Ladies and gentlemen, good day, and welcome to the EPL Limited Q2 FY 2022 Earnings Conference Call hosted by Systematix Institutional Equities. 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 touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Pratik Tholiya from Systematix Institutional Equities. Thank you, and over to you, sir. Thanks, Faizal. On behalf of Systematix Institutional Equities, I would like to welcome all the participants who've logged in to this conference call of EPL to discuss the Q2 and half yearly results. From the management team, we have Mr. Anand Kripalu, Managing Director and CEO, Mr. M. R. Ramasamy, our Chief Operating Officer, Mr. Parag Shah, our CFO, Mr. Amit Jain, Senior Vice President, Corporate Finance, Mr. Suresh Savaliya, our Senior Vice President, Legal and Company Secretary, and Mr. Deepak Ganjoo, President, AMESA Region. On behalf of Systematix, I would like to first thank the management for giving us the opportunity to host this conference call. I would like to request Anand, sir, to kindly start the call by giving his opening remarks. Thank you, and over to you, sir. Thank you very much. Hello, everybody, and good evening and a very warm welcome to this call. I'm Anand Kripalu, and I must say it's a pleasure to connect with each of you today for the first time after moving into the role of Managing Director of EPL after nearly eight years at USL or United Spirits. Looking at the quarter under review, which is Q2, we believe we have delivered solid competitive revenue growth at +12.8%. On a like-for-like comparable basis, that growth is +10%. In the half, we've also delivered double-digit growth at 10.3%. What's good is that this growth is broad-based across regions and across categories. Specifically on the regions, our revenue growth in AMESA was +18.3%. In East Asia Pacific, it was +11.9%, and in the Americas, it was +21.6%. As you may have seen from the deck that we have shared, Europe was challenged due to a temporary decline, and we believe it's a temporary decline in the personal care category. Importantly, there was no wallet share loss in Europe. Incidentally, we grew sequentially our revenue by 5.5%, so there is a relative improvement in our Europe performance. As far as categories is concerned, oral care grew by 10%, and personal care, in line with our strategy, grew at a faster +14.2%. As far as input costs are concerned, the quarter saw continuing hardening of commodities. Not just commodities, but also freight and packaging. Like many other companies, we are experiencing unprecedented inflation. Not just inflation, but also levels of volatility, right? The latter, which is volatility, also adds to unpredictability. Despite all of this, through a combination of pricing and a tight control of discretionary costs, we have delivered a sequential EBITDA margin expansion of 20 basis points to record 18.3% margin. In the quarter, our net profit declined by 24.3%, which also included a one-time write-down of assets of INR 59 million or INR 5.9 crore by an associate company. Net of this and other one-offs, PAT was down 12.3%. That was the quarter under review. Looking ahead, I just want to underscore the fact that growth is our priority, and we will keep our foot on the accelerator of growth, of course, with the right balance on margins. However, inflation and volatility of input costs across the board continues unabated. We are mounting renewed efforts to get judicious pricing from our customers and also drive further cost mitigations. Given not just the pricing challenges of commodities, but also challenges on availability, as a business, we are prioritizing supplies or service above costs to ensure that we are able to deliver the service levels that our customers expect from us. While doing that, we are also doubling our efforts on cost savings, and savings that will have medium to long-term impact on our cost base itself. Firstly, we are continuing the focus on Project Phoenix. I believe this has been shared with you in the past, which is a very comprehensive internal management-driven cost savings program, which was delivered over several years now. In addition to that, we are accelerating investments to drive insourcing of caps and closures, which will help us to mitigate costs and improve margins. As a company, we have always prided ourselves in being super cost efficient and being really tight on costs. Having said that, we said it's worth re-looking at our costs with an outside-in benchmarking exercise. Bring in a fresh pair of eyes to look at those costs. We are looking at every single cost end-to-end to explore even further opportunities. Our vision is to make EPL the most sustainable packaging company in the world. We see this as a source of sustainable competitive advantage as companies around the world, and importantly, most of our customers notify and pursue their ESG goals for 2030. Therefore, we are particularly delighted to have partnered with Colgate-Palmolive, one of our critical customers, to launch tubes with our 100% recyclable Platina laminate. We are also encouraged by the engagement from customers around the world for the supply of this Platina laminate. Net/net, we are confident on driving strong top-line growth based on our innovation pipeline and continuing wallet share gains. The commodity headwinds, and I must underscore