Ladies and gentlemen, good day and welcome to the Hindustan Unilever Limited conference call for June quarter 2020. 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 the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Amit Sood, Group Controller and Head of Investor Relations. Thank you, and over to you, sir.
Thank you, Stanford. Good evening and welcome to the conference call of Hindustan Unilever Limited. We will be covering this evening the results for the quarter-ended 30th of June 2020. On the call from each of them is Mr. Sanjiv Mehta, Chairman and Managing Director, and Mr. Srinivas Phatak, Chief Financial Officer in June. We hope that you are staying safe and keeping healthy in these uncertain times.
Given the exceptional circumstances created by the COVID-19 outbreak, we are presenting results from our respective homes, so please bear with us if things are not as smooth as usual. As is customary, we will start the presentation with Sanjiv sharing his perspective on the market and an overview on how we are managing business through the impact of COVID-19. Then Srinivas will share with you aspects of our performance for the quarter and our outlook for the future. Before we get started with the presentation, I would like to draw your attention to the safe harbor statements included in the presentation for good order's sake. With that, over to you, Sanjiv.
Thank you, Amit. Good evening, everyone, and thank you for joining us on the call today. I do hope that you and your loved ones are staying safe and keeping well in these uncertain times. This is a societal crisis threatening lives and the well-being of our society, with the potential to fundamentally reshape the world. On behalf of everyone at HUL, we extend our deepest sympathies to all those who are struggling to cope with the crisis, and equally, we express our gratitude to all the frontline heroes in managing and helping us manage this pandemic. One of the unusual features of this crisis is how it feels like the world is at a standstill, yet things are also changing at such incredible speed.
It is in this context of rapid and unpredictable change that we are discovering true responsiveness of HUL and the value of our business to consumers. As a company, we are privileged to be serving the everyday needs of consumers. We hail our own frontline heroes in factories and in sales who have been working tirelessly even during the peak of the lockdown with a higher purpose of ensuring availability of essentials like Lifebuoy soaps and sanitizers, Domex disinfectants to fight the virus, and a good cup of regular natural tea or hot Horlicks to boost your immunity. Now, let me take you to the market context and the imperatives for navigating through this crisis in detail. The economic fallout of this crisis is inevitable. In India, the economy had slowed down even before COVID-19. With the pandemic and ensuing nationwide lockdown, the immediate impact was severe supply chain constraints.
As businesses pulled down shutters, it manifested in empty shelves and shrinking pipelines. From a demand perspective, the fear of loss of jobs, dwindling earnings, and eroding investments have made people circumspect with their spending. Progressively, as the country started opening up, the lopsided concentration of cases implied a shift from absolute lockdown to more localized lockdowns or vertical lockdowns. A s you can see in the chart, as the number of cases continues to rise, the macroeconomic environment is becoming more challenging with slowing GDP growth rates. We should be absolutely clear that no one can predict with a high degree of accuracy what is going to happen. A lot will depend on the trajectory of the virus, what happens to the economy, to what extent is the demand postponed or impaired, the unemployment trend, etc. So there are various variables at play.
I would not want to hazard a guess, but I do hope that by the end of this year or early next year, we will see the economy picking up and the demand coming back. Right now, the challenge for us is to get the supply lines going. It is difficult to gauge the end-consumer level demand. Once supplies normalize and trade pipelines fill up, we will get to understand the underlying demand trend, hopefully in the September quarter. Steps taken by the government, such as increasing daily wage rates under MGNREGA, increasing the budget allocation, are all positive and should boost rural consumption. We are also delighted that the harvest has been good. Similarly, the steps taken to provide liquidity by underwriting loans to MSMEs is also a step in the right direction. We are hopeful that the government will take necessary steps to stimulate demand.
We are a consumption-driven economy, and it is vital to get the consumption going so that the economy gets into a virtuous spiral. Food and currency continue to be volatile due to geopolitical imperatives, unprecedented swings in global economic cycles, and trade dynamics. We are also witnessing inflationary trends in select commodities such as vegetable oil, tea, SMP, and tomato paste. Our strategy is serving us well. It remains unchanged by agenda. We continue to dynamically manage our business to deliver consistent, competitive, profitable, and responsible growth. A high growth fundamental is the key lever for driving growth across the categories. These are, as you know, purposeful brands, improved penetration, impactful innovations, design for channel, and fuel for growth. We continue to progress a purpose-driven future-fit agenda, which is even more critical during this time, and reimagining HUL is critical to drive digital transformation in all aspects of our operations.
I believe we have made good progress in our focus area. Last quarter, we had called out five imperatives which draw strength from our values and enable us to navigate through these difficult circumstances. Let me share with you the snapshot of our progress in all these five work streams: people, supply, demand, community, customer, and cash. The most important priority for us is and will remain the safety of our people, not just people who are on our roads, but the entire ecosystem that works for us. Based on our global best practices, the WHO guidelines, and the government requirements, we set up and implemented tiered SOPs for health and safety in our operations, accompanied with training and readiness drills to ensure that we minimize the risk of transmission across our value chain from suppliers to customers.
We set up contactless operations at the interfaces where risk of virus and risk is highest. We also set up a supply chain to deliver more than five million PPE items within our ecosystem to support 100% compliance to world-class health and safety standards. We were one of the first companies to provide insurance to our distributor sales team. There is no debate on cost when it comes to people safety. This has and will always be the philosophy of the organization. Despite all the precautions we may take, there will be instances, like in a Haridwar factory, when the infection will spread among our people, and more so because people are asymptomatic. In all such instances, our first focus is to get all our people tested and look after our people who are tested positive, decontaminate the premises, and restart the operations only with people who tested negative.
We are also clear that we will not be in a rush to open our offices. There are also times to innovate across our dimensions of work. For example, we have implemented the entire internship program virtually. This is also an opportunity to train and retrain our people. We, in fact, have seen a huge spike in the usage of our learning program. The second important aspect has been to keep the supply lines going. I'm extremely proud of my team for the way they have risen to the occasion and have adopted new and innovative practices. We were able to restore operations with alacrity after the precipitous drop in operating levels with nationwide lockdown. We shortened the entire planning to execution cycle to a daily horizon and ensured a dynamic response to an ever-changing environment.
Over 100 instances of critical material supply disruptions were handled with speed by onboarding dozens of new suppliers. HUL trucking capacity was restored at twice the rate of national trucking recovery, thereby eliminating key logistics bottlenecks from operational losses. Our supply chain today is well-positioned both on just-in-time and just-in-case requirements. In June, we were also able to build back our distributor stock pipeline, which had reduced significantly towards the end of March due to the lockdown. The third important area for us has been to keep a pulse on our consumers, the behavior, perceptions, the unmet needs, so that we can adjust our innovation and communication agenda. To address the critical needs in the space of health, hygiene, and nutrition, we have brought in markets. We have been able to assess the demands for our categories. We have also accelerated our innovation pipeline in the health and hygiene category.
This quarter, we launched Lifebuoy GermKill spray and Domex disinfectant and Lifebuoy Plus sanitizer. Fourth and most important aspect is helping the community. This is a crisis where business, civil society, and citizens must join hands with the government. As you would recall us saying, it is our purpose to go beyond the business and ensure that we use our scale and brand as a source of good to the society. As a responsible company, we stand united with the nation in this fight for survival. Last but not least has been a heightened focus on cost and cash. Even though we are one of the most valuable companies in the country, we pride ourselves in being a frugal organization with a middle-class mindset. Our balance sheet strength will be a source of competitive advantage.
We are driving cost agility, judiciously reviewing cash flows, and reallocating spends with rigorous discipline. Srini will throw more light on our detailed P&L management in the latter part of this presentation. We have taken significant steps to reduce complexity in operations. We have reduced by nearly 80% our SKUs during the height of the national lockdown. As the country started to open up gradually, we increased our SKU assortment, and we are currently operating at about 50% of our pre-COVID levels. Every crisis we believe while posing a danger also provides opportunity. We are leveraging this opportunity to reduce the complexity in operations. We believe that even as we go forward, we will bring down the SKUs to about 80% of our pre-COVID levels. There is a clear financial case for this in terms of cost, cash, and organization bandwidth.
These measures will enable us to respond with speed and agility in an evolving environment. We also responded with agility to major shifts in consumer demand. As an illustration, the production of sanitizers was ramped up by a factor of 100x and hand wash by 5x. The golden triangle of procurement, quality, and R&D enabled us to qualify and tap sources of new pack design, new materials, new formulations, and prototypes. We launched over 50 new products and pack innovations to cater to the rapid changes in demand in hygiene and sanitization products. We also formed tactical sourcing alliances to utilize spare capacity for addressing the categories of health, hygiene, and nutrition that are seeing demand, of course. Several innovative distribution models were also tested and launched to ensure that supplies reach the furthest corners of the country.
More importantly, the moat we have been building under our reimagined HUL digital agenda have been a clear competitive advantage during the crisis. A B2B app Shikhar, is now available in more than 150,000 stores, and a retail offering like My Kirana is also available across many pockets of six cities. This has been a clear competitive advantage for us, with Shikhar tracking almost double the average order value and line items per order compared to pre-COVID levels. The merger of GSK Consumer Healthcare Nutrition Business with us has brought great brands built on proven scientific credentials with great purpose into our fold. This merger could not have come at a better time. We are privileged to address the nutrition and immunity needs of consumers in the midst of the COVID-19 pandemic. A merger of this scale requires sharp focus, and our team has delivered a seamless cutoff.
