Ladies and gentlemen, good day and welcome to Zydus Wellness 3Q FY 2022 Post-Results Analyst Conference Call hosted by Ambit Capital Private Limited. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal for 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. Alok Shah from Ambit Capital. Thank you, and over to you, sir. Thank you, Zed. Good evening, everyone. Good morning to the people joining in from the western part of the world. On behalf of Ambit Capital, I would like to invite you all for the 3Q FY 2022 Earnings Call of Zydus Wellness. From the management side, we have Dr. Sharvil Patel, Chairman, Mr. Ganesh Nayak, Director, Mr. Tarun Arora, CEO, Mr. Umesh Parikh, CFO, Mr. Nitin Parekh, CFO from Cadila Healthcare, and Mr. Vishal Gaur, Senior VP Corporate Finance, Cadila Healthcare. Without further ado, I would like to hand over the call to Mr. Tarun Arora for his opening remarks, and then we can go ahead and open the Q&A session. Over to you, sir. Hello. Good afternoon, and welcome to the post results teleconference for Zydus Wellness Limited for quarter three financial year 2021-2022. As Alok has already introduced the participants, I'll move on to the details. During the quarter three, our company posted a year-on-year growth of 2.3% on net sales. The lower sales growth is largely due to two reasons. First, due to lower growth on a high base during previous year comparable period, which was accentuated by slowdown in rural growth. Secondly, as we are implementing a continuous replenishment process internally as a part of integrated business planning tool, we have reduced inventory both internally as well as in the trade channel. This would help us to operate with leaner inventory and better availability of fresh stocks to the consumers. As the country and the FMCG industry is reeling under the impact of inflation in the prices of key raw materials and packing materials, the company continued to face the pressure on gross margins. To mitigate the impact, the company has taken two rounds of price increases during the last two quarters, which will help the company improve gross margins in the coming quarters. As the third wave of COVID has hit India during the last half of current quarter with a very sharp rise in cases, with state-specific curfew and timing restrictions imposed, the company was quick on implementing the learnings from previous COVID waves and is in a better position to tackle the supply chain and other operational challenges. Due to COVID, there was a disruption in the non-essential category. However, essential products like Sugar Free, Complan, and Nutralite helped the company to stay on course. We continue to support the online sales through the third wave, as we have seen higher demand on these platforms. Going forward, post the third wave, as things return closer to normal, we would plan to enhance our direct distribution by another 1 lakh outlets. The company has been taking several measures to safeguard its workforce from the effect of pandemic. The company adopted hybrid model of working giving freedom to employee to work from home through these times. Let me take you through the highlights of the consolidated financial performance of quarter three financial year 2021-2022. During the third quarter of financial year 2021-2022, our total income from operations grew by 1.7% to INR 3,881 million. EBITDA was down by 34.8% year-on-year to INR 323 million. PBT before exceptional items was down by 36.7% year-on-year to INR 227 million. PBT after exceptional items was up by 1,205.7% year-on-year to INR 227 million. Net profit was up by 1,239.1% year-on-year at INR 233 million. With that, let me share some of the highlights of operations for the quarter gone by. We continued our thrust on marketing initiatives to grow the categories and increase market shares of our brands during the quarter. To narrate a few, on the Glucon-D front, during the quarter gone by, Glucon-D ImmunoVolt continued to deliver steady business while core business delivered flat growth. On the Complan front, the Complan relaunch was supported with its new campaign, Umeedon Se Aage Badhne Ka Plan, which communicated the key benefits of the brand, 2X faster growth and improvement in memory and concentration. This was amplified by 360-degree media campaign on TV, digital, impact properties, and influencers across the country. The relaunch was also supported by consumer promotion to establish mental growth association with the brand and generate trial. On sweeteners front, Sugar Free brand continues to air its new thematic communication, Fitness Ka Pehla Kadam, through TV and digital mediums across markets. Sugar Lite grew at a high double digit during the quarter across all channels, supported by consumer promos and TVC. On the personal care front, Everyuth brand continued to grow at a good double-digit, supported by ATL campaigns on scrub portfolio and new body lotions range. On the dairy and spreads category front, Nutralite brand delivered yet another quarter with good double-digit growth. The Nutralite DoodhShakti Probiotic Butter Spread and Nutralite Choco Spread were continued to be supported with TV, digital and print media campaign. As per the MAT December 2021 report of Nielsen and IQVIA, Glucon-D has maintained its number one position with a market share of 58.1% in the glucose powder category. Complan has a market share of 5.2% in the health food drink category. Sugar Free has maintained its number one position with a market share of 96.0% in the sugar substitutes category, which is an increase of 104 basis points over the same period last year. Nycil has maintained its number one position with a market share of 34.0% in the prickly heat powder category. Fair & Lovely has maintained its number one position with a market share of 39.2% in the facial scrub category, which is an increase of 448 basis points over the same