the fact that this is not unique to us, in terms of inflation and volatility, is likely to continue. In this challenging environment, we are doing what it takes to secure supply so that we can deliver the right service levels to our customers. There also exists a phase lag between cost and pricing for contracted customers, and this could have some shorter-term impact. Overall, we remain focused on growing the business by double digits on revenue with capital efficient, consistent earnings growth. With that, we're going to open up the line for your questions. Thank you very much. We will now begin the Q&A session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Reminder to the participants, anyone who wishes to ask a question may press star and one. The first question is from the line of Sameer Gupta from IIFL Securities. Please go ahead. Hi. Good evening, sir. Great to hear Mr. Anand's voice again. Sir, first question is on margins and specifically on Europe. Here, EBIT margin now has come at 4%, and the question also pertains to some of the events that have happened in the previous quarter. I believe you discontinued operations in Russia. The understanding was that it probably was a higher cost manufacturing and hence discontinued. Now we are looking at a lower margin, lower sales. What exactly was the reason for discontinuing operations there in the first place? How long, in your view, would you take to restore the margins in Europe back to the 8% levels, assuming that inflation is where it is today? I'll lead the answer to your question, and then I'll ask my colleagues to chip in as appropriate. First and foremost, you know, in business, you have to constantly evaluate your portfolio of products and offers and geographies and markets that you service, right? Active portfolio management is a very important part of strategy. Therefore, the evaluation of Russia as a market which we believed was not going to be accretive to the ambitions of this business, right? That was evaluated by the team, and therefore, the decision was taken to exit that market. Now, as far as margins in Europe are concerned, I just want to underscore the fact that this is a priority for the management team, right? We are doing what it takes to enhance our margins in Europe. The team has developed and is pursuing an active margin improvement plan, which we are obviously going to keep track of. Now, I don't think we're in a position to tell you by when the margins will be restored to the levels that you indicated, because there are multiple levers at this point in time that I've already spoken about, right? Multiple headwinds that businesses like ours are facing, right? Suffice to say, that is a priority for the business, right? Our attempt will be to restore these margins to levels that are acceptable to us, right, in the quickest possible time. Ram, do you want to add something on Europe beyond that? No. See, some of the product segments, like personal care in Europe, is muted for many people, to us also. That is temporary because of COVID-related issues. Travel related issues. We are hopeful in the near future it should restore back to a normal level. When it restore back to the normal level, we will see a leverage on EBIT too. It answers? Sir, just one follow-up. Sorry to dwell on this more. Can you just elaborate a little more as to what exactly were the reasons for discontinuing operations in Russia? Was it a product category which you thought is not going to grow or, you know, I don't know. No, no. None of that. We were in Russia for a very longer period of time. We were looking at larger contracts. Larger contracts were not available because many of the MNCs have moved manufacturing out of Russia. They start supplying from China and things like that. That was one of the reasons that in the near future that we were not looking at many big opportunities were in Russia. Second. That was one reason. The second, you know, because we were traditionally dealt with part contract, part retail customers. Retail customers were fluctuating based on, COVID demand and things like that. We, you know, as Anand said, it is a call for a time being. We are still trading out of Europe or other locations to Russia. When the volume grows up, we could revise that decision and go back to Russia. That's not an issue. Got it, sir. That is very clear. Second question, if I may. You've always maintained a guidance of modest improvement in margins, and I know these are times of unprecedented inflation, as we have, you know, noted from other companies as well. Just to clarify, do we still have that guidance for FY 2022, given 18.5% kind of a margin this quarter and FY 2021 finished on 20%? you know, we are not gonna give specific guidance about short-term margin movements. Okay? I have tried to explain the scenario as it is, and it's a dynamic and evolving situation, right? Now, there's little that management or indeed anybody can do when commodities inflate and fluctuate. The question is, what are we doing? We're driving growth much harder, right? We're gonna keep our foot on the accelerator of growth, right? That's important, and we hope to continue to deliver the kind of top-line growth that you are seeing, right? We want to do that. We are doubling and tripling up everything that we can do to drive costs out of the business. All right? That's the