Despite the lockdown, we were able to successfully close and consummate the merger on the appointed day of 1st April, with all activities, including the legal transfers and IT systems transitions, orchestrated virtually and flowing seamlessly. The nutrition business is up to a good start, with domestic business delivering a robust 5% growth in the quarter and tracking well ahead of market on back of volume share gains. Within a few weeks of GSK merger, we reformulated the full Horlicks mix portfolio with a higher level of zinc, updated the packs, and communicated the benefit of immunity-supporting nutrients like vitamin C, D, and zinc. We also launched pouch packs in all its Boost to drive consumer value and build access. The structural growth and margin opportunity with this merger remains intact, and we continue to make good progress against some milestones.
This pandemic can have a lasting impact on human behavior. One clear trend, of course, is a heightened awareness of hygiene. The pandemic has clearly raised the need for clean living, protection, immunity, and wellness. With iconic trusted brands such as Lifebuoy, Domex, Horlicks, Red Label, Surf Excel, around 80% of our portfolio addresses the space of health, hygiene, and nutrition needs of consumers. We have seen in India and in many other global markets that consumers this time do gravitate towards large and trusted brands. T here is no other company in India which has built many such brands over the years that delivers strong functional benefits and instills trust and confidence in consumers. Right now, people are grappling with a sense of fear of getting infected, and hence, they will remain wary of going out for some time.
This gives a flip to in-home consumption categories, and we are well placed with our in-home portfolio of ketchup, jam, soup, tea, coffee, and hot dog. With incomes under pressure and economic uncertainty, consumers will gravitate towards conscious consumption and search for value in each pursuit of pleasure. Our portfolio across categories straddles the pyramid and caters to different price points and benefits as well. Hence, even in this difficult time, we as a business are placed to meet all needs of consumers, even if they were to downtrade and downgrade. The crisis has also massive opportunities for e-everything. I've spoken about the Shikhar app and the digital orders that are taken directly from retail outlets, given the social distancing norms, mobility restrictions, and sales force manpower issues. My Kirana is currently, like I said, in more than six cities and proven very helpful.
In light of the current environment, we've pivoted it to a complete digital marketing and home delivery-led model. With SmartPick, we are resorting to new ways of driving market developments with targeted digital sampling. SmartPick delivers a sample box of HUL brands, specially curated through algorithms, and is targeted to consumers through a digitally enabled end-to-end experience. Not just traditional e-commerce, but it could also be the possible renaissance of the humble grocer. Consumers have realized the benefit of proximity. With Connected Stores program under a reimagining HUL agenda, we are empowering the grocer with technology. Connected Stores provides a brand-agnostic platform for the stores to go digital, capture online orders, digitize its billing, and offer the option of digital payments to shoppers. Against the challenging market backdrop, we believe we have delivered a resilient and competitive performance in the quarter.
Our reported turnover growth stood at 4%, including the impact of merger of GSK Consumer Health. Excluding the this nutrition business, our domestic consumer growth declined by 7%. With the headwind on costs, we saw 110 basis points decline in EBITDA margins. Nonetheless, our EBITDA margins are healthy at 25%. Our performance is a reflection of the strength of brands, execution progress and rigor, and discipline in implementing a consistent strategy. While we continue to focus on delivering consistent, competitive, profitable, and responsible growth, our compass is calibrated by a sense of purpose. When COVID-19 hit India, we immediately earmarked INR 100 crores to help the country fight this crisis, and we are spending the money in a systematic way. We are helping augment the capacity of healthcare infrastructure by donating several ventilators and about 75,000 RT-PCR test kits to hospitals.
We are utilizing a pan-India reach to distribute food and sanitation kits to needy people both in urban and rural areas. The first 150,000 packs of Horlicks with high-end zinc were donated to hospitals across the nation for the benefit of medical care professionals taking care of the COVID patients. We also donated two crores of soaps across India to hospitals and vulnerable communities. We've also partnered with Apollo Hospitals to set up isolation facilities. Finally, we are a marketing company and have expertise in changing consumer behavior.
We are utilizing our progress in partnership with UNICEF to come out with mass communication, with campaigns which we will feature memorable and positive messages that are the need of our reaching over 100 million households. Looking forward, while the near-term market outlook is extremely uncertain, we are confident of the medium to long-term growth prospects of the SMCG sector. Strength of agility and responsiveness gives us confidence to navigate the current challenges as well as capture the structural opportunity in medium to long term. With that, let me hand this over to my colleague Srini to cover the details of the quarter's performance. Over to you, Srini.
Thank you, Sanjiv, and good evening, everyone. So the quarter for us, I think, has been business most unusual, both on growth and cost, and the end results are indeed satisfying given the current context and the environment. As Sanjiv explained, agility and responsiveness across the value chain has enabled us to stabilize the operations and deliver a competitive performance. Our reported turnover growth stood at 4%, including nutrition, which is a GSK merger. On a like-for-like basis, excluding the impact of the merger, our domestic consumer growth declined by about 7%, and the UVG decline was about 8%.
Competitiveness is key, and in this regard, 86% of our business is winning share on volume when we compare on the last three months' basis as per the Kantar Worldpanel. As you will all be aware, given the challenges and the limitations and the restrictions, Nielsen data is not available and likely to be so for the next couple of months. To that extent, therefore, the consumer panel becomes an important indicator for us to look at our competitiveness. Even on value terms, around 80% of our business is actually gaining share in the last three months. It's important to understand the construct of growth. About 80% of our business addresses the health, hygiene, and nutrition needs of the consumers, and this has grown at about 6%.
However, the out-of-home consumption being impacted and some disproportionate impact on discretionary categories, the remaining 20% saw an adverse impact, dragging the overall growth down to a negative 7%. I will talk more about this when we come to the later slides in the presentation. In terms of month-wise progression, April was at about 70% from an operational perspective due to the lockdown and restrictions and our manufacturing only being limited. We saw a relative better performance in May, and in June, our growth was in the mid-single-digit growth as we recovered lost distribution inventory. We also benefited from rationalizing trade spends, and this has enabled top-line growth. Now, in September quarter, with the trade pipelines normalizing, which is pretty much we are referring to our distributor pipelines here, we need to get a better sense of the underlying demand, and that becomes critical.
Let me give you a bit of a flavor on the bottom line. From an EBITDA perspective, we delivered about INR 2,644 crores, and now let me split the EBITDA margins, and these are some sections where I will ask you to just focus because I'm going to call out some important elements, so when you really look at our EBITDA margin decline on our base business, the decline was about 170 basis points, and we got a benefit of about 60 basis points coming from a nutrition business, which therefore translates to about 110 basis points on an overall basis, so this chart, what you really see is all these numbers are reported. From a growth perspective, we have called out what is the reported growth and what is the growth excluding the M&A effect.
Therefore, you've seen that from a net profit perspective, at INR 1,881 crores, we were up about 7%. Important to highlight too one of our exceptional items here. We have received the benefit of some prior period assessments in the tax line approximating to about INR 96 crores. Y ou would also see an increase in the exceptional cost due to M&A, which is predominantly related to the stamp duty cost for Horlicks or for the GSK acquisition and for VWash, and there are also integration costs which are there. I think this gives you a very good snapshot picture across the three divisions. T herefore, I think the headline message is that health, hygiene, and nutrition have performed well.
Having said that, the headline numbers do not do a full justice to the story, and we will unpeel this to give you a better flavor when we talk through from a divisional perspective. I think let me first start with home care. Home care has delivered a solid performance across household care and fabric wash. Household care delivered strong performance in the home and hygiene portfolio driven by penetration. This has been a key one, and it has delivered good growth. Domex is staying true to its purpose, spreading awareness about the importance of home hygiene, and its credentials are resonating well with the consumers. Fabric wash registered a steady performance across the mass and the premium portfolio. Our laundry portfolio, straddling the price pyramid benefit, holds us in good stead and enables us to activate relevant parts to match consumer needs.
For example, our Surf Excel brand continued to remain consumer relevant with sachet offer packs and a contextual messaging through the "Ghar Pe Hi Raenge" campaign. Purifiers, due to its consumer durable nature and given the restrictions in terms of many of the stores being shut, were severely impacted in the quarter, pulling down the overall growth rate. When I talk about from a beauty and a personal care point of view, skincare was clearly an outperformer, and we had a stellar performance given the heightened awareness around hand hygiene. Our growth was really led by our purpose-led brands such as Lifebuoy and Hamam. Lifebuoy grew in strong double digits and across all the formats. Oral care had good growth delivery during the quarter with accelerated momentum on Close up. Hair category was initially impacted, primarily coming because we couldn't manufacture in the month of April.
We also saw some bit of pressure in Hair Care in terms of large bottles, but we started to see the demand pick up in the later half of the quarter. We are also confident about this category as it forms part of consumers' consideration set for hygiene needs in the current context. Skin, Color, Cosmetics, and Deodorants were adversely impacted both on account of supply constraints and muted consumer demand in the discretionary categories. Having said that, we have started to see some green shoots in skincare. Now, if I come to Foods and Refreshments, clearly, I think consumer trends of in-home wellness and immunity augur well for our Foods and Refreshments business. Important to highlight here that our Foods business delivered broad-based double-digit growth driven by consumption shifting to in-home. Our Tea and Coffee portfolio also registered strong double-digit growth.
Red Label extended its long-running Taste of Togetherness campaign through a simple yet contemporary message of we can be socially connected even when we are physically distant. As Sanjiv already called out, our nutrition business performed well with mid-single-digit top-line growth. Immunity-boosting Horlicks added with zinc was launched in the quarter. Having said that, our out-of-home business, which includes ice creams, food solutions, and vending, was adversely impacted given the out-of-home consumption. I think it's also important to clarify when we say that Horlicks or the GSK portfolio domestic consumer growth has been about 5%. I think to give it into a perspective, there is no base because the whole business comes in and gets added into our financials only from 1st of April.