period last year. Everyuth Peel Off has maintained its number one position with a market share of 76.4% in the peel off category. Everyuth brand is at number five with a market share of 6.5% in the overall face cleaning segment as well. As we speak, we have completed three years of acquisition of Heinz India Private Limited. Over the last three years, despite losing sales in critical months for two consecutive years due to COVID, we have consolidated and grown our market shares across categories, launched multiple innovations, doubled our direct distribution, made significant strides in growing our business ahead of the category in both online and offline organized trade, reduced cost to serve, and simplified the organization, leading to exceeding our synergy targets. The biggest challenge which we face is the recent inflationary pressures across commodities affecting our margin. With the actions in place, we should be able to overcome these challenges with the ongoing quarter four of financial year. The country is witnessing downward trend in the COVID cases and which will have a positive impact on the consumer demand sentiments going ahead. This will help the company to protect the sales of summer season quarters spanning across January 2022 to June 2022. Thank you. We will now start the Q&A. Over to Alok for the Q&A. Sir, can you take over the Q&A? Yeah. Thank you, sir. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset while asking questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. To ask a question, please press star and one. The first question is from the line of Abneesh Roy from Edelweiss. Please go ahead. Yeah, thanks. My first question is on Complan. What would be your long-term target for distribution scale-up? You have done 1 lakh more distribution since acquisition, but what would be your 3-year target? Second, in the last 3 years, how has the market share been in Complan? You mentioned current market share, but how has it been versus three years back? Let me answer the distribution at two or three levels. First of all, Complan, yes, when we acquired it was about 2.3 lakh outlets. We've crossed over 5.5 lakh, 5.7 to be precise, as reported by Nielsen. In our availability reach as per Nielsen, my view is 8 lakhs-9 lakhs is what we would have had. That will follow as the brand grows. I think this was basically catching up to the fair size of our brand. Rest of the things will also have to follow. We're also focusing on driving direct distribution, which will help us, our entry and quality of distribution, making all our products available. We started with 2.5 lakh direct distribution, each of the businesses before acquisition. We've crossed 5 lakh. Our vision for a direct distribution in next 3 year-4 years is to cross 1 million, which is suitable for our size and portfolio, for which over next few quarters we are looking at adding another 100,000 outlets. This will obviously have a ripple effect on Complan distribution also. That's answering the Complan distribution piece. Second, your question on market share. At an aggregated level, Complan market share for last three years has been in the range of 5.5%. It has slightly reduced. This year we are at 5.2%. I think there's a drop of 15-20 basis points over the same period at MAT level. This is also a function of multiple segments that Complan plays. There has been a little bit of that, but largely in the same zone as we. Two follow-ups there. On double-digit sales growth in Complan, do you have confidence next three years, if there is no very serious wave three, you expect a double-digit CAGR in Complan next three years? On the NPD launch, Complan NutriGro, how differentiated is it? Is it a big NPD or is it one of those smaller NPDs? Our aspiration for Complan has to have a double-digit growth. We've seen the category operating at 5%-7%. That's a challenge, and our wish list is to grow faster than the category, and that's why we believe it can do that. Our focus and priority will be on a volume-led, getting new consumers. And if led by some of the leaders in the category who've been reducing prices, if we have to act, we will act. At a volume level, our clear aspiration is to be a double-digit growth trajectory over next three years. And we believe our actions are in place or will follow it through. As far as extensions are concerned, NutriGro is clearly differentiated on a superior formulation vis-a-vis the competition. It is a higher level of protein than the top players in the segment on toddlers. It also has a better mix of proteins, which is more suitable for a toddler, closer to the mother's milk, inspired from the mother's milk with the right mix of protein and milk. We have the right formulation. It's going to be a little bit of slow burn because the route we have taken is the healthcare professionals and therefore it has certainly impacted the healthcare professional reach out for a lot of consumers. It may have a slower burn, but we have a differentiated offering, and we believe we have a good journey ahead with Complan NutriGro. One more. So, uh- I have one more point to add. This is Mr. Patel here. Sharvil. Hi. Two more points to what Tarun alluded to. One is, as we said that Complan is definitely differentiated. The NutriGro product, which will go through the medical fraternity first. We believe it will definitely be this year with the normalcy coming back, we can see a big jump in terms of our revenue for that. It will definitely become one of the large brands in that category where we are trying to highlight. The second part with respect to, can we see a Complan double-digit growth? One thing that we have definitely seen is the better proposition that this, the formulation offers versus the competition. Already in a modern format and other formats, which are more of the regularized formats and which are growing, we have seen a double-digit