reality. Finally, we're having active conversations on further price increases with key customers, all right? The contracted customers will happen in its normal rhythm, but for the rest of the customers as well. Beyond that, I think it is inappropriate to give any kind of guidance of what's going to happen in the next half, right? I think that is something that we'd not like to comment on. Our longer-term or medium-term ambition, right, is exactly what you said. That's clear, right? Albeit given the road bumps of the immediate period that we're going through. Very clear, sir. Always a pleasure to hear from you. Thank you, sir. I'll come back in the queue if I have any more questions. Okay. Thank you very much. Thank you. The next question is from the line of Sanjesh Jain from ICICI Securities. Please go ahead. Good evening, sir, and thanks for taking my question. First on the revenue growth side, close to 13% growth including inorganic and 10% growth on an organic basis. In a scenario where raw material costs have gone anywhere between 25% to 50%, which implies that there is a significant volume compression which we have seen in the business. This is on the backdrop that we are coming out of the lockdown, the travel is booming, and we were anticipating a big uptake in the travel side of the category and the beauty and cosmetics. Given all this background, it really looks like an underwhelming number from the revenue growth perspective. Can you just help us understand what is happening on the volume side and have we lost any meaningful market share in any of our geographies? First of all, I must tell you that the travel-related volumes have not really come back yet. Looking at the trend of travel, we are very confident that it will come back and could come back quite fast. All right? We'll have to wait and see as far as that is concerned. Now, we don't really comment on volume growth, right? What I can tell you is that there is, of course, some amount of price, right? It's not all price, huh. Right? There are other components that are contributing to the revenue growth as well. I think that's what you should take away, the fact that, you know, that is it and I'm not sure what your benchmark is, but in our assessment, having seen reported numbers across industries, right, our assessment was that 12.8% growth with organic or a like-for-like comparison of 10% was pretty much up there in terms of performance. If I may add to Anand's point, Sanjesh, I draw your attention to the region-wise growths. AMESA is 18.4% growth, Americas is 21.6%, and EAP is 12%. You already heard the questions of the prior participant and our answer on Europe. If you were to really look at it's a very strong growth in all three regions, and it's not a subdued growth. Yeah. Again, I repeat, 18.4% in AMESA, 21.6% in Americas, and 12% in EAP. Your point on share, right? I can tell you quite categorically that wallet share is greater than or equal to what it was. It is not less than what it was. Okay? That I can tell you quite categorically, and that I can tell you categorically across our regions. Got it. Second question is on the margin. Probably it will contain a couple of bundled into one. Our employee costs and other expenses continues to remain sticky, and the other expenses we quoted that the increase was on account of COVID-related costs, overtime and all what we were paying during the COVID. That was anticipated to come down with the lockdown. Number two, the mix change has always been a positive for us in terms of margin. Number three, now that we are telling that there's no market share gone, so now we'll take margin at face value. We are yet to pass on the margin, and that margin compression is only 200 basis points, and that's the kind of compression we have seen in the EBITDA margin. That, the other benefit which should have flowed in the continuous effort on the cost side to bring that down, the benefit of mix change, all those are still missing. Adding to that, the benefit of Russia synergy, what we've spoken about in the last earnings call. All those things are still missing in the margin. Can you just help us understand what's happening on the cost side and how should we read the margin from here on? Yeah. Sanjesh, first of all, let me reiterate, in this environment, which I'm sure you acknowledge, about the unprecedented inflation and volatility, our EBITDA margin has improved from 18.1% to 18.3%. I'm just sort of reiterating the context of where we are. Secondly, to your point on expenses and other expenses, we've explained, and that still holds true, that those expenses are largely on account of freight and packing. As far as our employee costs are concerned, I'm not sure if you're aware, but there are labor shortages in America, and to an extent even in Europe, and therefore, the spend on employee costs does tend to be a little bit higher than the normal spend. Again, I think I don't want to go there and be very specific, but I know you have more information than I have. If you look at what's happening to EBITDA margins of players in packaging industry or my customers and look at how we have managed it in the environment that we are. I think I would still say that we've done a very, very good job in this environment to grow our margins. Fine, it's 20 basis points, but I think it's a great performance. Got it. Thanks