What we've done is actually use the June quarter numbers reported by GSK in the prior year and compared it with the current set of numbers to give you a flavor, and that's really the definition for a 5% growth. I hope that clarifies for you when you think about it in the overall context. I think this is an important chart given what's really happening in the marketplace and to give a better understanding and appreciation of consumers. We have actually split our portfolio into three different segments. Health hygiene is really what consumers are looking for, and this has actually grown at about 6% while addressing the critical needs of our consumers. On the other hand, 15% of our business comes from discretionary segments such as skin, color, and deodorants, and this has actually registered a decline of 45%.
A big impact of this was lack of supply, especially in April and parts of May. There's also been some adverse impact on demand as people have remained at home. We are confident that skin will soon see a step up. Colors and deodorants are likely to remain a bit muted for some more time. Our out-of-home categories such as water, ice cream, food solutions, and vending business, while they contribute only about 5% to our business, were disproportionately impacted due to consumption loss and saw a decline of 69%. I think a recovery in this part of the segment will be linked to what happens to the overall spread of the virus. Let me now shift focus to the P&L and make some important aspects here. We've had many headwinds on cost, be it adverse mix, both from a category perspective and as well as pack.
We also saw that we operated with what is the consumer relevant packs, which has meant that making different choices in different parts of the country. We've had fixed cost leverage and increased cost of operations because of supply resilience as well as safety. In order to navigate these headwinds, we stepped up our cost agility, and we have taken various steps to stretch and dial up our savings. Sanjiv has actually spoken about the methodology and the philosophy that we operate when we look at this. We have indeed calibrated our BMI spends. If you really see in the month of April, we had taken a big reduction. However, we continued to invest back as the country started to open up. In doing all of this, we maintained competitiveness in a throughout basis.
So when you really start looking at it on a year-on-year basis, our share of spends and share of voice is actually higher than what we did in June quarter 2019. I'm also very happy to share that the synergy benefits from the nutrition business are ahead of the business case. When it comes to understanding the cost at a line level and therefore the margins, this quarter will be a bit complicated. It will not fit into your normal trend lines, which you would actually input into your models and extrapolate. L et me give you a little bit of the nature of what happens. H ere is where I request your indulgence because this is an important point. If you don't catch this, we'll have lots of questions, and I really want to take this head-on. Let me first talk about our base business, which is excluding nutrition.
It's got lots of elements, moving parts even on a normal basis. We talked about adverse mix. We talked about deleverage. We talked a lot about the COVID on costs. We also had commodity headwinds in vegetable oils and tea. We did not see the full benefit of lower crude given some of our stock positions and inventory which we had. Then I also talked about rephasing of some of our BMI expenses and calibrating our expenses. There was also a bit of a step up and phasing in terms of our CSR spends as we looked at it from a point of view of HUL in the fight against COVID. So that starts to give you a bit of a flavor of many ins and outs from the perspective of our base business, which is excluding nutrition.
The nutrition business, if I now focus on it, also had certain adverse impact coming from mix and inflation. There were significant on-cost in key items such as SMP. However, we were able to take out a lot of savings in BMI and overheads. The benefits of scale and the benefits of HUL media buying started to come in right from day one. There are no royalty payouts given that we had bought the brand, Horlicks brand, effective 1st April, and this helped us actually handle the higher cost of transition services. We are actually paying for IT and some of the transition services to GSK till we switch over to SAP, so this will continue for a period of one year. In addition, we've also had changes to our OTC service income. While the net margins were maintained, there was a little bit of reduction in the gross amounts.
The last pieces are exports that actually got reclassified into our subsidiary. So again, it starts to give you a flavor that both in our base business as well as in the nutrition business, there were a lot of elements which are unique to a quarter, and some of them are structural. So now what I will therefore do is, rather than trying to reconcile this at a line level, I will give you a bit of a flavor at a headline basis and the likely impact nutrition has on each of our lines. Before I do that, to recap, our base business had lower EBITDA of 170 basis points. Nutrition gave us a positive 60, therefore making it about 110.
Now, if I take some of the key elements to this, and the first one really being material cost, on a reported basis, you would see that reported material costs are higher by about 234 basis points. Here, we had a positive impact from nutrition. That means if we did not have nutrition added into the numbers, you would have seen a higher material cost when you compare it on a basis points basis. When you look at other operating income, on a reported basis, we will see an improvement of 18 basis points. Here, the nutrition business brings us a positive effect due to the service income related to the OTC portfolio. On reported employee cost, you will see about 170 basis points. When I look at it from a nutrition perspective, we took a lot of cost out from the nutrition business from an overheads on a YoY basis.
Therefore, that was beneficial there. H aving said that, given that the employee costs are high in nutrition, it has an adverse impact on HUL. W hen you look at BMI and other expenses, now this is a combination including nutrition. A s a percentage of turnover, this does not have a material difference. So hopefully, it gives you a bit of a picture to understand some of these moving numbers. It is indeed complicated. So it gives you a better sense on that. What we're also doing is tomorrow, we will be setting up some time to actually give you a broader update on the nutrition business and to talk through some key elements in terms of the growth and the margin potential. In that context, therefore, if you now look at it, I think this gives you a good sense in terms of growth as well as margins.
I think the important point to call out, and I think Sanjiv made here, was really saying that if you look at it at segmental levels, our margins are actually very healthy. Home care at about 19%, beauty and personal care at about 28%, and foods and refreshments about 20% really demonstrate the strength of our business and of our financial model. This is a quick summary, therefore, in terms of the overall results, and I think we have covered most of these elements in fair amount of detail, including exceptional items, which I started with. I think this is an important aspect. If you really look at it, our business operations are well funded, and our financial model continues to be strong. If you remember, in 2016, we had actually formalized a scheme of arrangement for transferring the balance which was sitting in general reserves into the P&L account.
This was approved by the shareholders, and subsequently, we had obtained the approvals of the NCLT in 2018. Immediately thereafter, we actually went into a GSK merger, which therefore meant that we could not have distributed these reserves to the shareholders at a particular point in time. With the merger now having been completed, our business operations being well funded, our financial model continuing to be strong, and given our confidence in our overall business model, the board has actually approved the distribution of reserves to the shareholders by means of a special dividend of INR 9.50. This will entail a total payout of about INR 2,232 crores and if I now come to my last slide, I think it's really starting to give a perspective about looking ahead. The outbreak of COVID has disrupted the business massively in the short term.
It is actually the road to new normal is likely to be uncertain. Sanjiv spoke in detail about some of these aspects. In these unprecedented times, therefore, it is a little difficult to have a demand prognosis at this stage. What's clear is liquidity pressures remain elevated, and there is volatility in costs. I think there's another important, there are two important dimensions, I think, which we need to be cognizant of. The first is we are continuing to see many more lockdowns in the month of July. There are vertical lockdowns, localized lockdowns. This is indeed putting a lot of pressure on the operations. The second part I think which Sanjiv started by talking about was really the pipelines with regards to our distributors. In the month of March, we had lost a lot of our distributor pipeline, which we gained back in the month of June.
Given the uncertainties, I think what we should not do is to really take the June performance and extrapolate it going forward. I think the important aspect when we look ahead is to really focus on demand generation.I n this regard, I think we have the right portfolio, and we have the right execution capabilities. T o that extent, I think HUL is positioned better than anyone else to really capture the opportunity in this market context. Our organizational strengths are very clearly articulated, and you're well aware of.
I think they will enable us to drive our model, which is really around future fit and purpose-driven. I think we will focus on really a competitive volume growth and really protect our financial model by looking at absolute profits as well as focusing on cash delivery. So therefore, I think that gives you a bit of a flavor in terms of the overall performance from a strategy perspective and the financial numbers. N ow I'll hand it over to Amit for us to really begin our Q&A.
Thank you, Sanjiv, and thank you, Srinivas. With this, we will now move to the Q&A section. In addition to the audio, as always, our participants will have an option to post questions through the web option on your screen. We will take up those questions just before we end. Before we get started with the session, I would like to remind you that the call and the Q&A session are only for institutional investors and analysts.
Therefore, if there is anybody else who is neither an institutional investor nor an analyst but would like to ask us a question or engage with us, please feel free to reach out to the investor relations team. With that, I would like to hand back to Stanford to manage the next session for us. Go ahead, Stanford, over to you.
Thank you very much, 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 the line of Manoj Menon from ICICI S ecurities. Please go ahead.
Hi, team. Good evening. First of all, very comprehensive and useful couple of slides, actually, importantly, which was very good presentation. I have four questions and ask two and then come back later for the other two. The first is understood that some of the categories like hygiene, etc., now would have actually got a boost and possibly there is a fundamental reshaping into the medium term. What I'll be interested to hear some thoughts from Sanjiv and Srinivas beyond. Let's say any such similar opportunities exist for pack size reconfiguration also. The example what I have in my mind is, let's say, something like a shampoo. Is this opportunity where consumers are buying large packs, etc.? I know that it's a bit of crystal ball waving, but is there an opportunity to fundamentally reshape the pack size, which can have significant impact on the profit pools into the medium term? So that's the question number one.
Okay. So what you were talking about is whether there are opportunities like shampoo to basically scale up the reach and accessibility of new categories. Take sanitizer, for instance. We have a lot of sanitizer in fashion. S anitizer during the peak of the pandemic, of course, people are clamoring for it, and it's a new habit, and it has really gone through the roof in terms of demand. I don't think this demand will sustain once the vaccine comes into the market. Of course, it is not going to go back to the pre-COVID level. It will remain at a high level, but it will not be today. Today, I would believe it's at an obsessive level, right? Any surface you touch, you want to clean your hands after that.
