Ladies and gentlemen, good day, and welcome to Hindustan Unilever Limited Conference Call for the Results for Quarter Ended 30th June 2021. As a reminder, all participants online 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 the conference call, Please note that this conference is being recorded. I now hand the conference over to Mr. A.
Ravi Shankar, Group Controller and Head of Investor Relations. Thank you, and over to you, sir.
Thank you, Martin. Good afternoon, everyone, and welcome to the conference call of Hindustan Unilever Limited. We'll be calling you this evening Results for the Quarter Ended 30th June 2021. On the call with me from our end is Mr. Sanjeev Mehra, Chairman and Managing Director and Mr.
Ritesh Divai, Chief Financial Officer at U. S. We hope that all of you are staying safe and healthy. At this customary, we will start the presentation with Sanjeev sharing his perspective on the market and an overview of how we are navigating the current environment. Ritesh will then share with you our performance of the quarter with the category highlights and our outlook for the future.
Before we get started on the presentation, I will draw your attention to the Safe Harbor statement included in the presentation for good order's sake. I request all of you to pay close attention to Sanjeev and Ritesh's message over the last next 30 minutes. We'll be addressing upfront a lot of questions which are likely to be top of mind for you. With that, over to Sanjeev.
Thank you, Ravi. Good evening, everyone, And thank you for joining us on the call today. I hope that you and your loved ones are safe keeping well in these exceptionally challenging times. I, on behalf of Hindustan Unilever, would like to express our heartfelt We wish a speedy recovery to those who are battling with virus And immense gratitude to all the frontline heroes who are standing up against adversities and are fighting timelessly to help keep others safe. I would also like to thank every member of HUL for their relentless commitment and dedication in these difficult circumstances.
I'm delighted to welcome Ritesh, our CFO And Ravi Shankar, our Controller and Head of Investor Relations. They are extremely talented individuals and have landed running. I'm sure each one of you will find the experience of engaging with them very enriching. Now let me take you through the market context and the impetus for navigating through the crisis. You would recall, I had mentioned that April had started off on a good note, continuing the strong momentum from March quarter.
Infection rates were largely under control, consumer sentiments were improving and the economy was in the path to recovery. And importantly, vaccination had commenced in the country. However, towards the latter part of April, cases started spiraling up in the country. It was more devastating this time. The intensity of surge in cases put the medical infrastructure under pressure With active caseload jumping to 3,700,000 at its peak, mobility got severely impacted in the month of May As cases hit the peak of more than 400,000 a day, an authority rightfully used localized containment measures to control the spread.
The amendments efforts of the priorities in the frontline were warriors. We saw a sharp decline from the peak to less than 30,000 cases per day now. Mobility has also started to improve in June as the restrictions were gradually lifted. Unlike last year, this time, There were localized lockdown, so the back end supply chain kept functioning, although last mile logistics had seen some impact. Overall, the impact on mobility this year was less severe compared to June quarter 2020.
If you were to look at it through the lens of the FMCV industry, So, in May months were severely impacted, a large part of the country is under localized lockdown. However, As restrictions lifted progressively, June month rebounded to March 21 level. Unlike last year, we have seen virus spreading into the rural hinterlands this time. Notwithstanding this, rural continues to remain resilient with a decent start to the monsoon and government support helping the call. Urban markets, which showed signs of recovery in March quarter, was impacted more severely and are yet to come back to March 21 levels.
On the commodities front, We continue to witness unprecedented inflation in our 3 key raw materials. Bomb oil prices continue to be at record levels, Buoyed by recovery in global economy and supply constraints, crude has also rallied significantly over the last few months. We had seen significant inflation in 2020 and the prices continue to remain firm. These are the initial days of the new crop. While we expect to see some softening versus the record levels in 2020, Prices are expected to remain higher than the 2019 level.
Therefore, the operating environment has remained challenging in this quarter. COVID wave 2 has brought into sharp focus of volatile and uncertain times we live in. It tested the resilience of a business, Character of the people, agility of operations and the depth of our financial strength. Building on experiences of 2020, we base innate resilience and utility in operation. Applied growth fundamentals: Purposeful brands, improving the penetration, impactful innovation, designing for channel and creating the field for growth, combined with our 4 clear priorities of people, supply, demand, cost and cash.
And the technology muscle that we've built over the last few years helped us to navigate the crisis well and come out stronger. Our people will always be our biggest asset and ensuring the safety and well-being will remain our topmost priority. We have ramped up our medical infrastructure Same manpower. We have a team of 60 doctors, 40% more compared to pre COVID levels to look after the help of employees. We have tied up with more than 200 hospitals across the country and have 45 fully equipped ambulances to support critical cases.
Central to tackling the pandemic is vaccinating our people. We are facilitating vaccination of employees, their family members and also people who form part of Out of Core. As of today, about 90% of all our eligible Own employees have been inoculated with at least one dose of vaccine. If I look at our ecosystem, Excluding, of course, the family members, then more than 88,000 people have received at least one dose of vaccination. Today, our supply chain has become much more agile and resilient.
Our distributed manufacturing footprint enables us to manufacture goods closer to the market. We have debottled our production lines, made them more flexible to quickly adapt to the changing requirements should there be a surge in demand and have taken a potential capacity to 1.3x of pre COVID levels. We are keeping inventory closer to the consumers to ensure availability of our products. Despite significant disruption from last mile logistics due to COVID Restrictions and Limited Hours of Stores Operations. We were able to maintain our direct upgrades within the others.
We also ensure the availability of a wide range of acquirements unlike what happened last year. Demographics in India are changing rapidly, and this is translating into world and consumer needs and aspirations. At HUL, we are leveraging our durable know how, embellishing it with deep local insights and innovating to meet consumer demand by constantly striving to deliver better experiences. To make the chore of doing laundry more efficient, Surf Excel has launched 3 in-one Smart Shot, a single use soluble liquid detergent capsule with a unique 3 chamber design that provides advanced skin removal, long lasting treatment and care for fabrics. On its journey to make beauty products more sustainable.
LAPNA has introduced its perfect radiant skin whitening bakery with a recyclable refill jar that reduces plastic usage by up to 85%. Quality Vault has launched the Canterbury Crackle Cup in partnership with Mondelez. It's a well itching combination of chocolate swirls and rich chalky scoop Overloaded with Cadbury Cracker Magic. If you haven't tried it yet, I would definitely urge you to do so. Vaseline has launched a new range of hydrating lotions and gels that keep you refreshed with hydrated and moisturized skin.
It's never been more relevant for brands to demonstrate their positive contribution to society and address the issues that consumers care about in an authentic way. So we are investing on communications that are explicitly purposeful and consumer relevant. Lifewire continued its purposeful journey and launched It's a public service message communicating the role every Indian has to play in teaming the second wave by educating people to become role models in the community by following the COVID appropriate behavior. With a strong sense of purpose to offer superior disinfection, Domex responded with agility to the COVID-nineteen crisis. Mumbai was one of the first cities in India to be greatly affected by the 2nd wave of the COVID pandemic.