for those answers. Just one last bit of data point if you can provide. What is the CapEx spend we are looking for this year? We've always guided that if you look at a three to four year span and look at an average of that period, it could go back to the depreciation spend of around INR 240 to 250 crores. We stand by that. We stand by that. Got it. Thanks for answering all the question, and best of luck for the coming quarters. Thank you. Thank you very much. Thank you. The next question is from the line of Punit Kumar from Reliable Investments. Please go ahead. Thank you. Mr. Kripalu, it was a pleasure speaking to such a focused, short, and crisp presentation, and it was a wonderful performance during the pre-crisis period. On a lighter note, you have inherited what you left in terms of United Spirits debt. The new MD there has talked in terms of some quarters in which quarter they'll reduce it. You have not talked anything regarding that here. Any views on that? You are one of the rare MNCs which has got such a huge debt. Thank you. I'm not gonna comment on that, honestly. I'm not gonna comment on United Spirits today. If you have questions on EPL, we'd be delighted to take those. No, no, you have already answered that extraordinary write-off has resulted in lower impact. The rest everything, 3.5% top-line growth is fantastic. Thank you. Thank you very much. Thank you. The next question is on the line of Chirag Maroo from Keynote Capitals. Please go ahead. Yeah. My first question is that do you have any kind of? Mr. Maroo, sorry to interrupt you, sir. The audio is very low. Please increase the volume of your device. Hello, am I audible now? Yes. Yeah. Yes. Hi, sir. My first question is that I just want to understand what is your view regarding the company for the growth. Is it like similar to what Mr. Sudhanshu had or is it something different what you're trying to do? What is my view of the company? Growth. Yes, for the growth. What is my view of the company's growth? Your view on the company, how you are trying to grow the company. Is it different from what Mr. Sudhanshu was trying to do or you are walking on the same pathway? No, no, I'm going to walk on the pretty much the same pathway, I would say, as a broad pathway. All right. But what I would like to do is to be maybe a bit more focused on a few things. One is, I think we really want to make sustainability the cornerstone of our vision, ambition, and our strategy. All right. Because I believe, as I said in my opening comments, that sustainability will be the single biggest source of competitive advantage in serving the kinds of customers that we service in this industry. All right. If we can help our customers achieve their goals, in turn, that's going to help our business. The second is we are absolutely focused on driving top-line growth. If anything, I would like to push the accelerator even harder, right. Now, that may be easier said than done, but as an ambition, that's what we'd like to do. That will in turn force a set of actions within our teams to go and look for more business and be more aggressive about wallet share gains. You know, the broad contours of the strategy that was there, I don't think we'll change that, but I'd like to just be a little more focused and sharp about what we want to get out of that strategy. Okay. My second question is on. Is it possible for you to give the data on what amount of revenue have you generated from replacement, and how much have you generated from the newer demand? How much from replacement and how much from newer demand? By newer demand, you mean new business? Yes, sir. No, I don't think we would share. That's like, you know, telling you what percentage of our revenue is coming from innovation and how much of it is from continuing core business, right? That's what you're asking. Yes, sir. No, I don't think we're in a position to share that information. I'd just like to add to Anand's point that our business pipeline continues to be very strong, and we are very much focused and confident of our double-digit growth. Okay. Sir, last question. One of the earlier participant had a question related to the Europe geographical area margin levels, and you have commented that you want to be in the acceptable margin levels for Europe. Can you just tell what is the acceptable level for you in Europe? Right. I think our EBITDA margins were 10.9% in Europe, and our objective is to get them to the mid-teens. Yes, our endeavor is also to do it as soon as possible, but in these unprecedented times, it's difficult to put a timeline to it. Our target would be mid-teens. Okay. Thank you so much, sir. I'll get back in touch. Thank you. Thank you. A reminder to the participants. Anyone who wishes to ask a question may press star and one. The next question is from the line of Rishab Dugar from CD Equisearch. Please go ahead. Good evening. Yeah, my question is, I just want to understand what sort of pricing power do you people have with your oral care client? Ram, do you want to take that? What kind of pricing power do we have with our oral care clients? You know, in a difficult time, each one of the product managers are trying to add more value to the product, right, premium products. Currently, what we do is we equip ourselves with best of the technologies that what we can have, so that more and more premium products