Any packet that comes from outside, you want to sanitize it and use your sanitizer for disinfecting your hands. So that is not going to remain at this heightened level, but certainly the practice of people carrying sanitizers, I believe, will remain. The big shift I would certainly see is in handwashing. We have been investing huge sums of money over the years in cultivating the right behaviors for people. I think this market development work would have been done by the pandemic, and people will certainly transform and realize that washing your hands with soap, which can cost you just 10 paise if you use a Lifebuoy, can do wonders for your health.
So this is, again, something as a practice will remain. The other would be a shift towards liquid, I would believe. India has been very slow in adopting liquid. This will give a big fillip to it. The fourth would be the entire range of disinfectants. There are lots of surface cleaners, toilet cleaners, etc. There would be a heightened need. So these are the areas where clearly one should see the market developing and the habit sustaining. T hat would be my pitch.
If I can add, Manoj, I think you were referring to also hair and trying to see if there was a big portfolio shift towards bigger bottles and therefore a better value creation or a better profit pool. I think two thoughts. One is if you see from a rural perspective, I think this is important to understand India on a disaggregated basis. If you see rural, I think the focus still continues to be a lot more on sachets, tier two, tier three towns. Wherever there is an income stress, I think that still continues to be relevant.
Having said that, we've also seen in some of the urban areas, large packs and large value consumption items have come into play. I t's an important aspect to see whether it was actually people buying in because there was a scarcity mindset or there was a fundamental shift to demand. So I think the important aspect is I think we have a very good sense of what's really happening in different parts of the country. At this stage, it's difficult to call whether we will see a big shift in those dynamics. I think Sanjiv explained well what is visible to us, but we'll continue to keep an eye on some of these trends and to capture the value.
Got it. Got it. Thank you. Thank you, Sanjiv and Srinivas. The second question is on the GSK portfolio's 5% growth in the quarter. I understand that one dot doesn't really make a line, so it's just a very small sample size. The only context of asking this question is, how do I think about this 5% number? Is it good, neutral, not so good? The way you're looking at it, actually. The reason I'm again asking is because there was a great enabling environment for this category in the last three months and possibly continues as well. Is it just a question of the immunity and those repositioning messaging probably happened in May and June and the adult target audience, etc.? So the thought process, what I'm trying to understand is, is the tailwinds of the immunity plus the good-for-you proposition of the product versus Horlicks or HFD actually discretionary within Staples sort of a headwind? How do we look at the next year in this?
That's a good question, Manoj. Our immediate task was to ensure that the baton did not fall. F rom the numbers, you would realize that indeed it did not fall. The second big task for us is to grow the market. W e have started with pouch packs. We have started with innovation, and you will see more about it as we grow about developing the market. I am very optimistic that this is a category which we have acquir ed at absolutely the right time.
Okay. Okay.
So it would take some time if we are able to get the benefit of distribution, etc.
Got it. Got it. So this is really not an underlying sort of situation. Okay just if I may push a little bit on, what's your initial thoughts on this discretionary within staples construct of this business? I mean, without COVID, actually. What is the construct of the business?
Yeah.
So what I'll ask this question tomorrow, Sanjiv, because I think we have this Horlicks GSK day tomorrow. I'll come back actually in the queue and ask this question tomorrow.
Okay. Thank you.
The next question is from the line of Abneesh Roy from Edelweiss. Please go ahead.
Sir, firstly, congrats for a good set of numbers in a very tough quarter. So last three, four years, you have closed the portfolio gap in a very good manner. So premium hair oil, nutrition, semi-premium, hygiene, regional ice cream, etc. If you see last four months, the two categories which have seen one of the highest growth, noodles and biscuits, your presence there is very nominal, either through own or through the acquisition. Now, biscuits and Horlicks did not succeed even after multiple interventions.
Similarly, Knorr Noodles, also you have tried a lot of stuff, but in most consumers' mindset, it is not there in the consideration set. It's the top two brands only. So what would be required here? Because we are seeing definitely even IT companies are saying that four, five years down the line, also most employees for them and a lot of other sectors will remain work from home. So in that context, what is the strategy? Because these are very large categories. Biscuits, in fact, is the largest category. So what would be the strategy here? It will be mainly through the inorganic only. This is possible because you or GSK has tried earlier, but we haven't seen really any meaningful success.
You know, Abneesh, first is not every company can be good at everything. Yeah, we have to accept that. B iscuits is not a category where we have any heightened focus. Y ou're right that noodles, we tried with it, but I don't think we got it absolutely right big success. I would still believe that we have a portfolio which to a large extent is recession resilient. W e should not get carried away by the inherent demand looking at one quarter.
Yeah, we have a portfolio where our tea and coffee is on a great rhythm. Our soups, our ketchup, they are on a fabulous rhythm. We have massive opportunity to grow our Horlicks business, which is the penetration is just at 25%. T hen we have the entire portfolio of cleaning and from a hygiene perspective, whether it is from a laundry perspective, whether it is from household cleaning, whether it is from skin cleansing. So we have a good solid portfolio.
I remain very confident that we have a portfolio not only good from a long-term perspective and also from a medium-term perspective, a short-term perspective. Yeah. L et's not. I only believe there's no person in the world who doesn't like to feel good on the go. So let's not in any way feel that beauty doesn't have potential. There will be a massive bounce back of the beauty category.
Right. In fact, one follow-up here. So this quarter, in fact, coming back to biscuits, bread has done better than biscuits, in fact. So have you seen in the adjacencies to bread, for example, jams and sauces, have you seen similar sharp pickup, or is it the more modest pickup similar to the overall food category?
You know, jams, ketchup, they're growing at a very robust pace. It is but natural where people are cocooned in homes, these categories with kids all locked up in homes, there would be demand for these products. It is very natural that there would be a big burst of demand for these products.
That's my second question. My second question is on the hygiene and sanitizer. You mentioned a good point that after vaccination, you would need to be realistic. Now, you have scaled up the capacity here by 100x. I think it will be mostly outsourcing. My question is, if you see paint companies are entering here, liquor companies are entering, every personal home care company has entered here.
So even after the vaccination, this will remain a much larger category than what it was in 2020, FY20. So how do you see the construct of the market share? Will it be similar to the deodorant wherein there's no sticky market share for any player? It will be driven by trade spend and ad spend, or it will reflect the personal wash kind of market share? What's your perception there?
I would believe it will be more like the personal wash market, yeah, where there would be some brands with credibility on hygiene, which will have a larger part of the market. Today, because of the pandemic and because of the heightened need, I think more the merrier. Let more players come in and let them grow the market.
Sir, this 100x capacity is obviously outsourced, right? So that's not a problem.
No, we have, first is there is outsourced. There is also internal. O ur internal capacity is fluid. We can shift it between different liquids.
Right a nd sir, one last one. Distributor pipeline, you mentioned in June there has been a benefit because of that. Is it possible to quantify that?
You remember during the March quarter, we had said we had destocked by 6%. Yeah. So what we had stocked in the March quarter, we have upstocked in the June quarter.
Okay. Okay, sir. That's all from me.
Thank you. One question for you, Abneesh.
Yeah? Yes, sir.
Why have you decided to come down in your batting order?
Sir, I tried, but couldn't succeed.
Number one also, one down also is a great batting spot. You know that, huh?
Thank you. The next question is from the line of Percy Panthaki from IIFL. Please go ahead.
Hi. Good evening, team. C ongrats on a good set of numbers in the current environment. Sir, I'll just start off where Abneesh left off in terms of the pipeline restoration. So last quarter, you had mentioned that there is a total 12 percentage point swing because of pipeline, maybe 6% distributor and 6% retailer. So that 6% percentage points of distributor you are saying has been regained. Any idea on where we stand in terms of the 6 percentage points of retailer pipeline? Have we regained any part of it or not?
Yeah. You know, if you remember what we had said is there is about the 12% out of which 6% is the impact of distributor. The balance 6% we had said some is trade stock and some is underlying demand, which would have gone off because of the shutdowns that have happened. Yeah. So you can safely assume that the estimate would be about 3-4% would be the trade stock.
Trade stocks, it is very difficult to gauge at this stage because we are not getting Nielsen data. A lot of stores remain closed during this period. Yeah. Even towards the end of June, about 20% of the outlets which we were serving were closed. So I think you will have to wait for some more time to see whether the trade pipeline has completely filled up.
Right.
The other aspect to add, Percy, is let's say even in the quarter, in such categories such as ice creams and out-of-home consumption, it will be fair to assume that that's not going to come back because summer was a big season, let's say, from an ice cream perspective, or let's say some of the food solutions which were supplying to restaurants. So some of those elements we've definitely lost. Yeah a nd therefore, it will take us a bit more time to get a good handle on the total picture. Sure.
Srini, did you mention during your initial comments that the June sales growth is somewhere in the region of mid-single digit?
Yes, I did that.
Okay. So would it be fair to sort of assume that after accounting for the pipeline refill, the sort of secondary sales growth is approximately flat in the month of June?
Don't have that number straightaway. D efinitely, if I see from a quarter perspective, secondaries are lagging some of the primaries. T hat's only natural, yeah, because first you just get the distributor pipeline going, and then in due course, you will start to see the secondaries.