market share there versus our 5% market share in the overall market. I think if everything goes well and if we do our right things in terms of science and also making sure that we give the right proposition, which is higher protein and higher better content of protein, we can definitely see a double-digit growth being driven by this product. One last follow-up on Complan. In FMCG, there's a threshold market share in any category before which your profitability really is there. In your case, mid-single-digit kind of market share, plus three years, the market share has not really moved much. Is it profitable and at what level market share aspiration would be there given single digit market share? Mid-single digit market share is quite low in FMCG. There are fixed costs, advertising spends. It is profitable, and I think there are two ways to look at it. We don't talk about it, but really speaking, this category is sizable. In fact, Nielsen still underreports it, but Nielsen number is INR 6,500 crores. If you look at broadly, if I give you a high-level 3-segment, so there is a toddler 2-6, then there is 7-15 kids, which is a large play where the TV or most Complan and key competitors is. There is the adult space, which is again fragmented, women's and adult, and there are new players coming in. Now, the mid-level of the market, which is 75%, where we have the main play, I think Complan alone will be an 8% play, and this is a sizable category. I don't think we can generalize all these parts from there. This is a profitable brand. We are building state by state strategy, and we are seeing some traction on that. I think it is above that threshold to confirm to you, and profitability is yeah, quite okay. Sure. That's all from my side. Thanks a lot. Thank you very much. Next question is from the line of Shirish Pardeshi from Centrum Capital. Please go ahead. Hi, good evening, Dr. Sharvil, Tarun, good evening, and the team. Two questions, taking from the previous participant's question. This high science or what we say that adult nutrition, and you did mention that the category size is INR 6,500. How big is this category in terms of adult nutrition? And maybe if you can say that what is the growth rates which are there in this category as an industry? You mean the overall INR 6,500 crore category is growing last, the Nielsen number, they are revising their estimates, but the last number I had in November was about 1.5%-2% for three years CAGR or two years CAGR. Last year is growing at 5%-7%, INR 6,500. The different segments are growing at a differential rate. Last year has grown by about 5%-6%. I got that, Tarun. What I was simply saying that the adult nutrition, especially the NutriGro- Adult nutrition is growing at a much faster pace. On a CAGR basis, it'll be about 7%-8% versus 1.5% that I talked about on the overall category. It is growing much faster. Okay. Toddler space in last 5 year-8 years has grown much faster. Last one or two years, the numbers have dropped. That also because this whole toddlers has a healthcare professional angle to it, and access to the healthcare professionals has really got reduced, especially even for the kids because of the fear. That category has been under pressure. The category has also been in a negative space in last couple of years. Okay. My second question is that if we have grown only just 2%, on a YOY basis. Which category or subsegments has declined on a YOY basis? I mean, you did mention that some products has a higher base. If you can just give little more color where we are seeing this decline. We've actually two reasons, as I explained to you. We have, on a primary sales basis, numbers reduction across two or three brands, including. I mean, we've had growth largely led by Everyuth and Nutralite, because we've also reduced the inventory, as I explained to you. I think majority also, but it's Complan, which I think will recover from coming quarters onwards. Complan have definitely had a challenge in the earlier quarters. We had some of the inventory related to the seasonal products, which we need to, you know, clear for fresh billing, also led to that challenge. I got that, sure. My follow-up on that, you did mention in the beginning that there was inventory correction, which has happened. At what level we are comfortable in terms of inventory correction? Is it largely done, it is behind, or there is furthermore correction which will happen? Because the last two quarters we've been saying that there is automation which is going to be taking place. We've done inventory correction both in internal numbers where we've reduced almost by seven days, and as well as with the distributors. Now we may not need to do anything substantial or anything specific going on. I think this can be handled. This also got necessitated given that we have to build up for the season, so we had to act now, and better to act now than later, and that's one of the things. We're largely done is my belief as a closure. There's no major other things there. I think what has happened for us is the inventory correction has been more than the other years because this year we expected a normal season. You know, April, the second wave took us all by surprise and it was even worse than the last 2020. I think that is the reason we had a little bit higher correction. I think that is a one-off, and we don't believe that from FY 2023 we would see those kind of corrections. Okay. My last question is on the international. Especially, you have said in the presentation that you want to grow to INR 100 crore next year. Just little more deeper, which countries, what products, and what is the opportunity which you would try to get? I mean, INR 100 crore in so many countries what you have shown is still looking less number, but I want to get little more deeper insight, which all products we are exporting and how the growth or maybe which