Domex joined hands with the Municipal Corporation of Greater Mumbai to fight against COVID-nineteen by helping keep public spaces safe and sanitized. After a delay due to pandemic, Olympics are nearly here. Our purposeful brand, RenminX's latest ad campaign, Time to Shine, is celebrating the inspiring story of grit and determination of India's 1st Olympic Sensor, Bamani Baby. Living its philosophy to encourage young girls to not only dream it, but also achieve it. Santel did that digital video with Priya Malik's popular word artist and poet to bring this alive beautifully to a point of no car key mail, inspiring us to turn the green into reality.
In the past, we have talked to you about reimagine HUL, a journey to create a tech enabled intelligent enterprise, where we are leveraging to scale up the impact of digital initiatives on our own business. Shikha, our eB2B app, is a real game changer for us. We've added another 50,000 stores to take the tally to 5,500,000 stores. Along with adding new stores, we are driving better adoption and stickiness, which is reflected in the contribution of Shikhar Turner Law, which has gone up by 6 times in June quarter versus the same quarter last year. COVID-nineteen has, of course, amplified the significance of e commerce and consumers' preference for e everything is a clear tailwind for the channel.
We believe as the consumers get used to the convenience and assortment of e commerce, This habits will continue to stick. At HUL, winning in Channel the Future has been a strategic imperative. In the last quarter, we talked about premium beauty business unit, which will focus on digital only and digital first brand. We are excited about this opportunity and have rolled out a range of beauty products in our digital only brand, Simplee. Leveraging our global presence, we are learning from our experience in more developed e commerce markets.
Design for channel is a key pillar of our 5 growth fundamentals, under which we are designing new products with right back price architecture exclusively for e commerce. All of this has enabled us to continue to accelerate our growth momentum in e commerce and increase the contribution of this business to 2x on a year on year basis. In our endeavor to provide a seamless engagement and shopping experience to consumers, we are exploring new routes to each. YouShoppe, our multi brand online direct to consumer store is a step in the right direction. We've started Ushop in Mumbai and Delhi will be expanding further.
Our premium brands like LATAM and Indulika have their own B2C platform, providing a unique shopping experience to the consumer. IC Now is another initiative where we are tied up with last mile delivery partners like Swiggy, Zomato, Dunzo to provide home delivery of ice cream. Today, more than 10% of our demand is captured digitally through these future ready platforms. This also gives us unique ability to run our demand generation activity in a disruptive way. As I said earlier, we start we entered the quarter on a strong momentum before hitting the second COVID-nineteen was impacted part of April 11th, prior month of May.
In this backlog, we delivered a robust performance, Consumer business growing at 12% led by underlying volume growth of 9%. Our profits after tax grew by 10%. Market development initiated by the strong RevPAR and the market development sales continue to grow ahead of our overall growth. Premium portfolio also did well, growing at 2x of the rest of the portfolio. Our business fundamentals remain strong, And we continue to gain penetration in more than 80% of our business and LCM basis when compared to the same period, Not in 2020, which would be an easier thing to deliver, but against 2019.
Again, in 2020, we are gaining penetration across all of our business. We are starting to see Nielsen having better stability. And as per the latest June quarter read, we are gaining value shares in more than 3 fourth of our business on a 3rd June basis. During the 2nd week, we launched Mission Hope. And as part of this, we airlifted 5,500 oxygen concentrators from across the world into India in a fast track manner to address the shortage of medical oxygen.
This is being deployed in hospitals in Six states who strengthen the rural infrastructure and with a partner, Topia Medical, established a free of cost borrows the return model in several cities to help people in need. We also converted idle nitrogen plant in Pondicherry to Oxygen Plants, supporting sustained oxygen supply to government hospitals for chest diseases. We also started 3 Prabhans telemedicine services in 5 of our factory locations in partnership with LeberNet Healthcare. These centers are ensuring safe, affordable and accessible healthcare services for rural communities where access is a huge problem. Let me now turn to a newly launched Unilever Compass, the strategy that will drive our business that will help us on a journey to becoming a leader in sustainable business.
It's the heart of
the compass. It's our belief That sustainable and purposeful business drives superior performance. This message is extremely relevant in today's environment than ever before. In a way, we are determined to end the debate whether there is a trade off between purpose and performance. We realize that being purpose led alone will not be enough.
To be successful, we also have to be future fit by being fully digitized, more innovative and faster to respond to the many changes shaping people's lives every day. Bringing focus to the compass of time bound commitments and actionable goals that we are committing to. We believe that this commitment will help Crackle, the biggest challenges at the time, such as packaging and waste, gender equality, human rights and fair value, Plus, of course, climate change, water scarcity and social inclusion. By focusing on building solutions Thank you for the challenges through a purposeful brand and action, we will connect even more closely with the consumers and communities we serve. The compass talks out that strategic crisis and actions that we believe will help us achieve our purpose in region.
We will do this by developing a portfolio to expand in high growth segments, leading in the channels of the future, Creating Purposeful Brands, Building Differentiated Capability and the Future Fit Organization Culture. Looking forward, while we are cautiously optimistic about the near term outlook, we remain confident of mid to long term prospects of SMC's industry and India. We are still not out of the woods as far as the virus is concerned. It is important for all of us to be responsible, Follow COVID appropriate behavior and not throw caution to the wind. As life war has rightly said, Fighting Coronavirus is in Your Hands, Our Hands.
Let me now hand over to my colleague, Ritesh, to provide deeper insights into this quarter's performance. Ritesh, over to you.
Thank you, Sanjeev. Good evening, everyone. I will now take you through the performance from an in quarter perspective and also talk about briefly the future outlook. As Sanjeev said, our performance has been robust in a challenging context. Sanjeev collaborated about impact of 2nd wave on May month and how we have sequential pickup in June.
Talking about the numbers, our domestic consumer business grew by 12 percentage led by strong underlying volume growth of 9 percentage. You could also remember Sanjeev talking about the high inflationary pressure in our input cost. Continuing with our judicial and calibrated pricing approach, we executed another round of price increase in skin cleansing, laundry and tea portfolio. Our underlying price growth at 3 percentage will optically look lower than March quarter 2021. However, this is reflective of the variation in the intensive trade spend in the base periods of March of 2020 June quarter 2020.
Growth was broad based with all three divisions Growthings Intermediates. Health, Hygiene and Nutrition, which formed 85 percentage of our portfolio, continued strong momentum, growing on a relatively high base of GQ20, while discretionary and out of home portfolio were impacted due to limited mobility and see the impact was lower than we have. We will talk more about top line growth when we go into category slides. Moving to performance, our net profit after tax grew by 10 percentage to more than 2,000 crores. Our EBITDA margins have declined 110 bps on year on year basis, primarily linked to high input cost inflation and increased A and D expense.
If you remember, we had the benefit of low media rates in the base period. This is partly offset by turnover leverage on other expenses and employee costs. On a sequential basis, our EBITDA margins are down 50 bps. This is consistent to how we had approached the business and spoken to you last quarter that we look to maintain healthy margins while driving competitive volume growth. The sequential drop in margins was driven by high input costs from crude and power, which have inflated at record level, partly offset by pricing actions.