are introduced in the oral care. Thereby customer grows, thereby our margin grows. That's a line of action that we have taken. When value is added, you have far better pricing power. If I can just add to what Ram has shared. One is absolutely supporting premium innovation in oral care, where, you know, the customers get a higher revenue, right? Because we supply more value added to you, right, we get higher revenue. Apart from that, the core vanilla business of oral care, a very large part of it is contracted in terms of price increases, right? That contracted means that when costs go up, right, within a certain rhythm, the price goes up, right? The pricing power is not about us sitting and negotiating every time for a very large part of our oral care business. If you add that, which is our core vanilla business, to the icing on that cake, which is the innovation business, both put together, I think gives us both pricing power and margin power to an extent because of the premium nature of the innovation that we are supporting. Just let me add data to that. We grew by 16.5% in oral care in Q1 and 10% in Q2. That translates to 13% oral care growth in H1. That 13% oral care growth has meant double-digit oral care growth in three regions out of four regions. I think that speaks to our, you know, ability to grow our oral business. I just basically want to understand that your margins on a year-on-year basis have fallen slightly. Can you give me a bit of an idea of what sort of resistance you are facing in passing on the price increases to your clients, oral care clients specifically? I'll share as much as is, you know, sensible to share. First of all, our contracted volumes. By design, and that has stayed in place for decades, right? There is a phase lag of a few months between the commodities going up and us suffering those increased costs and us getting the price increase. All right? Okay. That happens. Now, apart from that, for the non-contracted volumes, we got pricing, by the way, for all the cost increases that happened in the previous cost cycle. Now, it so happens that in the recent month, costs are going up again, which means we have to go and again get price increases from customers. You know, it's not as if there's resistance, but this is such a volatile environment that in the past if you had a conversation on pricing once a year or once in two years with a customer, now you need to do it once a quarter or sometimes even twice a quarter. That's the difference, right? That's the reality of the game we are playing, right? It's not about resistance, it's about changing the agility with which we go and get price increases from customers. Okay. Basically, sir, the contracts, the tenure of contracts with your clients are generally long-term or shorter term. Can you give a bit idea with that? These are long-term contracts, typically ranging from three to five years. The major partners, the major clients. Oral contracts or oral customers tend to be all long-term, and the period tends to be in the region of three to five years. Okay. Thank you, sir. Thank you. Thank you. The next question is from the line of Ashwini Agarwal from Ashmore Investment Management. Please go ahead. Hi, Anand. Hi, Ram. I just had one simple question. We were just looking a little bit into Europe. Europe had been a challenge for the business, you know, several years ago as well, and the margins in Europe used to be much poorer than the rest of the world. This problem seems to have resurfaced again. I'm just trying to figure out that are there any common threads, you know, compared to the challenges that the business used to face in the past and what you're witnessing right now? Connected to that is that, you know, in Europe specifically, you won a very large oral contract in Germany, from what I recall, about six months ago. I would have expected both growth and margins to see a lift from that, but that hasn't happened. I'm a little puzzled as to why, you know, you say that cosmetics haven't grown in Europe, but the rest of the world seems to be okay. I'm kind of confused. If you have any insights into why, you know, personal products or cosmetics haven't grown in the European region, that will be a great thing to understand. See, Ashwini, probably that we need to see this differently. If you look at last five or six quarters, it's about setting up an organization for a region, then leveraging the cost while growing volumes. Okay? What we have seen in the last four, five quarters is that quarter-over-quarter we have shown improvements in Europe. That's why there's a specific focus on Europe that which you would have seen. What we are seeing in this quarter is very, very temporary related to current uncertainty because of COVID and travels, right? Europe, for many companies, the volumes have not grown because the personal products have not grown very much, you know. This, I think it's temporary. The setup for leveraging the volume is already there. We got the contracts, as you rightly say, we have won a large oral care contract. It's not one contract, now we have three contracts in Europe. It's a question of, you know, passing the difficult time. I'm sure this time will go away in the next one or two quarters, and we will see a continuing growth again. If that answers your question. I mean, I'm just trying to understand that there