are the countries which are topping? Yeah, because you did mention that top five markets contributing 80% of the business. Our aspirations are much larger. Our aspirations are that it can be 8%-10% of our business, you know, in next 2 year-4 years. INR 100 crore is something we should be able to cross in next one year. Therefore, I would say that would be our, you know, execution plan for me and the management team to ensure we cross that, milestone. We, you know, it is managing the portfolio and we have a portfolio of brands and we have a portfolio of countries. Fortunately, there are some countries which are clearly emerging as more promising and have showing a stronger depth. Those five countries constitute a larger portion of business. Sugar Free, Complan are also showing a better promise in these markets, so they constitute a major portion of our portfolio and therefore will allow for, should I say, extensions and going deeper and wider in these markets. That's a broad thought on this. First of all, there are countries, we've just established our subsidiary in Bangladesh. Bangladesh is clearly a country of interest to us, and we believe we have a exponential growth opportunity in that, and we will be investing behind that, starting with maybe setting up a third-party manufacturing line as well to support that initiative. We've also seen Middle East responding very well and Nigeria responding very well for us. There is New Zealand, which is a little far away, but has been doing okay for us. These are some of the countries which constitute this. Bangladesh, Nigeria, Middle East, more so of the eastern part of Middle East, if I were to say the UAE side, I think that those are the geographies which are looking stronger response, wider portfolio and getting deeper. We have extensions planned. We have new launch and extension planned by end of this quarter itself, coming through. I think what Tarun also said, you know, our mid-term plan is to get that 8%-10% of our revenues driven out of export, which was insignificant for a period of time. I think at least our 5-year plus vision is to definitely create INR 1,000 crore exports in international business. I think we're making sure we start off well with our first milestone. As we are prepared for that larger opportunity, we will definitely discuss that as we prepare the strategy for that. Currently, we hope that about first half we will. In the first few years, we believe we should target an 8%-10% kind of market of our overall Zydus Wellness business in the exports over the next 3 year-4 years. That's really very helpful. Just one last follow-up on the you have mentioned just now that there is a third-party manufacturing which we are looking at establishing in GCC and New Zealand. What is the thought process behind this? Which are the products which we are seeing will have the data set of having this manufacturing outside? These are largely Complan production places that we are using in GCC as well as New Zealand, and we are setting one in Bangladesh, partnering with somebody to set it up in Bangladesh. We will add more products as we go along. We already have these manufacturing other than Bangladesh already done. We are just gonna add Bangladesh as an additional country now. Okay. Yeah. Thank you, and all the best to you and the team. Thank you. Thank you. Next question is from the line of Kapil from Edelweiss. Please go ahead. Hello. Sir, this, our Nutralite sales have been growing well over the last few quarters. I believe, these new launches such as, mayonnaise, Choco Spread, and even now ghee must be shaping up this growth. What are our expectations here, and how big this portfolio can become, Nutralite? Nutralite is now coming together with the convergence of what was actually by-product business of Heinz, plus our own fat spreads. We're creating a brand which will have a larger play in both dairy as well as spreads. Dairy is leveraging our existing capability of the Aligarh plant, where we source milk from 25,000 farmers, and we use it for Complan. Nutralite lends very well to building a value add. In dairy, our wish list is to play only in the value-added products. The way we see it is we'd rather be in ghee or butter or maybe some other new dairy-based spreads we could evaluate, which we are working on. Mayonnaise and chocolate, early days, but we are seeing good traction on mayonnaise. More so also in the food service space. All these will go across both in retail and as well as food service. The way we are carving out is that a new route to market retail will merge with our rest of our business, and the Nutralite sales team will focus largely on the food service, and we'll widen our portfolio. Standalone, it is due to convergence, the brand looks almost twice the size of what it was. But largely it has come from the convergence of two coming together under one umbrella of Nutralite. But we're also seeing good traction on the fat spread in last few quarters. As well as mayonnaise in the fats in the food service space. Ghee is also building up and butter is also building up steadily. I think this brand can be a sizable portion of our portfolio, be in the top three, four brands for us as we go. I think, maybe if I can add to what Tarun says in terms of our strategy and plan. Definitely with the, you know, with Nutralite being expanded into adding value-added products from dairy side also, I think you see tremendous potential for this brand. This brand definitely has the potential to be the largest in terms of sales, for the organization over the next few years with the traction that it's going through. I think with the right segmentation that we have done on the professional range, the HoReCa food services, and separating it from the retail side, which is very different, I think all of that will also help in terms of the strategy, in terms of how to move the brand