We have talked about 1 off benefit in employee costs in March quarter 2021 linked to true up of free label pay. A and P spends are sequentially lower as we calibrate our media spend given 2nd wave of COVID and impacted some discretionary categories. We continue to maintain competitiveness of our brand with our share of voice well ahead of our share of market. Profit after tax before exceptional items were up 5 percentage. The gap of 5 percentage impact DEI and net profit is explained by exceptional costs in this period linked to M and A and integration costs.
Our growth has been broad based with all the 3 divisions growing in double digit. Home Care growth at 12 percentage was enabled by strong performance in carpet wash and and Household Care. Beauty and Personal Care Growth at 13% was led by Healthcare and Skin Care. Foods and Refreshments grew at 12 percentage, led by continued momentum of in home portfolio. Let me now shift gears to performance within each of the division.
Let me start with Home Care. Household Care continues to perform well, delivering high teens growth on a strong way, led by 3. Premium dishwash portfolio continues to do well. Safeway wash grew in double digits driven by our premium portfolio of soap, liquids and fabric conditioners. We continue to take calibrated pricing in laundry considering the significant input cost inflation.
Fuel and fire continue to improve sequentially led by acceleration in e Commerce. Moving to Beauty and Personal Care. Source delivered another strong quarter of growth. Premium portfolio of soaps continued to perform well, growing sequentially. Hand hygiene portfolio comprising sanitizer and handwash declined on an exceptionally high rate from GQ20 when we saw people stocking up these products.
Power continues to be at record level. It's a multiyear high, and we have been taking pride in a calibrated manner to protect our business model while maintaining competitiveness. In oral care close-up continues to do well, Pepsilent launched its coronavirus fighting mouse wash with CPG technology that reduces 99.9 percent COVID-nineteen virus after 30 seconds of rinsing. Hair Care continues its stellar performance, growing in high double digits As we continue to gain market share, our innovations and communications are finding relevance with consumers and see good results. Skincare and color cosmetics recovered strongly on a year on year basis as mobility improved versus GQ 'twenty, though not back to pre COVID-eleven.
These are structurally very attractive businesses and have delivered strong performance for us. We believe as mobility further improves, These categories will gain increased consumption. Talking about foods and refreshment, business continues to grow in double digit led by in home portfolio. In food, catch up and soup continued their strong momentum and grew on a higher basis in gQ20. We delivered another strong quarter with all our key brands growing inter by digits on a very strong wave in the prior year as we continue to gain share.
Go to market integration in nutrition business is progressing well. Health food drinks gained penetration sequentially and grew volumes in net intelligence. You would recall, AFK used to operate with the sub distributor model, which are now changing to direct coverage in line with HUS distribution practices. As a result, their work and adores impact linked to pipeline correction, which we integrated distributors. I will speak in more detail about Nutrition Business and progress on integration a little later in the presentation.
ISV recovered and grew here on here from a few days. Although performance in the quarter was impacted by limited mobility. In partnership with Multisheet International, we launched Quality Wall, We have been talking to you about our portfolio from a cold impact lens. And if you would notice, the Health, Hygiene and Nutrition, which used to be 80% of our portfolio, has now gone up to 85%, reflecting the differentiated growth of the 3 portfolio. This chart provides a quick snapshot of how the 3 portfolios performed in this quarter.
Health, Hygiene and Nutrition continued its momentum, growing at 8% on a relatively strong base. Discretionary and out of home business, which includes categories like skincare, color cosmetics and ice creams, were relatively less impacted In this quarter compared to same period last year, we grew in high double digits, albeit not yet back to pre COVID levels. Now let me talk more about nutrition business, which I'm sure is an area of interest to many of you. As we told you in April, We completed SAP migration in March quarter and had started off with go to market integration, which was a major logical step. GSK has mainly 800 distributors who have become part of HUL distribution network post merger.
We have designed our go to market structure to ensure with the combined strength of both GSK and HUL are leveraged in the marketplace. We are progressing well on our plans and have nearly integrated almost half of the business despite the COVID challenges. We have also expanded our target coverage in nutrition by 1.4 times compared to April of last year. As we said in the past, health food drink is a highly underpenetrated category in India with all India penetration levels at circa 25 percentage. And in rural areas, this is even lower.
Quite naturally, our most important job is to develop the market and grow penetration in this category. One of the important market development activity is ConsumerConnect to recruit consumers into the category. This call has been made 500,000 contacts and are looking to guide us further as COVID restrictions are lifted. Another critical aspect of integration is to continue on the journey of generating cost synergies. And consistent with our past commentary, we are progressing ahead of our plans.
We will continue to invest part of this synergies back in growing penetration and developing the portfolio further to keep business on a virtuous circle of growth. Talking about segmenting performance, now from our segment clients, all three segments have performed well with growth in double digits. We are also seeing the impact of inclusion of nutrition business members in the base of food and refreshment. As I mentioned earlier That this quarter we annulcerized and all the numbers of foods and nutritionists have nutrition in the base, so it's completely like for like comparison now. Our margins in all three divisions are healthy, and we continue to manage them dynamically.
If you recollect, full sale refreshment margins in December quarter were at 14 percentage. And from there, we have been able to build the margins up to 18 percentage in just a couple of quarters while still growing the business at a high pace. As we always said, margins will follow if we are able to get growth equation and competitiveness right. That's exactly what we have been able to do well in our Foods and Refreshment business. In summary, our performance has been from both on top line and bottom line.
I already covered most of the lines in detail. Let me pick up a couple of items and elaborate more. The first is drop in asset income, which is on account of lower treasury yield and one off credit in base from interest on tax prior period adjustment. The other one is on effective tax rate. Our ETR for the quarter was 21.7 percentage, given certain prior period items.
Excluding prior bill items, we expect for ETR for the year to be around 26 percentage. Coming to my last chart for today, looking forward, we are cautiously optimistic. With mobility improving, we believe that demand for FMCG product will go up, especially for discretionary categories. The strength of our portfolio and our capabilities will hold us in good stead. Notwithstanding that possible surge in infection rate may cause uncertainty to demand.
Rural has been growth in India for FMCG for last few quarters, And it continues to be resilient. Hopefully, we see it more soon. This will also well for the rural economy and for our business. 3 of our biggest import materials remain volatile and at elevated levels, and we will continue to look for all levers like savings, judicious in calibrated pricing whilst maintaining the right growth equation to protect our business model. Our focus remains on driving volume led competitive growth with right balance on pricing.
We will continue to dynamically manage our EBITDA margins broadly in the existing range. With this, we complete our prepared remarks, and let me hand over to Ravi to commence our Q and A session.
Thank you, Sanjeev. Thank you, Ritesh. With this, we will now move on to the Q and A section. In addition to the audio, as always, our participants have an option to post the questions through the web options on your screen. We will take these questions just before
we end. With that, I would like to hand
the call back to Margit to manage the Next question for us, please. Go ahead, Marjeet. Over to you.