Sure. Sir, a second question is on gross margins. You did allude to it in your opening comments, so I'll not go into too much details on the moving parts. A s you said, it's a 230 basis points contraction. I f I include the GSK mix effect, it would be somewhere in the region of 350-400 basis points on an organic basis. So just wanted to understand, one, is there any COVID-related costs in these which would go away as the sort of COVID impact fades? S econdly, if there is no COVID-related costs in this line item, then this such a big swing of 350-400 basis points YoY, how much do you think is sort of a very short-term thing, and how much do you think can really continue for a few quarters more?
So let me split that up. There are definitely COVID-related on-costs. There are COVID-related on-costs both in the materials line, for sure. There are also COVID-related costs in conversion costs. T here are also COVID-related costs in some of the other expenses, just given the nature of what's happening. Some of that, we hope to take it out because supply resilience has come back.
Some of it is also something which is likely to continue on an ongoing basis because the overall management of safety, PPE equipment, taking care of your workforce are inherently higher. I think the other important aspect is that we also had a big negative mix in the quarter. I think we had a negative mix because of the BPC parts of the business, let's say the skin and some of the others having muted or negative growths. We've also had, given that we operated with a very tight SKU mix, which also meant that it was attuned to what the consumers were buying.
So we found adverse mix there. So I think it's difficult at this stage to put a pin on all of them. G oing forward, we definitely expect some of the mix to improve, for sure. Some of the COVID on-costs, we hope will not be at the same intensity, but we'll have to see how the lockdowns will happen. T his is something I think we just need to be watchful, Percy, that in the next couple of quarters, we'll have to be very dynamic with all of these things. T hat's what we will do. I think important to get that volume growth construct going well. I f we get that going, I think margin restoration is not going to be difficult.
Again, having said that, we also start from very, very healthy margins. While we'll all get to a lot of these basis points calculations YoY, even if you look at it on a sequential basis, and if you really look at each of our divisions, I think the margins are very, very healthy.
Sure, and last question, if I may, the core hygiene categories, that is the hand wash and the hand sanitizer, and maybe include Domex brand also, just these three. I mean, some companies have been sort of saying that these core hygiene categories on a low base have grown like 3x or 4x also. So what is your experience? Could you give some kind of ballpark idea what percentage sales contribution do they have this quarter, and what was it in the base quarter 12 months ago?
So, Percy, I don't think at this stage we are splitting all of this at that level. It suffices to say, for example, hand wash, hand sanitizer, SIF, or Domex, or Vim for that matter, have all actually registered very good growths. I think the potential is immense. I think one is what has actually happened in the quarter, where you're also reacting in some cases to demand, where you're leading demand in some cases. I think there is a better picture we will start to see in September quarter and December quarter because some of these are actually going to be sustainable over the next six to nine months before there is a structural solution or a cure to the pandemic.
Right, sir. That's all from me. Thanks and all the best.
Thank you. The next question is from the line of Vivek Maheshwari from Jefferies. Please go ahead.
Hi. Good evening, everyone.
Hi, Vivek.
Hi. My first question is, last quarter, there was quite a bit of debate about. I know these are still early days, but to the extent you have intelligence on organized versus unorganized, and some reports talking about unorganized being more agile and gaining share, whereas your point was that it's ultimately the organized guys who will benefit and brands will be favored. Any updates since the last time that we spoke on this issue?
Yeah. You know, Vivek, what Shini indicated, that we are gaining shares in over 80% of our turnover. I n many of this, they're very handsome shares. So I wouldn't be worried about. I think the important bit is it's not about organized and unorganized. There are two things which stand out. One is which is a company which is agile and can maneuver or manage the disturbances or handicaps that come on the way. T he second, also, it is very clear that during these times, people do gravitate towards trusted brands. T hat would be my pitch to you.
Sure. Sure. S econd, I know there is a GSK call planned tomorrow. T his 5% growth, what you mentioned, is it possible just to given that April must have been a tough one, any comment on the exit rate in the month of June?
June has also actually started to pick up in the same context. I think the degrees will vary. W hen you compare from an April, May, and June point of view, we have seen an improved trajectory. A gain, Vivek, it's important not to, as I have said, that we shouldn't take June and start extrapolating because this is a fairly uncertain environment and a fairly volatile environment given the supply chain constraints that we are having. Having said that, the momentum has been positive as the months have progressed. T hat will remain our objective to see how do we continue to have that going.
Sure. Okay. Srini, one other thing, the others, just a bookkeeping one, others in segmental, this INR 49 crores EBIT, what does that number represent?
Amit, can you just clarify that, please, if you can?
You wanted to understand what is the other segment, right, Vivek?
Right. I mean, from a run rate of, let's say, plus minus INR 2 crores, that number has jumped up to INR 50 crores. So is it GSK, BAI, or can you just clarify what is the quantum? Is this given the quantum?
Sure. Sure. So first of all, what comprises of the other segment, that is important to understand. Then, obviously, EBIT is a follow-through of that. So traditionally, our exports business is whatever we sell related to exports is housed there. Now, in addition to that, we are also exporting the GSK portfolio, right? So we sell it to our captive subsidiary, and then that exports it out. So that is one business which is housed there. T he GSK OTC OH business is housed there. So these are three primary things which comprise of the other segment. H ence, the margins related to these three businesses are reflected in the EBIT margins of others.
Got it. That is useful. Lastly, Sanjiv, is it possible, since we are speaking now, is it possible if you can give some of your views about Glow & Lovely and the fact that can this create a bit of a disturbance in the transitioning phase?
Yeah. I'm glad, Vivek, you raised that. What I'll say is I'm very confident about Glow & Lovely. First, important bit is that this is a work which has been on for the last few years. Yeah. I'll recap the bit of the history. The second is we first changed the communication. Then, after a lot of research, we went in for a major relaunch last year when we changed the proposition and went away from fairness to glow.
Since the relaunch, our penetration and market share increase have been unprecedented, which gave us immense confidence that the last lap was to move towards changing the name. So I am very confident that Glow & Lovely will not only take with it the franchise and the consumer base of Fair & Lovely, but it will also add consumers who hitherto were not with Fair & Lovely. That's my very clear feeling based on the work that has been done, the results that we have achieved, and the plans that we have put together. I t's a big relaunch. L et's see the results. I'm very confident.
Right. Right. Thank you. W ishing you and the team all the very best.
Thank you.
Thank you. The next question is from the line of Arnab Mitra from Credit Suisse. Please go ahead.
Yeah. Hi. Good evening. Given the big income effect on consumers, and now it's been three, four months into the situation, are you seeing the lower or the mass end of the portfolio for you in many categories either growing faster than the overall category growth or actually the gap between that growth and the premium growth narrowing? And is it a broad-based trend, or is it specific to certain categories? If you could throw a bit of light on that.
I'll give you some structural answer because as yet, we don't have all the information. First is, yes, the frequency of purchase has gone up. So there are more trips to the grocer now. Second is, we are seeing many consumers gravitate towards low price point packs. Yeah. That's also a very clear phenomenon. Is from a perspective of moving to lower-priced brands, that is yet to become completely determined.
In some pockets, we see it, but it's not a very big trend as yet. That is at this stage. I f the economy continues at this pace, and if it doesn't pick up, then it could become more discernible. F rom our perspective, Arnab, the critical bit is that in most of the categories, we have the brands or the portfolio which straddle the price benefit pyramid. Yeah. So if there is a move, then we have a brand like whether you look at laundry, whether you look at skin cleansing, whether you look at hair, whether you look at tea, we have the brand which can cater to the consumer. So we have to be a bit more watchful to see how trends shape up. W e are keeping a very close watch on it.
Sure. Thanks. That's helpful. The second question was, Srinivas specifically mentioned three commodities: soap, tea, and sugar. Elsewhere you had inflation. So my question was that, one, are the trends currently improving in terms of the commodity costs going down or up? And secondly, any thoughts on pricing in some of these categories in the current macro environment?
Srinivas, I think the picture.
Yeah, I'll do that, Sanjiv. The picture varies, ArnaB. Clearly, when you see tea, tea is actually a new crop coming through. Given that there was scarcity in the month of early season, we have seen significant inflation come through in tea. N ow it's a bit broad-based, not only from the premiums point of view. So I think that's something which is playing out.
Second, if you really see from something like an SMP, clearly going forward, we have seen a lot of softening in the prices of SMP given where they were earlier and some time back. So I think that augurs well from a category point of view. If you look at vegetable oils, and again, it's a year-on-year. We had seen a big dip last year, and subsequently, we had seen increases. So to that extent, I think we have seen an increase in vegetable oils, and the trend is slightly upwards as we speak. A gain, this is a situation which continues to be a bit dynamic given some of the international developments and a read on demand and supply. Specifically, in your question with regard to pricing and how we are approaching this, in tea, we are taking some judicious price increases in parts of our portfolio.
Some of it has already landed, and some of it will land in due course because the quantum of inflation there is a lot. W e'll do it in parts of the portfolio where it makes sense. When we look at from a home care or a laundry point of view, while crude has picked up on a YoY basis, crude is much lower. T here, we are actually looking to pass some benefits to the consumers by reducing prices. P arts of it will now start to land. So that's the case of where we are actually looking at price reductions.
Sure. That's very clear. J ust one last question, if I may, which is on the soap portfolio. So this is one category where you had been losing market share relatively, doing worse than the industry in the last couple of years. Now, have you seen, while your growths are very good, any sense on have you been able to turn the needle on market share significantly given that Lifebuoy is one of the few germ protection equity brands? And any sense on market share movement in that category?
We have stopped at gaining volume shares in the entire skin cleansing portfolio, soaps as well as liquids. I do hope, Arnav, you also use Lifebuoy.
Yeah. Absolutely. Thanks so much. All the best.