forward, in these segments. Very importantly, what we have realized is that many of these products will form part of the daily requirement or daily household needs, from the brand Nutralite point of view in terms of consumption. I think once we execute all of this right, this can be an important lever in terms of revenue growth for the organization. Once it achieves a certain size, then definitely it can be one of the largest brands for the company. I think the profitability will improve over that period. Thank you. Thank you so much. That was really insightful. My next question is, in your investor presentation, where you have mentioned a break-up of your channel mix, this others contribution is quite significant at almost one-fourth of the overall pie. Which products would be getting supplied through this channel, and how are the margins stacked up here as compared to other channels? If I were to give you a sense about one-third of that is in food service HoReCa, therefore it's largely Nutralite. Little bit of Sugar Free, but that's one-third Nutralite. Another one-third would be government channels, which is basically CSD, CPC, et cetera, where the margins again are in line with our retail channel. There is a little bit of other things that will add up. Mainly these are two key drivers of the others, about 16%-18% out of, I think, 22.3% of the revenue. Apart from Nutralite, it would be other products like Complan Glucon-D also, or how it would be. Like Sampriti Ghee would be there, but then. No. In the food service HoReCa, it is what it constitutes is largely Nutralite brand Sugar Free. Nutralite will have some bit of ghee, butter as well. Government channel has Nutralite. Sorry, it has all the brands, which is Complan and ghee and Sugar Free, all the brands. So it's a CSD, CPC channel. Most of the margins in government channel are in sync with the margins we earn in the retail. Little bit here and there. Some brands are little higher and some are little lower, but largely in sync with the other margins. Okay, sure. Thank you. Thank you for the clarification. Thank you so much. Yeah. Thank you very much. Before we take the next question, we would like to remind participants that you may press star and one to ask a question. The next question is from the line of Nilesh Shah from Envision Capital. Please go ahead. Yeah, I have a couple of questions. One is in Nycil, what is the market share? Because in the presentation somewhere we've mentioned as 37%, somewhere it's mentioned as 34%, in our press release it's mentioned as 34%. Is it 34% or 37%? Volume share is 37.4%, value share is 34%. Okay. There is a gap in value and volume, and in the presentation we have explained, we've moved from 29.1% to 37.4%. Our focus has been recruiting new consumers through volume-led initiatives. One of the things we have realized is that maybe the opportunity to price up exists, and therefore there is a gap between value and volume share, and we'll try to work towards closing this gap in the next coming quarters. Thanks. Second is on the export side, which are the products or our brands which are doing relatively better? We probably export all our products or all our brands, so is there any specific product or brand which is doing better for us in the exports market? Ninety percent of our business is between Complan and Sugar Free, and both are meeting or exceeding their targets. Sugar Free comprise of Sugar Free base brand, as in the sweeteners, as well as the chocolates which we sell in Middle East and now some other markets as well. The Sugar Free franchise and Complan both have been meeting and exceeding the numbers. We are hoping that we'll be able to add on some of the brands in the portfolio. We see some opportunities where Revive is doing better and has the opportunity in Bangladesh. We're taking some of the other products as well, they fly in the market. The flagship for us remains between these two brands. Okay. Lastly, on margins, given that we are approaching a couple of quarters which essentially, of course, are important quarters, and last year in the same quarters we had operating margins or EBITDA margins of about 24%. Given that the business environment is a bit sluggish for us, and we are facing headwinds in terms of inflationary cost pressures, do you think we should be able to get to that 24% operating margins for the upcoming quarters, or that looks a bit of a challenge for now? I'll give my point of view, Umesh, if you want to add. In my opinion, I think we have a little bit of higher operating leverage in quarter four, quarter one, because 60% of our planned sales typically come from this quarter and much higher portion of our margins come because the cost structure is remaining same, it delivers a higher profitability. I personally believe we have taken actions that we had to because our pain area has been gross margins due to inflation. We have taken action in terms of price increases. Unless there is a mix issue or product mix, or some other external factors, I largely believe we have a good shot at meeting or exceeding our EBITDA margins in the coming two quarters, which are very, very crucial for us to deliver our each financial year's numbers. Great. Thanks. Let me, Nilesh, I think just to- Sorry. Also clarify further on that. Sure. I think, you know, other brands have Complan definitely has faced challenges. Other brands have been very steady. I think this year what we will see in the quarter four and quarter one is last two years we were disrupted because of COVID and brands like Nycil and Glucon-D obviously could not do their regular business. I think that will be a big upside this year because we had a very big loss of base in the last two years. We have at least on the margin side, a good margin structure on those two brands, and we have covered for some of that, either through price increase or buying of raw