is no structural challenge you face there in terms of, you know, the new contracts being at a significantly lower margin and you need to work through them over the next two or three years, and therefore the margins in Europe can continue to be a drag in the medium term. No, no, we don't think so. See, you know, most contracts are longer period of contracts may come out with, you know, appropriate margin for such a period of contract, but it will never be lower. It'll be. You know, it's you have seen the last four quarters versus this quarter. This is the Q1 that we have some issues because of an uptick, but that has nothing to do with the contracts. Contracts margins are always tight. Ashwini, just an obvious point, and I think you're probably aware. Unlike the other regions, Europe region has about 65% of its revenue composition in personal care. What we all do sort of agree and appreciate is that in COVID times, personal care obviously more impacted than oral care. Therefore, it's the personal care business in Europe that has been impacted. Europe has seen in recent times strong emergence of COVID once more. We're also experiencing labor shortage even in Europe, which was so far confined to Americas. Therefore, clearly in our view, and we are confident of what we say when we say this is a temporary setback in the personal care category. I might also underscore that, you know, if you look at Europe organically, without Russia and explosion that happened in the early parts of COVID, as you know, and I'm sure you're experiencing that. Everyone was hungry for hand sanitizers six months, 12 months ago. No one's using it today, right? Same thing has happened. If you remove Russia and hand sanitizer from the base, Europe has actually grown by? 2.8%. 2.8% in revenue this quarter. All right. One more question I had. You know, you've taken good trouble to go into detail as to, you know, the efforts the company is making towards sustainable products and your partnership with Colgate. I know you don't comment on product-wise margins, but would it be fair to assume that these innovations at the margins should help margins over a period of time, or that's not a very clear cut equation? Sorry. There's a lot of background sound. Is your question on whether the sustainable tubes will be margin accretive? That's correct. That's my question. You know, that will be like commenting on SKU-wise profitability honestly. I don't think we would like to share level of information to that level of granularity, right? What I can tell you is this, that, driving innovation through sustainable offerings is like pushing water downhill. Every customer is hungry to do more and more and more, right? As we can also secure the right raw materials and everything else, this will drive wallet share, right? Will drive our top line growth, right? Drive our competitiveness. That is something that's absolutely there. Okay. All right. Thank you and all the best. Thank you. Thank you. The next question is from the line of Prilok from Aditya Birla Sun Life Insurance. Please go ahead. Yeah. Hi. Good evening, sir. I just had two questions. One is, you know, based on the recent uptick in the raw material prices again, have we taken enough price increases already to ensure that the margins are protected from here on? And second is, could you just tell us what's the, you know, mix of contracted versus spot in terms of clients or revenues as we speak in the term 2021? All right. Two questions. On the second one, have we shared publicly the split of contracted volumes versus the rest? No. All right. That unfortunately we can't say because I think that's a level of granularity beyond what we would like to make public. Now, having said that, your point on have we taken enough pricing to cover the most recent inflation? You know, this is a moving target, to be honest with you. All right? Like any moving target, you know, the target is always a little ahead. All right? Because there are inflation that has happened that is unexpected two weeks ago also, which is on top of what happened in September and August before that, right? The reality is because of volatility, right, the reality is we are always going to be a little bit behind. It is impossible to be ahead on pricing because you will understand that you can't go to customers for price increases before the cost has hit you, right? That's not a conversation that they will encourage or entertain. It will always, by definition, be a little later after the cost will hit you and you have the information to go and then tell them, "Hey, costs have gone up. Now we need a price increase." By definition, there is going to be some lag. Okay, understood. Lastly, you know, you were addressing to the previous participant question on, you know, Europe personal care. You know, this COVID impact or, you know, the probability of COVID, you know, coming and going in several regions will remain, I think so, for the foreseeable future. How do you guys, you know, plan or, you know, kind of, internal planning perspective from revenue as well as, you know, cost and EBITDA for region-wise? Because it is obviously all the more difficult for us to do it. I mean, how are you guys doing it is what I want to understand. Is there anything that, you know, you guys can, I mean, because wave two versus wave three versus wave one, you