Thank you very much. We will now begin the question and answer session. Sanhu. The first question is from the line of Avnish Roy from Edelweiss. Please go ahead.
Yes. Thanks for the opportunity. My first question is on In the FY 2021 annual report, in PE, you mentioned significant market share gains. And you mentioned this in Q1 commentary, market share gains continue. So my question is, is this coming from the Regional players essentially or even the other large Pan India players?
And second, is it happening because of The sharp inflation market leader gains or even VIMI strategy and your healthy variants, those are also also.
Yes, Agnes, thanks so much. On the yes, we have gained market share. Our Strategy was always to drive competitive growth as we saw pretty steep inflation of the commodity, as you know, which happened last year, and it remains elevated even now as we speak. In TV, our strategy was to ensure that we drive competitive volume growth, and this is exactly what we did. We grow incrementally market share on volume and which also can translate into value market share as well.
So we have gained on T volume and value market share And our growth, I think your question has been across the board. It's a pretty robust growth across the geographies that we play against with 5 segments that we play. The biggest strategy which you spoke about, that has been extremely carefully navigated in the quarter. As you know, the it was a pretty tough period for the country as infection started to spiral in the later part of April and was at very different height in month of May. During this period, we very calibratedly managed our different geographies wherein we are able to play our portfolio in a very different manner with full capability of our customer development teams and our supply chain teams to drive growth across different parts of the country.
And of course, different mixes for different geographies have always been one of the hallmarks of our portfolio, which is pretty broad from a price perspective and also from different taste Thank you. Hi. Two follow ups
on this. One is you mentioned in your opening remarks that In pea crop, these are aggregates for the fresh crop, but you did mention some correction from last year. But from a 2 year basis, it will be inflationary. So my question is when I link up your 400 bps expansion in F and R margins from a 2 quarter perspective, Is the pricing in tea either up or down largely done, taking into view some correction? And second, your Unilever parent has said today that The operational separation of the tea business is largely done.
We have said $2,000,000,000 revenue excludes Key business in India and Indonesia. So does it mean India's tea business will not be part of this and so it will continue as part of HUL?
Yes. So let me pick up the PEE question first. So PEE is an extremely strong business for HUL. We are fully committed. We are running very strongly.
And as I just covered and mentioned that it is going very well, gaining both volume and value share. Tea remains an integral part of business.
Yes, on the parent, parent TV.
Yes, I'll just Ritesh, I'll just take that question.
Sure.
Yes. Abhijh, let me be very emphatic. We keep Strengthening our tea leadership in the business leadership in the tea business. We have got a fabulous Tea business, and we have no intention whatsoever to divest this business. This business will remain an integral part of HUS.
Sure. That's helpful. My 2nd and last question is on sequential penetration gains in Glow and Lovely and your nutrition business. That was something I think given the pandemic grade 2, if you could explain what's the what is the reason for this and how is the 2 rupee pressure doing in Nutrition Business.
Yes, Amnesh. Both in Nutrition and in the portfolio, as you mentioned, we have gained During the quarter that we have run the business, market development actions, they have continued. You also heard me speaking earlier that we did 500,000 consumer connects in the quarter. And hopefully, as the situation further improves, we are able to further accelerate it. During the quarter, all our jobs that we have to do in terms of developing market has continued to happen, which is why you have seen the impact of that in blue and lovely and Unilever Vision, as you mentioned, about sequential penetration gain.
I also commented overall 80 percentage plus business Across Hindustan Unilever has gained penetration over 2019, and more than 3 4th quarters of our business and games share as well, including skin trending. And within that, the point which you mentioned on the sachets, yes, both the 2UP and 5UP sachets, they are very critical for us to gain penetration. I mentioned earlier that the penetration of category of output trains is more than 10.25 percentage, and it is lower in rural areas. There's a big job to be done for us. Hence, the role of RUB2, 5,000,000 sache in enrolling new consumers with more trials is extremely critical, And we are exactly focusing on that.
Including the plus range, to extend the various platform, we have estimated that that covers another route to drive Market Development. In summary, I probably may touch upon one more element of nutrition as I mentioned earlier, the go to market integration. It has enabled us to get 1.4 times direct reach as we have delayered our distribution system. Once we complete in next 3 to 4 months' time our entire go to market integration, we hope to have at least twice the amount of direct outlet coverage what we have in April last year. So put together, we are confident that we should be able to keep developing market and penetrating more with the pandemic.
And just last to pick up, Apopesh, your question on the fee inflation and fee market index. Fee, we are in neutral season. We will know as to how the profits come out. Too early days to have a full view at this point in time, but the overall remain inflated compared to what it was. We have taken a sequential price increase, One more round in June quarter.
And our overall margins in F and R, as I just spoke earlier, 18 percentage is very healthy. And we have been able to improve F and R margin across the board, and which you've seen from 14 percentage. Now we have taken that to 18 percentage. But while doing that, there has been no compromise on our competitiveness and our ability to drive volume growth in the business.
One last follow-up, small follow-up on nutrition. So I understand integration It is still underway, and I also understand the impact of pandemic, etcetera. But when I see growth rates of 5% in this Category where direct reach has improved significantly and 2 rupee, 5 rupee sachet has come. That is lower than your overall growth rate And double digit growth rate in all the 3 sub segments which you report. When do we see nutrition business growing faster So then the company average, do we have to wait for the full integration to happen because you said half of the integration Yes.
On integration, generally, we have almost half marked the average point in time. So in June quarter, we completed roughly 50 percentage of integration. By the end of September, we should be having 80% to 90% of integration completed. With the support of one of the elements I had called out that We delayer the earlier system that we had. So GMK had distributors and sub distributors.
With HUL go to marketing division, What we have done is we have 3 layered distribution systems wherein now we do direct servicing, as I mentioned earlier, to large number of outlets. And we have taken the mid layer of subdistributor. This would also mean pipeline correction in our distribution system and hence have impact in the quarter
.:]
Overall, long term, we are very, very clear that the market development potential It's pretty strong for the location business. As I mentioned, the penetration is low at 25 percentage. There's enough and more to be done, Be it using more or 2 to 5 gs route to reach more consumers or be it our expanded plus range, Put together, we have a pretty good headroom to keep driving consumption of nutrition.
Sanjay, I don't know if you have to
pay something on this button. And just to also mention, Abhij, of course, the overall market development, our impact on the quarter did get Limited because of COVID-nineteen. We hope to pick up further pace on that. Tumi did a pretty good job across the portfolio. I must say that in the quarter, It got limited to some extent in the month of peak May, I mentioned earlier, where mobility was severely restricted and a deep impact.
But as we speak, coming month of June, as mobility has improved, with inspection rates coming down, we have full back swing on our initiatives on market development That is a route to growth. Given the penetration in levels of consumption for FMCG in India, this will continue to remain a focus area and a growth driver.
Yes. Avnish, let me embellish what Ritesh has said. From HST or the nutrition business, Our first priority was people integration and be able to retain all the best talent, which we have been able to do. 2nd was the system integration, which we have completed to a large extent. The third was the GTM integration, the go to market, which Rakesh has explained is in place and will be completed definitely by end of the year.