materials. I think if everything goes well in terms of our plan, I think these two quarter, I mean quarter four, but more importantly quarter one will be very important, driven by obviously these two brands which have obviously struggled last two years because of COVID. Great. Thank you so much and best wishes for the upcoming quarters. Thank you. Thank you. Thank you very much. Anyone who wishes to ask a question may press star and one at this time. Next question is from the line of Praveen Sahay from Edelweiss Financial. Please go ahead. Yeah. Thank you for taking my question and thank you for a detailed presentation you have shared. My question is, as you have mentioned in the presentation for double-digit growth in profitability led by innovation. My question is, in the past, the company has launched new product across segments. Is it possible to share any directionally when it will work? How much of the sales generated from the innovative new product you had launched in the past? Products launched in last three years have contributed to close to 2.5%-3% of our sales. Our wish list is to be five. We are building towards five. We started at a lower level once we integrated the business. We still have a path to go. Some of the innovations that we've launched, we launched a flurry of innovations in last financial year. two or three of them will not see forward. We dropped them. Some of them have good potential to grow and therefore our priority right now is to build on innovations that we already have in the marketplace to take them to the logical conclusion and grow them faster. We believe some of them are really good to go and have enough footing. Going forward, we will be looking at probably 3-4 launches in a year, 1-2 max launches in a quarter. Build around those in a sizable manner. My wish list is that we should cross 5%-6% of our business coming from products launched in last 3-4 years, and that would give us that we're not just launching products, but we are seeing enough momentum in the following years as well. Maybe if we get there, we can be more ambitious as well. I think it's also raising the bar constantly. I think there is some journey ahead to improve our innovation potential as such. Yeah. Thank you. These innovative new products have a higher margin as compared to the existing ones? They are largely in the same zone. It varies from product to product. Sometimes they could be even higher. If I were to look at some of the examples, like we launched body lotions, the last one. They are largely in sync with, the view through overall category. Maybe, few percentage points lower to start with, but we also as we build our learning curve in procurement and manufacturing, we've seen that some of these products also will get better in our hands as well. No, I think, Tarun, and to the question. Yeah. From what we have seen, majority of them will have same or better margin. Yes. Yes. Okay. Great. Especially on two of your product, you had mentioned in the presentation, one is in ImmunoVolt, which is around 28% of market share. Can you give some color on how big the market size is and competition is especially there? It's very small. We are looking at widening our use cases. There are some players already in that space, but the category has not grown or was growing at a small pace earlier. While we can be happy about 28% in a space which is about less than INR 100 crores, INR 60 crores-INR 80 crores, INR 80 crores-INR 100 crores. The point is, we grow this space sizably, it will be most important for us. That's really what we will be looking at building on this. In the Nycil, as you had mentioned about the 37% of the volume market share, is that also include your new product which you launched in the Nycil category like a body mist, and all? No. Mist is not included in that. Mist is hardly anything because we launched in March and April, May, due to wave two. We could not get much value for it. I mean, even if I added it won't change anything substantially. Okay. Thank you. Thank you for taking my question. All the best. Thank you. Next question is from the line of Akash Shah from UTI Asset Management. Please go ahead. Hello, am I audible? Yes. Yeah. Thank you very much for the opportunity. I would just like to ask what is the contribution of Sugar Lite to overall sales, maybe for FY 2021 and this quarter? At last trailing three quarters YTD level, I would say it is operating at about 7%-8% of Sugar Free, 8%, and it's growing much faster. Thank you. A similar number for international business. I mean, what is the contribution to overall sales, maybe nine months FY 2022? Last trailing quarters, it'll be about 3.5%. Sure. Thank you. What would be the gross debt, let's say as of December 2021? Gross debt is INR 315 crore. Yeah. That's it. Thank you. Thank you very much and all the best. Thank you. Thank you so much, Akash. Thank you. The next question is from the line of Alok Shah from Ambit Capital. Please go ahead. Yeah, hello, sir. Thank you for this opportunity. Tarun, I wanted to check your thought process on how do you plan your investments in building brands? This especially is because, you know, Zydus is the market leader in most of the categories except the FFB. Does some brand takes precedence over others? You know, which will be those brands, which are sort of like a power brand for you at this point in time? We are so fortunate, I mean, for our size, and I believe, we are of a size, we've not had to take a call on one brand versus the other or prioritize one brand versus the other. If you look at the presentation that we've shared over the past three years and our journey forward, each of the brand has a good double-digit growth potential. Therefore, it is not a situation where I have some cash cow sitting that I'll milk it and not build on it. Some brands may be delivering, I mean, may to some investors or some