know, the learnings and implications are very, very different, right? Any comments on that will be helpful. You guys are focusing more on Europe than I think there is warrants on this call. See, in any business, right, at least 40 years of experience that I have, you will have a portfolio of countries or a portfolio of states or a portfolio of brands. There will always be some that does better and some that does worse. All right? That's the reality of business, right? I haven't yet seen a business where everything is perfect and everything is growing at the same rate. Now, the reality is that Europe has had its own unique problem because of which there has been this impact, right? Its structure of business, the fact that it's more of a personal care business, for us, and the fact that this category has been impacted because of, well, by definition, these are categories that people who go out, right, consume. You know, at the end of the day, we need to obviously get Europe right, and I've emphasized and underscored that already. You know, nobody wants to understand why the other regions have grown so fast on this call, right? You know, that's interesting because, you know, we can always focus on one smaller part of the business that has had some challenge rather than focus on the positives and the wins. You know, you just have to recognize that we're all playing a portfolio game here, right? I spoke about the importance of portfolio management, you know, in the Russia conversation as well, and that's the situation here. Right? Just so I can underscore, Europe contributes less than a tenth of our business, right? Today, share of voice has been 50% on the call, right? also less than 10% of the EBIT of the company. I'm not trying to run away from the Europe conversation, right? Honestly, I think we've said what is there to be said, on Europe, and we're all aligned about the fact that, we need to pull up our performance in Europe, right? We are absolutely agreeing to that. Understood, sir. Thank you very much, and wish you good luck for the future. Thank you. Thank you. The next question is from the line of Sumant Kumar from Motilal Oswal Financial Services. Please go ahead. Yeah. I would like to understand overall growth, how volume trajectory, because we are unable to understand how volume is growing for us in this scenario. You know, we are not sharing volumes, and the reason is that we use revenue as a core metric of performance in this business, particularly as this business focuses more on beauty and cosmetics, as this business focuses more on premium offerings in tubes, right? As I used to say in my previous company, you can't add one case of McDowell's No.1 and one case of Johnnie Walker Blue Label and say, "I sold two cases." All right? You just can't do that, right, in a market that's premiumizing. I think we are absolutely focused on, you know, driving volume in this business, but even more focused on value through mix and getting the right kind of pricing through. I'd like you to really use revenue as the core metric of evaluation of the business rather than try and overanalyze the sub-segments of it. Okay. Can you talk about the overall, we have a long-term on the lag of three months. Next quarter also we are expecting have an impact on the margin. Overall, the price pass on on the other side, how possible and how easy are? You're talking about the price pass-through. Pass-through. on non-contracted volume? Is that the question? Yes. No, no. We are absolutely at it, just to be clear. We are not sitting and just waiting. We are absolutely at it to go and get pricing as quickly as possible. You know, we have been, I would say, very successful at getting pricing in the last cycle, right? Just a couple of months ago, based on the initial increase that we saw in commodities through April, May, June, July and so on. Right? We're very successful in negotiating price increases, and therefore, I have every confidence that we will be very successful even this time around. The question is, it just takes a little bit of time, and yes, there is that little bit of sales lag that you will see, but it's not as if there is a longer-term erosion of the fundamentals of this business, right? The price increase will always catch up. Okay. How is the client, customer addition side? The momentum has gone up or overall it has moderated? The customer momentum? Yeah. No, I'm saying. Actually, you know, I have to say this, generally speaking, apart from a few pockets, again, the portfolio conversation, demand is, I would say, pretty strong in most parts of the world, right? Therefore, I have to believe that our customers are doing well. Okay? Demand is strong, and in fact, some of the challenges we are having with having with people and so on in the Western world, right, is because demand is robust. I would think the customers are doing well, right? We have a very powerful customer base, probably the best customer base that you will find, you know, the choicest customers from around the world. They do what it takes to make sure their brands grow and their categories grow. You know, our growth will follow that. I have no reason to be pessimistic as far as that is concerned. Barring, like I said, a few pockets like, you know, again, Europe, which is where we've had some challenges, obviously, and you know that. Thank