Thank you. The next question is from the line of Latika Chopra from JPMorgan. Please go ahead.
Yeah. Hi. Good to see your resilient performance in the current macro. Just one bit from my side. You did mention that you saw rural growing slightly better than urban. G iven the localized lockdowns that you're seeing now, do you see this could challenge or put at risk the more resilient small-town rural performance? And the second part is on distribution channels. As you exited June, it seemed that skincare, you mentioned you've started to see green shoots emerging. How have the channel behavior on modern trade and e-commerce panned out for you?
Yeah. Okay. First, hi, Latika. Good to have you on the call. The rural and the small town would, to a large extent, depend on whether the infection spreads. The focus in the initial period has been on some of the big cities like Mumbai, Delhi, and Ahmedabad, Pune, where the infection rates were very high. As you see settling it down over here, now they're spreading to tier two, tier three towns.
So what you ask would really depend on whether we can contain the infection rate or it does spread. D ifficult to visualize what would be, to what extent, and for what period would there be vertical lockdowns. Yeah. I hope not because it would be sad when you're seeing some rural pickup that we should not further see a constriction of the economy because of physical lockdowns. I hope not. W e'll have to wait and see. Y our second question, Latika, please, if you could, again, just repeat it.
Yeah. On the channels contribution. On the channels, sorry. Yeah.H ow are we seeing modern trade, e-commerce now?
Yeah. There are two channels which have stood out during this period. One is e-commerce, albeit from a small base. The second is the humble grocer. Yeah. These two have done very well. Humble grocer for the proximity and e-commerce for the reasons we all know, and modern trade has suffered because the stores were shut.
While they have tried to pivot towards omni-channel, they've not been able to pick up to the same extent as the stores that were closed down, and so for us, the bigger impact of the modern trade exposure after opening has been less on skincare but more on categories like color cosmetics, where large quantum of sales used to go through beauty stores and through modern trade stores where we had beauty counters
All right. Thank you, Sanjiv.
Welcome.
Thank you. The next question is from the line of Tejas Shah from Spark Capital. Please go ahead.
Hi. Thanks for the opportunity. Sanjiv, in FY20, you were the first to actually call out deceleration in rural demand. I n recent months, the noise of rural revival is getting much more secular and way across sectors now. So just wanted to hear your current read on rural demand and is it sustainable in your opinion?
Yeah. So thanks for that question. Till the crisis hit us, till say February, we were still seeing rural being soft. It had not that the rural had picked up. I t is only in recent times after the crisis that we have seen that a lot of noise. W e must accept that the noise has been because, one, the harvest has been good. So you are clearly seeing an uptick in sales of categories like tractors and motor bikes. T he second is government's proactive intervention. Yeah. We were, in fact, clamoring that the MGNREGA rates and the MGNREGA outlay should have gone up in the last budget.
Nevertheless, they have gone up, which is absolutely right. The direct transfer also during this period has been right. So in the last, like I said, we have seen that the growth rate of rural has been not less than the urban growth rate. T hen you also look at it from another lens that urban has been impacted much more by the physical lockdowns and the closure of modern trade stores. T he economic activity in urban area completely hampered because of people staying at home. S mall and medium stores, self-employed people, their earnings and all have been impacted. So I would not say with certainty that the rural economy has picked up on a sustained fashion and is on a path to recovery. I would say there are clear green shoots, but let us wait for a couple of more quarters to see whether the trend becomes more discernible.
Sure. So just to follow up on that, so last analyst presentation, you had shared this data that we are 1.3 times over-indexed in premium portfolio versus rest of the market. So is it that we will be last or one of the, I would say, later on people to experience that revival in rural because of much more premium end of the portfolio exposure that we have?
No, it is this way. I'm glad. Again, it's a very good question. You have to accept that in India, it's not one India. You have about 10% of the households whose purchasing power would be comparable to the developed world. F or them, the premium that we talk about is not prestige premium.
It's just a relative premium. T hey would never give up the benefit of higher-order benefits coming from slightly more expensive brands because of the value that we create. So they wouldn't be impacted. T hen what we have done that for people who cannot afford, we have also made our premium brands accessible to them through lower price point packs. Yeah. So that's the story. I f times become tough, then you would like to even ration your outlay on even these products and may go in for lower unit price packs, but which will give you more ml or more grams. Yeah. So that could happen, but we have a portfolio which will cater to it. W e must remember, for instance, that the bottle consumers are very different from sachet consumers.
If you're used to using a bottle of shampoo, you will not very easily move towards sachet. Yeah. You will stay to bottles. So that is the reason we always say that the FMCG categories in which we operate are recession-resistant. They're not recession-proof, but they are definitely resistant.
Sure a nd last question, Sanjiv, so this calendar year has been very remarkable on other counts also that the first half itself, we are seeing many deep-pocketed global and even national giants are trying to disturb the GT channel or rather reinvent the GT channel by wooing Kiranas to dial up on digital network. Now, amidst this change, where do we see our role considering that we have brands also and we have our own digital distribution ambitions as well? So where do we position ourselves in this?
First is, I firmly believe that bringing in technology and the science of retailing is the right thing for the country and for the channel. Yeah. We want the GT channel to survive and thrive because 100 million lives, they get dinner on the table because of this channel. So it's very important for us. Now, our strength is because we are the trustworthy partners of this channel over decades, and we have great relationships. W e are also bringing in technology to them. I've spoken about Shikhar.
Even the backend, we have completely, in many cases, we are reinventing the business model so that we can serve them with speed. T hen we have also brought in initiatives like MyKirana, which will give them the benefit of e-commerce without significantly changing the business model. Yeah. So we are extremely happy with technology being brought in. We will partner with companies so that we can help the grocery channel to survive and thrive.
Thanks. That's all from my side.
Thank you. The next question is from the line of Shirish Pardeshi from Centrum. Please go ahead.
Yeah. Hi. Good evening and thanks for the opportunity and congratulations for a good set of numbers. My two questions relate. One is on the category growth. If I say, and if I understand correctly, you said on the core portfolio, excluding GSK, revenue decline was 7% and volume decline was 8%. So would you be able to give the, including GSK, what would be the volume number?
Shrini, did you want to abandon that?
Yeah. Yeah. Yeah. So look, we've said, look, the point is that GSK, there is no base comparator because the whole business comes into effect from 1st of April. T herefore, the 5% growth that we have given you in a manner is called combination of volume and price. So it's a positive on both. So the picture gets a little better. A t an aggregate, if you see the GSK portfolio is less than 10% of the totality. So if you want to do on a comparable basis, the picture may not be very, very different. Yeah.
So what I was trying to understand, if we have three segments, that 8% decline, which segment has shown the sharpest? I mean, I would assume beauty and personal care would be there. I f you can spread.
It is quite natural. I think beauty and personal care indeed is a big component. Within that, you will have skin coming as a clear component because we also talked about we couldn't supply in the initial parts, and it started only later on. We talked about ice creams. I f you really looked at some of the drops that we've had in ice creams and what we called in the discretionary, 5% of the business went down by about 69%. 15% of the business went down by about 45%. So there are large components sitting there as well. Yeah. R emember, we keep talking about UVG. It's not absolute volumes. So it's a combination of volume and mix so that both of them come into play to have an impact. I do understand. M y last question, on the new product launches, somewhere I gathered we have significantly launched about 40, 50 new products.
So if you can elaborate what kind of segmental opportunity in health and hygiene or what are the categories we are now trying to get into in the market? And if you can say what is the new product contribution in quarter?
First is I just want to clarify to you so that you get a better perspective of the business. Srinivas also alluded to that 80% of the portfolio was growing at 6%. Yeah. T hat is the bigger impact. So don't look at it from a lens of division. Look at it from the three buckets that we spoke about. The first is there are categories which would still remain relevant during this time.
Then there is, on the other extreme, 5% which are mainly out of home, where it is not that ice cream has not become relevant, but people don't have access because they don't go out. Similarly, UFS because the restaurants are closed. Yeah. T hen there is the categories which are a bit more discretionary in nature and which were impacted by supplies. So look at it with that lens. It will give you a better picture rather than looking at it from a division lens for this purpose.
I got it. Thanks, Sanjiv. M y question was on the new products. What we are now.
New product. It's still too early to give you what is the impact it will have. W here our main focus has been, like we said, on nutrition. We went in with new packs. We went in with added zinc for mommies. Similarly, we are looking at Domex. Yeah. We have come out with a spray where you can kill the virus within 60 seconds. Then we have gone in for Lifebuoy on the detergent side.
Yeah. Then we have just launched a Vim bar with, again, bacteria-kill properties. So our entire focus has been the hygiene space, all the products that we have launched. A lot of sanitizers, Lifebuoy sprays, sanitizers in different formats for institutions right up to the sachets. So when we talked about the 50 products, they were brands, variants, and pack-size combinations. T he real benefit of these would be as we go along because many of them were launched during the latter part of the quarter. In the first month in April, we were battling to restart the operations while our innovation teams were working on it. M ost of them were brought in towards the latter half of June.
Okay. All right. Thank you and all the best.
Thank you.
Thank you. The next question is from the line of Sanjay Manyal from ICICI Direct. Please go ahead.
Hello, sir. Most of my questions have been answered. Just probably if you can elaborate some key prices. What I understand, probably key prices are almost 40%-50% up on a year-on-year basis. W hat probably the price hikes have taken is, what I understand, is probably in a single - the gross margins would impact forward.
Excuse me, this is the operator. I'm sorry to interrupt. Mr. Manyal, your voice is breaking. Hello. Can you hear me?