Then the core of the marketing was market development and getting into new segments. Now obviously, with all the disruptions that have The market development has not gone off with the kind of pace we normally do. So we are not much worried about that. Yes, it is market development. It pays massive amount of effort.
It requires not just communication, But it also requires us to make people experience the brands and that together with accessibility and higher distribution gets into a virtual cycle. So yes, the environment has been a bit vitiating, but very importantly also we have ensured With synergies, cost synergy, which is much more under our control, we have been able to deliver ahead of plan. So I'm not really much worried about HFT. We will get into the rhythm what we had thought to do when we purchased this property.
Sure. That's very helpful. That's all from me. Thanks a lot.
Thank you, Mr. Singh.
Thank you. The next question is from the line of Parshi Khanduki from IIFS Securities. Please go ahead.
Hi. Good afternoon, team. My first question is on the pricing. Domestic consumer sales growth at 12% and volume at 9%. The derived pricing is about 3% there versus in March quarter, your difference between the Volume and value was about 5 percentage points.
So I just wanted to understand why this has come down to 3 Senthil, now especially given that in the last 3, 4 months, at the margin, you would have taken price increases only, not price decline. And is it a big anniversarization which was there in Q1 which has happened? Or is it that in the first wave, basically all the companies had pulled back on promotions and discounts? And versus that, this quarter, you would have a normal promotions and discounts, and that is what is pressuring the sort of price growth.
Hi, Prathy. Yes, this quarter, as you've seen, again, in between the 12% domestic consumer growth, we have 9% underlying growth and 3% UPG EPG Friday. I think last quarter March 21 was 5 percentage. As I explained in my opening remarks, I talked about pricing There is a impact of promotion phasing in the business. If I adjust for that, the March quarter pricing was more like 3 percentage, And in the current quarter, June quarter, we have more like 4 ish percentage pricing.
We have taken CQC pricing within June quarter across the laundry, tea, skin cleansing, which had got impacted because of pretty high much higher commodity inflation. So yes, there is sequential pricing. Pricing in June quarter is ahead of what we saw in March quarter. But optically, you see the numbers differently Because what happened at 8 last year between March quarter June quarter in terms of promotions. March quarter, one of the elements Sanjeev had called out In the last quarter's call, the difference between primary and secondary where we were not able to do quite the same for primary at the end of the quarter.
So yes, because of those periods, it was a very different level of promotions which was in the range. And equally, in June quarter 2020, Given the peak of COVID, which was then day wise, it was a very different profile of investment that we did in TTS vis a vis now where things had more open up, Much better managed Wave 2 as a country, which allows us to do expenditure on take promotions. So hence, overall, in summary, June quarter pricing is ahead of what we saw in March quarter because we had to take sequential pricing in our commodity impact categories.
Very clear. As we go ahead into September quarter, how is the base on promotions there? So September quarter last Sir, would you say it was a normal promotional intensity? And therefore, as we look at September quarter this year, The Y o Y change in the promotions would not be much and the actual pricing growth would really reflect So would that be a fair assessment?
That's a fair assessment. September quarter, we should see normalcy levels of this competitor. It was more of a disruptive nature of what happened in June quarter last year, especially last and also last week that happened in March quarter last year. So May March quarter June quarter had a disruptive day, but from September quarter onwards, it is normalized in the base.
Okay. And also, would it be fair to say that the gross margin pressure on a YOY basis that you are seeing this quarter It's also affected by this YY pricing being lower because of the phasing of the promotion. And as we go ahead, even the gross margin will recover as the pricing recovers.
So the key impact that we saw in the quarter was sold, both sequential and year on year, there is an inflation. 3 key commodities of crude through the same time actually last year in June quarter, crude was at multiyearlow compared to where it is now at elevated health. It remains elevated. So within all three categories, we have pretty high amount of commodity inflation affecting 3 of our large categories. Even that, that is the impact that you saw on what margin as cost of goods sold has increased.
Well, commodities are, of course, technical in nature. We are in the peak of the commodity. We are in the peak of the season both for tea and for past, depending upon what kind of production and inventory levels The season leads to determine the next rounds of commodity price levels in September December quarter. But in my mind commodities are sticky, sir. Today, I see we have strength in our portfolio, and we have leadership position across the categories, and this is why we've been able to lead price increases.
Important measurement for us out here is to get the growth equation right and protect the business model. This is what our cornerstone of strategy has been. The point I made earlier for Foods and Refreshment from a lower 14 percentage in December quarter, we had 18% segmenting margin for Foods and Refreshment. And the way it happened was, in terms that we've been able to first drive savings, we continue to drive more than 8% Savings Store Turnover, number 1. Number 2, it required the big take both calibrated and judicious pricing sequentially in the quarter.
And that put together with the value equation for consumers remain, we should be able to drive complicated volume growth and then hence The virtual segment of work should kick in in terms of driving growth and hence driving profitability. So we are very confident that what
we have done for F and R is what we will end
up doing across the portfolio as we are operating multiyear higher in commodity cycle.
Yes. So derivative of this, I mean, each year, I've been listening to your call since several years. And each Here we have reiterated that we will deliver modest EBITDA margin expansion. Now obviously, last year was an exceptional year And therefore, you could not. But this year barring any third wave of COVID, would you reiterate that kind Guidance that we would deliver sort of modest EBITDA margin expansion on a full year basis.
Yes. I just say, no, that we don't give guidance of future quarters, but it is still at the point out here. Our margins today at 24.3 percent EBITDA is at healthy levels. One of the aspects which we had called out in the last quarter as well that we would want to ensure that we will protect the business model. In last 10 years, we have driven 1,000 bps expansion of our Verbita margins.
So business does have capability to drive competitive, profitable, consistent and responsible growth and which is what we have always spoken about in our 4 gs growth model. Given that we are at a multiyearhighregulated commodity level, we will have to be sensible for a couple of quarters to manage the business model very carefully, very careful so that we don't lose consumer franchise. And the cost price value equation remains intact so that we are able to enroll continues to move consumers into our portfolio. And the virtual sector of growth I mentioned for our business refreshment is a classic example is what we would want to keep driving in our business. Thank
you. The next question is from the line of Adi Mehta from Macquarie. Please go ahead.
Hi, sir. So I just wanted to follow-up on the last question. You have clearly spelled out that you would like to maintain margins This current range is what I heard you. Does that suggest that gross margin inflation or the input cost inflation Is what is going to weigh down on the ability to expand margins from the current level and when should we look at Broadly doing a similar margin as the last year? Or is this commentary more for a newer next quarter perspective that you are looking at it?
Yes. See, Baby, Mariner P and L is across all the lines of the P and L. There are, of course, lines of cost inflation, which is impacting cost of goods sold. Equally, we are doing, as I mentioned earlier, the overall savings agenda that we have, which is more than 8% year turnover that we do, that's hitting certain types across the portfolio. Modeling saving for our, the way we use our own materials, the way we run our factories very efficiently, The way we guide ROI, some of the media investment, the way we tightened our overhead costs as we see you see that in the direct and sales cost structure.