you, sir. Thank you. Participants, to ask a question, you may press star then one. The next question is from the line of Kashyap from PhillipCapital. Please go ahead. Yeah, hi. I think performance has been reasonable. I think double-digit growth and QOQ margin improvement more or less underscores what we had discussed earlier. I just had two questions. First and foremost, just a clarification. In Q2 last year, I think Creative was acquired, so would it be fair to assume that when you basically have reported the adjusted EBIT of INR 173 crore and this year around INR 166 crore, the last year's base Creative is not part of the last year's base whereas it's part of the current quarter's base? Would it be a fair understanding? Can you just repeat the question? I'm sorry. I just wanna be clear I understood you. Creative is the You acquired Creative Stylo Packs last year. Correct. Through last year when you actually have reported INR 173 crores as your adjusted EBITDA in the presentation that has been shared, and this quarter you kind of put across as INR 166 crore. You are kind of saying the decline is more or less 3.5%, correct me if I'm wrong. Will it be the last year's base Creative is not part of the last year's base or is it part of the last year's base when you are making this? No, it is not part of the last year's base. It is part of this year only. If you were to kind of, you know, adjust that, could you give a comparable EBITDA? What was that adjusting that? let me put it in a very different way. When we made the acquisition, we said some of the criteria that we use is it would be revenue accretive and margin accretive. I can confirm that is true with respect to the acquisition. Maybe I'll just add a bit here. Of course, we can dissect numbers in any which way. But I just want to say that M&A is an absolutely key leg of our strategy. All right. You know, as this business evolves, the attempt will be to bring in strategically relevant acquisitions into the EPL fold. Relevant from a portfolio standpoint, from a technology standpoint, and from a growth and margin standpoint. Okay. I just want to underscore that and say that it is. Therefore, Creative was one such example, and hopefully there'll be more in the fullness of time as well. Sure. Fair enough. I understand. Well, another question is, you know, while you kind of made it very clear at various points in the call that, you know, you took the price increases, but they were in the previous cycle, and then you again saw unprecedented increases. I understand you can't keep going to customers constantly till things settle down for a renegotiation. You mentioned that this is gonna be a moving target, so to speak. I don't want to ask you to comment any number that, okay, this is where the margin target would be, et cetera, et cetera. Qualitatively, would it be fair to assume that the QOQ margin improvement that we've seen in the current quarter will be the story for the remaining part of the year, that Q3 will be better than Q2? Because you will constantly go and make these iterations either on costs or product mix, customer negotiations, et cetera, et cetera. For the full year, we will evolve, but, every quarter the margin reported should be logically better than the previous quarter, at least till things settle down. Would that be a fair assumption? You're asking me to comment qualitatively on something that will have quantitative outcomes effectively, right? Listen, I don't want to belittle your question. I understand your question. Honestly, there is only so much that I can say as far as this is concerned, because otherwise it would be like giving you a categoric guidance for the next quarter or two quarters, and that's something that, you know, we do not do and don't intend to do. On pricing, I just want to say that there is absolutely no apology in this environment to keep going back to customers any number of times. Okay? Because it is an unprecedented environment, and therefore it calls for unprecedented actions. There's absolutely no apology that we will need to make, right, in going back, and we are not gonna be ashamed or hesitant to do it. In fact, if anything, we will be very aggressive on going back to customers and getting price increases as quick as possible after the cost increases hit us. Oh. Fair enough. That's helpful. Thank you. Okay, thank you very much. I think this should be the last question, please. Participants, to ask a question, you may press star then one. As there are no further questions from the participants, I now hand the conference over to Mr. Pratik Tholiya for closing comments. Thank you, and over to you, sir. Yeah, thanks. On behalf of Systematix, I would like to once again thank all the participants for logging on to this call. Again, I'd like to thank the management for giving us the opportunity. Mr. Kripalu, would you like to make any closing comments, please? No, no. I just want to thank everyone for joining this call late in the evening. You know, the questions really reflect your understanding of this company, the rigor with which you track it, but most importantly, your support of this company, for which we are very much appreciative. Thank you very much. Thank you, sir. Thanks a lot. Thank you. Ladies and gentlemen, on behalf of Systematix Institutional Equities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.