stakeholders may feel that they have more potential. Largely, if you look at the potential of each of the brands, each one has sufficient room for growth and penetration. There is a use case which appeals to a large set of consumers, and therefore, there is a growth opportunity. It's just that the solve for each of the brands is different, and their margin profiles and approach is very different. So far, we've been able to optimize our needs for each of the brands without having to take some hard calls. The hard calls of prioritizing one over the other comes only at the time of innovation, which typically, again, I look at three levels. One is the incremental innovation, which the brand P&L will pay for. There are platform innovations which need a little bit more money, but only for one or two years. There are breakthrough or are large innovations which we believe have a longer play and may need some habit changing and will probably need investments a little harder and a longer breakeven. A good example would be Sugar Lite. We will in a, in a given point of time try to not take more than one odd big innovation, but most of the other innovations we'll have to balance within the brand budget. We are kind of so far been able to balance it, but we do, for example, have some thoughts in the pipeline, we will balance it out. But largely, I think most of the brands I feel we are sufficiently resourced to drive our growth. Being the leader, it also becomes that much harder if there are many people. It cuts both ways. One, if you are alone, yes, you have the disproportionate share, you have a pricing power, but it also limits your, you know, opportunity of how you can grow the brand at a faster pace, which multiple players together by investments make it. This is a kind of, you know, challenge we face, but I think we are well-resourced, and we are doing whatever it takes for each of the brands. I think, if I can add to what Tarun also said, I think it's two things, right? Because we are market leaders in majority of the segments, there are two options for us to increase the business, I mean, opportunity side. One is to have more use cases. Brands like Sugar Free and Everyuth, and some others need to be. We need to create more use cases. And then secondly is we are not participating in certain segments of the brand. There in terms of, Complan, right? We're only present in, toddlers and, certain other segments. We're not in the adult segment. I think we have to look at segments and see where we are missing in terms of the brand. Largely, when we look at our spend, it is a mother brand concept that we follow. You know, when we are doing, I think there is a rub-off effect on the overall brand when you are doing some kind of promotional activity. Looking at both of those things is how we are trying to take a call when we're talking about a new introduction. Going forward, one is because of COVID also. Another thing, I think the number of new introductions will need to be limited and a few more impactful launches will make more sense to do as we move forward in this coming year. Got it. My second question was on the distribution. Post the acquisition, we have, of course, seen the benefit of distribution expansion. Any quantification that you know whether all your portfolio is now able to seamlessly move in the new distribution? Basically it's a depth versus breadth, right? Where will we be on that front now? Distribution, I think, a lot has been said in terms of our outlet reach, which has more than doubled. Our number of towns, we have gone up by almost one and a half times. We are focusing adding more stores as we go forward, both in urban as well as rural. We believe we have some distance to go, but we'll have to be balanced because growth and distribution have to go in, and distribution has to be. Expansion has to be ahead of what the current situation is to pave the path for the future growth. I think we have been able to access all the sub-channels because our brand portfolio is such that all the sub-channels play out, whether it is grocers, the pharma, the cosmetics, the food stores and standalones. The pan kiosks is the one place which has not been very important for us, fortunately, and therefore that can be much harder to work for some companies it works. We've been able to grow each of these parts very well. One of our key focus right now is to drive our range productivity across this portfolio, and that's really the initiative post expansion has been. How do we increase our range? Therefore, we are using a series of measures in terms of measuring those. As well as our Salesforce automation is also helping us track this, and use better use of data to, you know, address where the gaps are and keep working at it. We have a short-term plan by sub-channels, states, et cetera, that helps us making our product better available at the right place. Got it. You know, basically what I was essentially alluding to is that now with, say, Glucon-D, you are able to reach new distribution areas. Have you been able to, you know, push your other brands also in that new retail outlet that you have got through the Glucon-D? You know, from our six brands, to what extent we would be able to reach? A good example is Everyuth. Everyuth has seen in last three quarters, I think, in the wave two, like all brands and it being non-essential, it got very badly impacted in April and May. Post that, it has come back so strongly, and we've seen high double-digit growth across months. Even when we have, like last month, last quarter, we have reduced, for example, we were talking about, reduction when PNI impacted all brands. It has continued its momentum. We've seen a good, one of the brands that has, gained out of this, portfolio. Actually, it impacts all brands. Even within Glucon-D, it is not just about Glucon-D being large and therefore it is driving. Our