Hello? Yeah, Sanjay. Go ahead. Go ahead. We can hear you.
Yeah. So my question specifically on the tea prices is that tea prices are almost 40%-50% up on a year-on-year basis. P robably the price hikes you have taken still would be on single digit if I'm not wrong. H ow it would impact the gross margins and what would have been the impact on gross margins in this quarter? And will you be able to really fill the gap if the prices sustain for the entire year?
So two or three things. So you're right that the inflation is tending to be quite high. I t's important how the crop comes through between July and going forward because effectively June was the first month where you start to see sizable crop coming through. I nflation has been significant. I think we have a simple playbook and a well-tested playbook in this for many, many years.
When you see these kinds of inflation, you always need to be calibrated in terms of how you take up pricing. You will take price increases in smaller quantities. I f required, you will do that at a certain frequency. You would never try and take up prices at a big clip because that's when you start to lose consumers. As far as gross margins are concerned, yes. W e have said that we have multiple levers to manage the overall P&L. While gross margin is important and is reflective of the long-term health of the business, when you see this kind of inflation, I think you would rather manage your overall P&L at a UOM level or a net profit level. I t's also important that we can manage it at a portfolio level and also at an HUL level.
I think if we do that sensibly and then, again, we also have many levers in terms of our savings agenda, our leverage in terms of what we drive. So many of them will come into play to enable us to manage this sensibly because if you do it well, actually, in categories such as tea, inflation is a good thing. I t gives us an opportunity for us to gain both on a volume basis as well as on a value basis. We have seen some inflation in the quarter, especially in the month of June. A t an aggregate level, you've seen that our F&R margins are overall extremely healthy. T herefore, that's not been a big impact for us in June quarter.
Right. Just one bit more. If you can quantify the distributor pipeline by the end of June quarter?
I think Sanjiv already spoke about that. We had lost about 60% in March quarter. We have gained that distribution pipeline back. That's really the headline answer.
Okay. J ust one last one. You mentioned there would have been supply disruption probably starting July. O ne of your plants in Haridwar is probably shut down now. So is there any other plant which has also been shut down because of the lockdowns? Or what could have been the supply disruption in terms of the capacity?
Yeah. We have - would you want to share your question? Yeah. We have our own plants. T hen we have many 2PL and 3PL plants dedicated to us. Right now, there are three plants where we have factories which we had to shut down because of rising cases of infection. T here is pipeline stock. So we are confident that we will be able to restart those operations soon. T hen also remember that it is not that we have 100% capacity utilization everywhere. We shift capacities if need be. I'm very confident that all the three facilities will be. We will be able to restart soon.
Actually, if you ask, in my view, I think right now what we are experiencing is difficulty in distribution because of localized lockdowns. It's not a manufacturing constraint. We have the stocks. It's just that many parts of the country are going into lockdowns of different degrees and different timelines. That's actually restricting a lot of movements of goods. I think that is the bigger concern for now and not manufacturing. Manufacturing, I think Sanjiv has explained clearly where we stand.
Okay. Okay. Thank you. All the best for you, Sanjiv.
Thank you. The next question is from the line of Aditya Soman from Goldman Sachs. Please go ahead.
Hi. Good evening. Just following up on my previous reply, in terms of distribution, has the distribution got impacted in the previous quarter? And has it normalized again? I was wondering if you would have prioritized some amount of urban distribution given potentially higher value in urban.
Sorry. What was.
The question is, what's the status of our distribution in rural and urban? And Aditya was wondering whether if you have prioritized urban distribution versus rural.
No, it is not that we are prioritizing urban over rural. Our objective, we are a national company. W e have big rural footprints. So we would like to distribute our goods as far as possible and as wide as possible. We get sometimes constricted by the restrictions. A s far as priority is concerned, we would reach wherever our consumers are. O ur consumers are national. Yeah.
A gain, to give you a flavor, our Shakti channel, which is an important deep rural channel, is actually quite resilient and working quite well. So I think it also gives you a flavor saying that it's important. We are national and all channels are relevant. S hakti is a good example of how rural distribution is still continuing to work well for us.
Fair enough. Thank you. S econdly, you mentioned sort of mixed situation overall and part of it coming because some of the higher value segments like skin growth lower. D id you see any improvement in pack size, increase in pack size, say, in home care given that consumers were less certain about availability?
Sorry, say that again. I couldn't. Yeah.
Just given that consumers were less certain about availability for detergents in April and May, was there any increase in pack sizes in detergents or in home care?
Okay. Okay. See, what we were doing is when there was significant supply constraint and we were having only a few factories running, then our focus was primarily on large packs. Yeah. Because we were trying to maximize the throughput. A s things started to stabilize, then we went across the packs. In the initial period, the entire pitch was, how do you maximize? And the only way you would be by having larger packs.
Fair enough. T here is no sort of significant mixed improvement that you would call out, say, in home care compared with a sort of mixed deterioration overall?
Again, very difficult to say because this June quarter has been a quarter where we have filled up the pipeline. There have been various kinds of supply disruptions. We don't even know whether the freight pipeline has been filled in or whether the freight stocks have come down. It's very difficult to discern a trend, whether what is happening for a pack size movement. S ome of the things which is not based on quantitative research, but it is based more on qualitative, like I said, is the number of shopper trips has increased. That means they are buying at more frequency. That would also mean that they are conscious about the outlay increase. T hen the second is we are seeing a shift happening to the small pack.
Fair enough. Thank you. J ust lastly, on a housekeeping question, in terms of the sort of higher decline in sales relative to volume growth, was this because of, oh sorry, a lower decline of sales relative to volume growth? Was it because of price increases that you took for Vim and tea in the previous quarter?
No. So it's not about price increases. We had also looked at a lot of rationalization of our trade spends. T hat actually helps us from a point of view of positive pricing. So it's not really a lot of pricing. I don't think there was much of a price increase per se in the quarter from a consumer lens.
Yeah. No, very clear. Thank you.
The next question is from the line of Kunal Vora from BNP Paribas. Please go ahead.
Yeah. Thanks for the opportunity. First question. In your presentation, you mentioned that you are still operating at only half the pre-COVID SKUs, and you mentioned that in June, sales are already back to growth trajectory. Can you help us understand better? Are all these SKUs which you are not currently producing insignificant in terms of contribution, or consumers are buying whatever SKU is available? And the 20% SKUs which you are looking to permanently cut, will they be completely insignificant in terms of sales? Or you think consumers will move to the alternative packs?
Yeah. You're absolutely right. In your question, there is an answer. In FMCG, there is always a very long tail, yeah, and at periodic intervals, we do take a call to prune the tail, and we thought this is a great moment for us to prune the tail. D uring the period, like I was explaining to the previous person, that when you have capacity constraints, when you have physical constraints, then the best is to maximize your throughput.
So we've gotten those 50% of the SKUs where the throughput is maximum. Y ou're absolutely right also in the thinking when during times when your distributions are constrained, then consumers would go for a brand, but if they don't get their pack size, they would go for the pack size nearest to their old pack size. Similar goes with variance. W hen we look at pruning, we are not looking at losing any sales. We are looking at consumers, which is a small portion of the sales because the tail is long, migrating to the other packs within the brand repertoire.
Sure. That's helpful. The second and last one, which involves CapEx and tax rate. You recently set up a new wholly-owned subsidiary. Can you talk about the aggregate CapEx plan and the investment plan in the newly set up subsidiary? And how would both of these, like I said, the new subsidiary as well as GSK acquisition, impact your tax rate in the near term and the medium term?
I think, look, the new subsidiary is just taking shape. It will be some time before we actually set up some of those facilities and start to see production come through. I think we have some good six, nine, 12 months away from that. If I take the next 12 months horizon, I don't think that's going to be a big change.
On GSK, I think we also mentioned last time that at an ETR, it's not going to make any difference because it's going to be a move between current tax and deferred tax. W e will talk about it tomorrow when we give an update on GSK. For, I think, all practical purposes, I think it would be good to assume around 26% as an ETR for our business and operate with that over the next one-year horizon.
Understood. T hat's it from my side. Thank you.
Thank you. Can we do one last question from the phone? Because we have a few on the web. W e want to make sure that we wind up the call by 8 o'clock. Before 8 o'clock, please.
Sure, sir. We take the next question from the line of Prasad Deshmukh from Bank of America. Please go ahead.
Hey. Good evening. So first question, post-lockdown, are there any accelerated efforts to negotiate contracts like those related to depots, support services, leases, etc., especially given your focus on zero-based budgeting?
No, look, there's.
Sorry, go on, sir. No, no. Please go ahead.
No. Our focus has been right now that any cost which doesn't add value, we are questioning it. O ther what we are looking at is more about moving costs from fixed to variable so that we create optionality. Okay. You may want to.
No, no. I think that's a fair summary. We do look at opportunities. W e use the scale. We use our capabilities. E qually, we also honor contracts. I think it's important to get that balance right. I think there is a piece of hard negotiation. T here is also a hard fact of first principles. I think we do it within that balance.
I think the bigger opportunity is also to look at many costs which are fixed in nature and try and link them to sales and link them to growth. I think if you do that, we then create structural solutions because some of these negotiations tend to be transitionary, tend to give you short-term impact. I f you're able to get your focus in terms of making some of these costs variable, then that's a sustainable solution. I think between the two, I think our focus is really in getting some of these costs to be more variable.
Got it. Second and last question, advertising costs. You mentioned that there is some efficiency being driven there. So just wanted to confirm. This decline is mainly because the unit for ad space has gone down. I t's not that there is any lower number of ads that were. Yeah.