So across all the lines of P and L, we enable P and L to ensure that we are able to get value from every line. This is what really gives us the ability to keep maintaining healthy margins. As I mentioned, the next couple of quarters is what we have to ensure that we very sensitively manage these medications where we are against multi heights. You've not seen these levels where 3 of our large candidates, at the same time, we have come out in inflation, which are multi year levels. And which is why we had mentioned in the last quarter, and I repeat again, we need to manage this next couple of quarters very sensibly not to lose the volume growth competitiveness.
We are taking pricing, as I mentioned to you, sequentially to ensure that the price versus cost equation remains in a manner measured and calibrated all in service of complicated growth. So together, we are confident that we should be able to do what we have done, which is Keep driving healthy margins in our business, but also equally important, as I mentioned, 1st priority, driving competitive volume growth.
Ritesh, if I may just give one more flavor because there are a lot of questions coming in from margin. Since we also have to consider the mix, we have fabulous portfolio, which is now being tabled under discretionary, where we have very strong market positions and we have very healthy margins like skincare, color cosmetics, all this. Now obviously, because of lack of mobility, These categories have been impacted and we have still not gone back to the pre COVID level. Just to explain to you, If June quarter 2019 was 100, June quarter 2020, we came down to 50, and now we have gone to 70 Hi, but we are not yet at 100. So as mobility improves, the mix will impact And we will have even better margins coming from these categories.
No, sir. Sanjay, if I may, sorry, just to sorry to belabor upon to some extent, but I want to just keep this clear. What you're essentially what I'm trying to understand is Input cost inflation and mix is not a is this more a yearly worry for now is what you are looking at it? Or is this more No, no, no. Guys, at the end of the day, this impacts your gross margin, right?
Yes. So that's what the picture I'm telling you. And this is not structural issue. This is just an issue which is linked to lack of mobility. So you are okay.
So you're saying that as the mix improves, that is what we should kind of bear in mind, which is what we do. Okay. And hence the range comment is also in consideration of that and not kind of factoring in exchange. Perfect. My second question was again on the inflation aspect.
Would you be able to share what is the Price increase or price hikes that we've already taken through the quarter and how much would we still need to Carryout as we go forward across personal wash, tea and laundry categories, please. That's all from my side.
Yes. As I mentioned earlier that in this quarter, across all the 3 commodity driven categories, we have taken sequential in quarter sizing of close to 3 percentage across the engineering portfolio, our key portfolio and non debt portfolio. We will have to, of course, very clearly monitor the inflation levels across all the commodities. I mentioned for 2 of the 3 commodities, we are in second season now for palm and for tea. The kind of production that we'll have for these commodities will then also let us will also inform us either quality of tea which is getting produced, The volume is being produced and for the matter, palm production dishoppers.
We kind of inventory these large categories with large commodities when they're leaving at the end of We'll end up determining the commodity view going forward. Commodities, as I mentioned, are ethical in nature, And it just happens that we are multi high across all CFM. So we will have to keep in tandem our pricing actions as we keep seeing commodity inflation. If commodity inflation remains, of course, we will have to keep working as we're doing already very hard on our savings agenda. But equally, as I mentioned, lead price increases.
As category leaders with strong brands and strong portfolio, we will need pricing as required to protect the business model. So far, the consumer value equation remains good and is able to drive competitive volume growth. So right here, I should do that but But balance that competitive value growth with right pricing given the kind of technical commodity highs that we are seeing this morning.
So, sir, as of now, we would have passed on, say, 50% of the inflation, 60% of the inflation. Any range that you could kind of give us? I understand the volatility aspect that you highlighted, but just to get a sense on where you are in that journey?
So I won't get into details of that, but more than happy to have you pick it up a bit, Ravi, offline. But at this stage, I would have given this high level comment, as I mentioned, where we are
Thank you. The next question is from the line of Aditya Soman from Goldman Sachs. Please go ahead.
Hi, good evening. So first question on rural demand. I mean, obviously, you've indicated that the impact on rural India's time around is somewhat bigger. However, for you, I mean, rural Have you seen any changes in consumer preferences, whether it's to smaller packs or spending less on At single shopping trips or anything of that, sir? Anything qualitative that you can add?
Yes. So Rudolf has been resilient. I was mentioning earlier that as we are operating margin June July, the overall dip that we saw in the from end of April May Of course, Rugal has had a good one. We have now seen consumption in FMCG coming back to the levels that we saw in March quarter in March 21. Within that, rural has led the comeback strongly, and rural is ahead in terms of growth and trajectory compared to urban.
Our portfolio in rural remains robust across all brands and our categories. We have our portfolio which stretches across the price category. And our penetration path covers excess path that we have. We continue to keep doing business and gain sequential penetration. The point I made earlier that 80 percentage of our business today is gaining sequential penetration over 2019.
That is across London and rural. So we have been able to gain penetration in rural and overall three quarters of our business is gaining market share as well. I think one let me, Alithya, also mentioned about our premium portfolio. During this entire pandemic of wave 2 in June quarter, We continue to drive our premium portfolio extremely well. Where the premium part of the business has grown at twice the speed compared to the rest of the portfolio, That again remains a very strong priority for us this point of time.
And as I mentioned, Vasu, as you did earlier, We would hope to see mobility further improving as the infection levels are receding and mobility coming back, which will then further help us to better consumption of our institutional categories. So, okay, back to all different ways in which you look at this area. Hope it helps.
So, Yes. Gentlemen, if your question you were alluding to, are we seeing significant gun trading? Are we seeing more frequent trips, The smaller basket size, we have not seen that happen, yes? And as far as Google is concerned, This is something which we saw at the beginning of the pandemic last year, but since then we saw the rural pickup And rural has remained resilient. The disruptions this time were more because of either the wholesale Mondays closing down All because the Sudipta in rural area falling fake, those kinds of disruptions.
But we have not seen any discernible shift in consumer behavior. Thanks, Sandeep. I think the 2nd question, just in terms of direct to consumer, I think you alluded to premium very much faster. Now when you think of new shop, is this is there a disproportionate So the Telkruco premium on direct to consumer? Or you are seeing universal growth across most of your brands from mass to premium?
So if I talk about e commerce channel overall, being direct to consumer, including elements of B2B And of course, if you could see, all put together, you're seeing, as I mentioned earlier, our business today has doubled from the e commerce channel. We've seen pretty strong growth. As assortment has increased online, consumers are degrading that possibility of buying into that assortment. Put together by adding our direct to consumer channels, our e commerce, both E B2B and E B2C and Shikhar all fit together. We now have more than 10 percentage of our business which is digitized in terms of sales demand capture, and this really clearly opens up In a very disruptive way, we should be able to drive demand generation.
So this future earnings change platform now are more than 10 percentage of our total sales.
No, fair enough. That's clear. My question was more on the premium. Are you seeing a disproportionate sales growth premium products on these platforms? Or That wouldn't be a fair comment.
