year, that gives a sense of the kind of strong business that we have created with Hindustan Unilever.
Thank you, Sanjiv. With that, we will now come to the end of the Q&A session. If there are any further unanswered questions, please feel free to reach out to us in the IR team, and we'll be happy to clarify. Before we end, let me again remind you that the playback of the event will be available on the IR website in a short while. A copy of the results and the presentation, if not with you already, it is on the website as well. With that, we would like to draw this call to a close. Thank you everyone for your participation, and have a great evening.
Thank you.
Thank you.
Thank you very much, sir. Ladies and gentlemen, on behalf of Hindustan Unilever Limited, that concludes this conference. We thank you all for joining us, and you may now disconnect your lines.