Just wanted to confirm. So, look, in the month of April, when a lot of product itself was not available given constraints of supply, it did not make a lot of sense in actually advertising. T herefore, we did reduce our absolute spends in the month of April. T hat is true of us. T hat is true of many others and the overall industry. Second aspect is also, but as the demand started, as the country started to open up, we did step up our spends. So May was more than April. June was higher than May. It's important to invest behind your brands. We did that. The other element also in all of this, given our scale and size, we have enjoyed some benefits of good buying. That's also flowed in.
I think the most important criteria, because I think after a point in time, it's not the absolute spends. It's real relative spends on where you are. We have done everything to get to our reach and objectives. More importantly, our share of spends in June quarter has been competitive. A ctually, if you see our share of spend, which is relative to the market in June quarter 2020, was higher than where it was a year ago. So therefore, we were spending more than our relative shares and reaching our consumers.
Got it. Got it. Thanks, Srini. Thanks, Sanjiv.
Thank you. So you may go ahead. Yeah. Yeah. Perfect. So what I will do is there are about six or eight or nine questions on the web. I will call out the name and the question and give a short answer. If it's already been answered, I will clarify that. The first question is from Anshul Bhargava from Abakkus Asset Manager, asking how much of price hike contributes to profits. I clarified this. There were no material price increases during the quarter.
Therefore, there is nothing really in terms of a specific call out there. There's a question from Bala Murali, wanting to know about the outlook of the industry and the growth prospects for HUL. I think we have covered this in detail, also giving how we see the near term. So I trust this has really been answered. Vikas has got a question of saying he wanted to check the quarterly results. Please do so. It's available on our website. H opefully, in this call, you've got all the details. Meher has got a comment of earnings and special dividends.
not entirely clear, but we have talked in detail about both earnings and the strategic rationale for the special dividend. Hopefully, Meher, you have your answers. Vivek Maheshwari is asked as an individual investor. Ideally, I wouldn't answer because there's a call for institutions. I think I will give a quick answer to it. Share of Horlicks. I think if you really look at the reported published results, you'll realize that GSKCH was about 10% of our overall business.
We have spoken in detail about beauty segment advertising and the performance in July. So that's already been covered. Rohit has asked about a question about what would growth be including distribution and exports business. So the question is we wouldn't really talk about the OTC income. It's always another operating income. I wouldn't really talk about it from a growth perspective.
I think the important aspect there is the net margins are protected. On the exports business, I think we have had a muted growth. T hat's more because of transitory issues. I think the first objective for us was to really manage the domestic business. T hat's been done well. T hat was in anticipation of the transition. There was some stock buildup which had already happened in the exports customers.
That was also an important thing to do, not to disrupt during the transition. We will now be focusing on the exports business to really streamline. T he structural opportunity of what it means is completely intact there. Yeah. Hopefully, that gives you a bit of a flavor, Rohit, in terms of distribution as well as exports business. Question from Akash Rungta on our guidance on volumes. Akash, we don't give any guidance on volumes.
We've been consistent with that. The next question is from Jayesh Shah. Do we expect TV spends to settle down at a lower level? Look, I think this is an evolving picture. TV still continues to be a very important medium, especially if you go into beyond the top metros. E ven within the top metros, there is a certain select audience who's very dedicated to TV. O ur actual spends will follow wherever consumers are.
TV does tend to have a very important role. T herefore, we will continue to advertise them. Alok Shah from Edelweiss has asked a question. Our website says that Fair & Lovely has not been changed to Glow & Lovely. By when is the relaunch under Glow & Lovely expected? We shall have it very soon. We have already commenced production of Glow & Handsome. O thers will follow very, very quickly.
I think Sanjiv has spoken about the strategic rationale and how we see that coming into the quarter. There was a second question saying with respect to the special dividend. The INR 22 billion actually belonged to the erstwhile shareholders. W hy partake it with GSK shareholders? I think it's important, Alok, to go back and look at the merger. Because the merger, when we did the swap ratio, took into account all the aspects of the balance sheet of both the companies.
If I were to use your analogy, and I don't think that would be right, we've also had access to the cash from GSK, which was over INR 4,000 crores. We also had the benefit of their payouts used to be lower from a dividend perspective. I think the best way to look at it is that it's an integrated one company done on a share swap.
That actually, from a valuation perspective, evens out everything. The next question is from Rajamohan. There's congratulations on a solid quarter. Thank you for that. The question is, God forbid, if the virus were to spread more rapidly into tier two and tier three areas, would it lead to a material recession? Or are tailwinds from Kharif very strong to overwhelm this concern? In this regard, the tailwind otherwise strong enough to give an impetus to your performance. I think it will be a difficult one to call in terms of what kind of virus spread are we looking at. Because that's, I think, the big unknown. F rom a portfolio perspective, from our execution capabilities point of view, I think we have given you a good flavor of how well we are positioned.
I think the spread of virus and the consequent lockdowns, vertical or localized, is going to be something very difficult for us to predict. W e'll have to handle it with agility and be very responsive in the value chain. The next question is from Ajay Thakur from Alder Capital, asking us if you could throw some light on the urban versus rural growth and outlook for rural momentum. Is the spread of COVID into hinterland a risk to a rural growth momentum?
Ajay, this has been discussed in the call. W e have actually answered this. So hopefully, you would have already got that response. Shirish has had a question in terms of handwash penetration and January. A re we witnessing a big opportunity in rural going forward? Shirish, we do not quote specific penetration numbers. D efinitely, there has been a step up in penetrations.
That's also the reason you see that we have also expanded capacities by 5x in case of handwash and about 100x in terms of hand sanitizers. Even into the rural areas, we do see handwash being an opportunity. Because I think the awareness of handwash and hand sanitizers actually has taken off in a big manner, whether it is urban areas or rural areas. The next question from Amit is really in terms of, is it possible to quantify the price cuts that you're planning to take in laundry to pass on the crude deflation? Amit, I think this is a bit of work in progress. We are continuing to work through this. I t'll land in phases. Some parts have happened and more to follow. The next question has come from Richard. Richard said, can you help me understand the monthly progression of skin, cosmetics, and deo?
How does that minus 45 break up into April and May and June, given that April, June also had manufacturing issues on manufacturing, etc.? Richard, we are not breaking it up at this particular point in time. I'm not sure it entirely serves the purpose. Having said that, I did talk about skin starting to see green shoots and traction. So obviously, once we had some of those supply issues sorted out, skin has definitely picked up in the month of May and June.
Cosmetics and deodorants have been challenging. I think one aspect has really been in terms of manufacturing. T he demand there also has been muted, given that a lot of consumers have remained in-house. So I don't think there will be a material pickup that we would see in terms of cosmetics and deodorants with the progress of the months. The next question is from Tejas.
Tejas from Spark Capital on guidance on tax rates. I think I've already clarified that earlier in the call. The next question is also from Tejas. Any COVID cost-saving initiatives which stay with us as structural advantage? Any thoughts on room for margin potential ahead? I think we have discussed this in detail, Tejas. I think the important aspect right now is to get competitive volume-led growth, look at absolute profits, and manage cash.
Excuse me, this is the operator. The line for Mr. Srinivas Phatak has dropped. Please stay connected while we reconnect Mr. Phatak. Mr. Phatak is reconnected.
Yeah. I'm back. Yeah. I'm sorry. I'm back. Yeah. Sorry, I lost the line there. So I've talked about the business model, Tejas. Hopefully, that's answered your question. The next question is from Vishal from Nirmal Bang. What is the current direct reach for us, and was it impacted in the March-April period? Other income for the quarter looks low. Any exceptionals here? I think on the first part, I think, yes, direct reach was impacted in the month of March and April.
Definitely, it's picked up for us from the month of May, June. I t's getting better as we speak. I think we already spoke about the other income earlier in the call. I f you have any specific questions, do reach out to Amit and our IR team. T hey will clarify on that one. The next question is, would you like to comment on the lawsuit with Emami? I don't think we comment on a competition. I think our position is very clear. Y ou would have also seen some of the statements from HUL. W e are very clear.
We are progressing with our actions both on Glow & Lovely and Glow & Handsome. We are quite excited with the change and the opportunity to make a big difference to our consumers. Shirish seems to have lots of questions. One more question from Shirish. Have we rationalized employee cost or cut employee strength in quarter one and quarter two? Shirish, we have not rationalized any employees. I think we have also explained that in the previous quarter. People, whether it's in our own business or our core, are crucial to us. We did take some steps in terms of pausing increments and pausing promotions. We are very clear that we want to protect our people, take care of them. We also want to make sure that they get paid.
It's also important that we create a lot of capabilities, which I think if you take a short-term view of life, we'll get impacted. W e do not do that. W e're hoping that with business picking up, things will come into normalcy. W e just have to work it through. Ayush, I think, has got a question on cutoff date for special dividend. I think in the press release, we have already indicated the date. Amit, would you know what is the effective date for dividend?
31st July for the record date.
31st July will be the record date. T hey should get paid out within the month of August. Yeah. So I think we've covered all the questions which are on the web. Amit, over to you to bring the call to a close.
Okay. So with that, we will bring to an end this Q&A session. B efore we end, let me just remind you that replay of this event, as well as this transcript, is available on our investor relations website in the shareholder web. Y ou can go back and refer to see. Similarly, a copy of our results and presentation is also available on our website for your reference. W ith that, I would thank everyone on the call. W e can draw this call to a conclusion. Stay safe and stay well. Thank you.
Thank you very much, sir. Ladies and gentlemen, on behalf of Hindustan Unilever Limited, that concludes this conference. Thank you for joining us. And you may now disconnect your lines. Thank you.