So our PQC branch, if I talk about the 2 premium brands, both Latmain and Indulika, We've seen pretty good traction on both these brands online as we are close to consumers and we have liked this website, the product and we've seen good amount of growth Both of them. And Zusha, of course, is a today, as I mentioned earlier, Zusha is something which we have across the portfolio. So it is not focused only to the premium portfolio. It is across the portfolio that is what we launched in G SHOP. But the point I mentioned earlier, Overall premium portfolio has grown at twice the pace compared to the rest of the portfolio in June quarter.
This is across segments. And 3 months predefined its higher order benefits at 120 price index. That portion of the portfolio is what has grown extremely well even in such times as we saw in quarter 2 with COVID in the country.
Thank you. The next question is from the line of Sajid Shah from SPARC Capital. Please go ahead. Hi.
Thanks for the opportunity. My question also pertains to margins, and I'm sorry to drag this part. But margin in GSK portfolio last year, we exited the year with 31.8% margin and our guidance has been 500 to 700 basis point range improvement. And then you just spoke about that we are in terms of people entering integration, process integration, we are almost Done. So you
have secured a large part of
the integration process on the back end side. But in terms of margin [SPEAKER SRINIVASAN VENKATAKRISHNAN:] Actually, you have just managed 15% of the low range of the target. So just wanted your thoughts on the same. I'm not Sure. Your question, when you refer number, are you talking to Hindustan lever or are you trying to speak?
No, JSK portfolio because you shared that number in your annual report, so I'm referring to that. Sorry, which one for you? GSK portfolio, the nutrition portfolio. Yes, yes. So GSK, yes, one of the elements that we have done for GSK is our cost measures.
We had a very clear business case, And we are as we speak ahead of the business case in terms of driving cost synergies from the portfolio. What synergy numbers is what we have quoted when we had spoken earlier, but the clear job for us would be to ensure that we are able to invest back those synergies to drive penetration to drive market development and to drive consumption increases. When we are on our journey, we are pretty much ahead in our journey of realizing cost Synergies from GSK. We still have some more jobs to be done, and we have clear line of sight for that. But at this point in time, as I mentioned, we are ahead in our synergy, Our focus is to ensure that this extra growth that we have with our cost synergies, we are able to invest it back in the business to drive penetration to drive consumption.
Let me just clarify a bit. When we say the integration It is getting completed in different phases. That does not mean that the synergies have all been realized. Yes. We get up to realize the synergies on the manufacturing side.
What we have been able to do is on the procurement side, What we've been able to do is on media buying, the CD side, it will be linked to the integration and manufacturing is yet to be done. Yes. So we are very well poised. We are ahead of the plan when it comes to realizing the synergies from the DSK Akrutish. So Sanjeev, based on our deep concern or commensurate with the numbers that we have shared, Should we believe that that 500 to 700 basis point guidance itself needs to be revisited in line of what has happened last year on COVID?
You believe that the large part of its ceiling is yes to show up on numbers and what we have done is largely the back end part of the process and then the large part of the process will come up as we go along in See, I'll have Ravi sit with you to clarify. I hope you're not mixing the F and R margin with the DSK margin. Yes. There are 2 different things.
No. In most two accounts, we have shared our GSK nutrition business margin separately. So I'll listen to that only.
Yes. But this quarter, we have not given you any nutrition margin.
Yes. This quarter is okay. But I was just thinking on Y o Y basis, we have So 80% of the journey left in terms of margin expansion in that portfolio or so.
So on that margin, let me assure you, we will Realize what was there in the business case and perhaps more.
Sure. And just staying with nutrition portfolio, We have done a lot of interventions in terms of distribution. We have got that business on a distribution platform that we have, which is almost 2 times or 3x more size than the initial portfolio had. But the growth is still very disappointing in terms of versus our overall growth,
Yes. No, no, no. You have to look at it. We have never said that we have completed the distribution. Yes, the distribution integration will be completed by end of the year.
So it's not happened. And you should also understand the premise on which the growths were built was based on market development and new innovation. And both for market development, we have not been able to do the market development activities which we had planned to do because of the disruption. So I would say that as far as the DSK acquisition is concerned, it remains significantly attractive for us. We are pleased with the attraction and we are very confident that we will achieve what we have set out to do.
There may be because of the disruption, The phasing of it and but if we are confident that we'll get a little bit back. That's also my side and all the rest. Thank you.
Thank you.
Thank you. The next question is from the line of Girish Padeshi from Centrum Capital. Please go ahead.
Yes. Hi. Good evening, Sandeep and Jigesh. Thanks for the opportunity. I have a continued question on GSK.
On your comment that you mentioned that 800 or distributors has come formally and you have cut one layer. So there is some pipeline inventory correction you did mention. Is it largely done or there is some more part which is left which can come up in the latter That's the first question. And follow-up on that, in terms of our journey when we have now cut one layer, so obviously, the distribution Touch points would have gone up. Are we benchmarking this distribution against any of our products, say, tea or Maybe my boy may not be the right consideration, but maybe the fare and lobby is the consideration.
Is that the benchmark which you can expect Down the line, maybe a year from now.
Yes, Vishu, as I mentioned earlier that within June quarter, we completed half the job almost, where almost 50 percentage of the go to market transition we have completed. Over September quarter and up to end of the year, we will complete the transition. I expect by end of September quarter, we would have done 80% to 90% rate and then some elements left will get done in December quarter. So that's the stage at which we are progressing on GT mitigation. As I mentioned, in spite of the challenges we had in the quarter Of COVID, we still managed to do almost close to 50 percentage of the GTM integration.
That's the number 1. And Yes. As I mentioned earlier that as part of this that we have been layered, we have been able to increase the direct reach. The number of outlets that we're serving directly has also gone up. So as we speak, we already have 1.4 tonne outlets that we're virtually reaching.
And we intend by end of the year, as we finish the integration, You have doubled the amount of our number outlets that we reached directly compared to what we had in April of last year. It should also benefit from that from the pharma channel strength of GSK. Now, P wash, for example, the part that we sell As we acquired, the entire detailing of the wash was done using nutrition detailing. So those are also the benefits of that we have posted Apart from expanding the direct outlet reach, but also leveraging the pharma capability that we have in GSK. So those are the elements that we related to earlier in terms of,
Yes. And you're absolutely right. We would be benchmarking the distribution with the relevant category. That's where the strength comes. Exactly.
I'm banking on and I'm with you. Just one follow-up since you touched upon. I just wanted to understand, I mean, exactly a year before on 1st April 2020, we had a very long Session and chat, the opportunity and all. And when we look back, we had lost the facility. And now we look back the further integration challenges.
I missed your candid answer that what is it that we Land and we have delivered and what is it that we can expect? I'm not saying we have faltered. I think the pandemic has behaved differently. But I think what is it we can expect on the risk and nutrition portfolio? Let me give you a perspective.
Last year, Yes. We were also disrupted because we had some factory issues. If you recall, we had shared that with you. One of our bigger factories, one was impacted severely with the COVID first wave. The second was impacted with some industrial relation problem.