ability to place some of the like this, Volts was existing earlier also. When we relaunched it, you know, ImmunoVolt with a larger distribution, we've been able to get our way through. It is not just the big brand, but there are SKUs within brand which are important and strategic in nature. We are able to push through those as well. That's the benefit of having a better direct distribution, which lets this cross 1 million in the next couple of years. Got it. Lastly, one bookkeeping question. What would be the blended price hike that you would have taken at the portfolio level? Now in line with the current inflationary scenario, do we think that, you know, most of the price hikes required are taken and you will take a pause at this point in time? We will take a pause at this time. We have taken the price hike even you know during the December and you know earlier prior to that quarter, we also taken one more price hike. I think this is now pause for the price hike. If required and if inflationary pressure continues, then we'll take the call at that time. What Umesh is explaining is the price hike taken in December to take care of the costs for this quarter, which is in operations. We've covered ourselves for our forecast of the costs. Okay. Got it. Thank you very much. Thank you. We can move on to the questions. Thank you. The next question is from the line of Nirmal S., a private investor. Please go ahead. Hello. Hi, Sharvil, Tarun. This is Nirmal here. It's a real pleasure to talk to you guys after a long time. My question is regarding future strategy. We've got a good portfolio of brands. We've got a good team. Of course, we've got our hands full with all the different initiatives in each of the brands. And then hopefully over time with Sugar Lite and Nutralite adding more contributing more to the business. The business is already going to be throwing off about INR 300 crore of free cash flow, which will hopefully continue to increase. While we are executing on all these fronts, strategically, are we also looking at you know deploying that money in terms of inorganic expansion? Do we have any thoughts there? On the inorganic, right now our focus is to look at more bolt-on and fitting into our portfolio kind of approach, where we're looking at products which fit into our wish list, both from personal care, but more importantly, if something fits in food and nutrition will be important. We're also looking at some of the key markets international acquisitions, and we will look at those. We are conscious of that. To that point and to what Tarun said is right. One is definitely and on the nutrition side, we believe that protein is a protein area of protein related products are very critical and especially with the, you know, movement that you see on the e-commerce on certain new types of products. I think we are seeing that as an opportunity area to acquire something and build on, build an e-commerce as well as, from an e-commerce to a direct, distribution play. We look at brands that we could acquire or businesses, or looking at making sure that they have better gross margins so that we don't want to buy something that is lower on gross margin side. Also, you know, building an international business is an important area which we can, I think, of doing over the next 2 years-3 years. Any areas in international that we would be looking to see if we could acquire. I think those are the two immediate ones. Beyond that, I think currently, as Tarun has said, internally, we still believe we have a lot of opportunity to grow these mother brands. I think the focus will be to make sure that we do so. We'll keep our eyes open for any opportunity to acquire. Thank you so much. Thank you. Anyone who wishes to ask a question may press star and one at this time. We would like to remind our participants that you may enter star and one to ask a question. Our next question is from the line of Akash Shah from UTI Asset Management. Please go ahead. Thank you for the follow-up opportunity. I just would like to ask, are we planning to enter any or does the management team have any thoughts on entering, let's say, adjacent categories over next 2 years-3 years or maybe five years down the line? Just any thoughts there? This is just coming from I mean, we are planning to expand our international business, but certainly there is a lot of scope in domestic business. Any thoughts there, yeah. Let me say this, that we believe domestic has enough scope and our existing brands have enough scope. We will be looking at core businesses of each of these brands to grow, because we believe there is enough potential. There are some, you know, adjacencies within these brands which are possible, which have potential and which will fit in very well with our portfolio, and we will look at growing them through innovation, and or, I mean, from an expansion point of view. That's really our primary focus. Even in international, we are seeing it as an extension of the same thing. We learn from each other and pull this together. There is enough opportunity to grow on that. The bolt-on acquisition is only to fit in and give us if there was a quick progression in the spaces that we would like to be. That's largely how we are looking at it. Sure. Yeah. Thank you. Thank you very much. If there are no more questions, we could wrap up. Hello? Sure. All right. As there are no further questions, I now hand the conference over to Alok Shah for closing remarks. Over to you, sir. Thank you. On behalf of Ambit Capital, we would like to thank the management of Zydus Wellness for giving us this opportunity to host the call and to all the participants for taking time out for the call. Thank you. Thank you very much, members of management. Ladies and gentlemen, on behalf of Ambit Capital, that concludes today's conference call. Thank you all for joining us, and you may now disconnect your lines.