Now those are behind us. What was the premise of the growth that we have taken? That one, the penetration of these categories in the 2020. The second is that the distribution of this, there is a huge runway yet to increase. And the third one was bringing in innovations which are relevant and linked to all those work, bringing in total driven So one, we have been able to get now massive insight into what propels the category growth.
So the communication and all that we are now coming out with are very relevant to persuading the consumers to consume more. The second has been that pandemic has impacted 2 key levers of our plans. 1 is the 3 d integration. The second is market development. Yes, Had the pandemic not been there, we would have been far ahead when it comes to seeding market development and income of CD equation.
So these are the two things where we have been behind schedule. But when it comes to margins, we are ahead of plan. So looking at the gravity of the pandemic, I'm not much prepared to do that. The premise of growth remains. And our ability to harness it, I remain very confident of that.
When we look at such a big acquisition and such fabulous brands, A couple of quarters here and there should not worry this. And then as businessman, I'm ensuring that the cash generation It's not lower than what we had forecasted when we made the business case. Wonderful. That's very helpful. 2nd and last question.
It's just an observation, and I'm very hopeful that you hopped on the out of home consumption, the offices will come back Good morning, sir. While doing our visits, what we found that modern credit is one of the key factors driving our discretionary portfolio. Generally, my experience in the industry suggests that the consumer tend to buy large pack on the e commerce and also on the modern trade in a huge way. And this disruption has impacted our numbers in BPC portfolio. Do you think or rather I'm asking your confidence or trying to borrow the confidence That is the management is very hopeful that once this modern trend comes to a normalcy, I think we will see the kind of growth and the profitability which people are experiencing.
Absolutely. These are directly linked to the 2 things. 1 is mobility, mobility linked to shoppers and Mobility Linked to Consumers. When women aren't stepping out to go to work, they aren't applying makeup the way they normally do. So once they start stepping out, going back to work, etcetera, and the entertainment starts, shopping starts, Then color cosmetics and all will get back to it, Seligam.
But you are absolutely right that the discretionary The market development categories lend itself much more to modern trade than to general trade. All right. Thank you and all the best to you. Thank you.
Given the time, we will take one more audio question. And then Ritesh, if you can go to the web questions, please. Sure.
Thank you. The next question is from the line of Harit Kapoor from Investec. Please go ahead.
Yes. Hi. Good evening. I just had 2 questions. Firstly, we wanted to get your perspective on the 3 categories, soaps, rambling, anything that have seen the maximum inflation.
These are also categories in some large regional brands or unbranded presence. I just wanted to get your sense of how the competition, which is a smaller regional branded, The regional and unbounded competition has reacted. I mean, have you think had to pick up prices much faster than you have? Is the competitive intent against the media and regional markets much more than what it was because those guys are not able to have the cash to So just wanted to get a perspective on that. That's my first question.
The second question was on the e commerce side. So you did mention that B2B, B2C together is over 10% of your business. It would be very helpful if you could give a sense of what the pure B2C part is now as a percentage of sales for the company, which basically includes eShop and all the other online portals. Thank you.
Yes. On your first question about the 3 categories, let me start by saying that all 3 categories, skin cleansing, laundry and tea, We have high productivity growth and we gain market share in all 3 of them. You're right in terms of inflation. There's a pretty steep inflation in all 3 categories, But we have been able to drive our growth not only across the portfolio but also premium portfolio within these categories, and we remain competitive, and we continue to gain share in these Coming to your second question on B2B, B2C. So as I mentioned earlier, if you look at all the digital platforms where we do our business, Shikhar, where we are now listening to the outlets directly, number 1.
Number 2, of course, the B2B platform, B2C platform and direct to consumer platforms. All put together, the future ready platforms we have now more than 10 percentage of our sales, which is digital. It will give us both ability, ability to capture demand more smartly and also to generate demand very differently. So I don't know at this stage getting to
Okay. Okay. Thanks.
Yes. Thanks so much. So now let me move on to some questions. And if I go to a very one question, the first question is
from Ramon Sankar,
how much raw material price is performing compared to Pre COVID quarter and how much of that can be transitionary in the nature given competitive scenario. As I mentioned, we compare to pre COVID levels. All 3 key commodities I referred to from the crude was at a multiyear low, for example, in Q2. But As I mentioned, these are cyclical in nature. We need to watch out as to where the check is down In times to come, including post lockdown.
Then I move into a question which we have from Karan from Digi Capitali. In Home Care segment, we've seen cost inflation. How is the cost behaving in other segments? As I mentioned, there are 3 different categories where the team heightens cost inflation, Correct. 1 is laundry, 2nd is 3 and 3rd is skin cleansing.
I would say, put together, these 3 are the ones which have really seen elevated cost inflation amongst the portfolio that we said. Moving on to question from Nitin from TLSA. What is the mix of LUPs in our portfolio in soap and tea? And What is the quantum of price hikes undertaken to pass inflation? I mentioned this earlier that across all the 3 categories which have got heavily impacted in commodity, We have sequentially taken approximately 3 percentage price inflation in quarter.
As I mentioned, the mix of HDPEs is there across Toast and Tea. We have a pretty strong price dynamic and we straddle the consumer dynamic of digital portfolio and price points and we've been able to do business across that. Yes, I think that by and large covers, there are questions on margins which we have already answered, on I think we have already answered, so I won't repeat those conversations. With that, I don't see any further questions. Roni, back to you.
Okay. So maybe we can take one more question in the audio line if there is one, and then we'll call later.
Ravi? Yes, Satish.
If I may just take a minute to because there have been lot of questions on margins, etcetera, Let me lay down for the benefit of all our friends here what is the philosophy on which we work. Over the last many years that you all have been engaging with me, we've had a fantastic rhythm of improving the margins. And we have grown. Yes, we have grown at a target of 9% in the last decade. And 60%, 65% of that growth has come from volume growth.
Now we have reached a level of very healthy margins. And even during the period when there has been significant disruption, we have Continue to invest in our brand much ahead of our market share, yes, which indicates There is a commitment from a long term perspective to keep growing our market share And to keep ensuring that the consumers remain within our franchise. Yes. So we have been very aggressive in ensuring that we remain our competitive growth. Now when you have very healthy margins and when you have unprecedented inflation, Then you would always try to play the different leaders of business in a manner Got you.
Keep growing your business, keep growing competitively, while ensuring that your business model remains intact. And that's the game we have been playing. So if you were to ask me what is going to be my margin, I'll tell you that I'll ensure that my business model remains intact. But don't worry, from a medium term basis, our commitment to modest improvement in margins still remains intact. Ravi, over to you.
Thank you,
Sanjeev. With that, we will close the session now. Before we end, I'd like to remind that the playback of this event will be available on the IR website in a short while, and you'll be able to go back and refer to us. A copy of the results and presentation is not already with you, is on the website, and again, you can refer to that as well. With this, we'd like to draw this call to a close.
Thank you for your participation, and have a great evening.
Stay safe and stay well. Thank you. Thank you so much. Thank
you. On behalf of Hindustan Unilever Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.