Ladies and gentlemen, good day, and welcome to Britannia Industries Limited's Q1 FY 2024 earnings conference call. Just a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Sambayan Mondal from Investor Relations team. Thank you. Over to you, Mr. Mondal. Thanks, Nirav. Hello, everyone. This is Samayan from the Investor Relations team. I welcome you all to the Britannia Earnings Call to discuss the financial results of Q1 2023, 2024. Joining us today on this earnings call is Vice Chairman and Managing Director, Mr. Varun Berry, Executive Director and CEO, Mr. Rajnish Kohli, Executive Director and CFO, Mr. N. Venkataraman, Chief Commercial Officer, Sales and Replenishment, Mr. Bipin Kataria, Chief Marketing Officer, Mr. Amit Doshi, and Chief Procurement Officer, Mr. Manoj Baghi. The analyst deck is uploaded on our website. Before I pass it on to Mr. Varun Berry, I would like to draw your attention to the safe harbor statement in presentation. Over to Mr. Varun Berry's remarks on the performance. Morning, everyone. Let's, let's jump to the deck. Page three of the deck. This gives the parameters for the quarter. Our revenue growths were 9%, which actually incorporated a transaction growth of 9% as well. Operating profits grew by 37%, and our market share was stable. However, the, you know, the gap with the second largest competitor became much larger this quarter. Moving on to our strategic pillars, you've seen these, distribution, marketing, innovation, adjacent businesses to contribute more as we go forward, cost efficiency programs, which we've been running for quite some years now, and sustainability, which together will drive profitable growth for the company. Moving on to slide number five. If you were to look at our distribution, we are now at about 26.7 lakh outlets counting. Our focus states growth has been much higher than our growths for the rest of India. Focus states have continued to grow at a faster clip, which is 2.2 times what we've grown in the rest of India. Our rural distribution continues to move up. We are at 28,000 rural distributors now. We, you know, as we speak, we are scaling this up even further. Slide number six, key marketing activities. We focused on Marie, Milk Bikis, Pure Magic, Fifty Fifty, Croissant, Winkin' Cow, and we also started the Marie My Startup season four. The rewards and recognition programs, you know, that, that we participated in, we were chosen the FMCG brand out-of-home by Kantar. Our marketing team got the Marketing Team of the Year award, the ET Shark Awards for 2023. Proud moments for us. We, we've run some consumer promotions, which are a mix of items as well as grammage in pack. The grammage in packs have been more to make sure that we remain competitive. As inflation has receded, you know, it's, the, the local competitors have started to bring in more grams in pack, we are making sure that we remain competitive with that. Innovation, we've had a very interesting product launch in Jim Jam Pops, and we've got some very interesting advertising as well behind it. We've also launched a Multigrain Rusk, which has been launched in Western South only for the time being. We've also scaled up Fifty Fifty Wholemeal, which is doing extremely well for us. We've also had a robust season for Winkin' Cow with a wide range of offerings. We obviously have transitioned to the PET bottles, which is doing really well. These are ASI PET bottles, and the line is in Ranjangaon. It's an expensive line, but it's eco-friendly because you use less plastic, as well as the quality of the product, because you're not, you know, subjecting it to very high heat, is a lot better. It's not burnt. It's, it's product which is much better than a heat-treated product. We've also launched Rich Milkshakes and Coconut Water this season. We've had very high double-digit growths as far as drinks is concerned, and our innovation contribution has been greater than 10%. Moving on, our adjacent businesses are also on reasonably strong footing. I wouldn't say absolutely strong footing. We have been scaling up our innovations. We've, we've launched the Big Swiss Roll. We've also done cupcakes. Sequentially, we've moved up to cakes, but post COVID, this is one category which seems to be still coming into its own. We've seen green shoots this quarter, and we are absolutely confident that cake is moving in the right direction. Rusk, again, we've strengthened our portfolio with regional core flavors, like Golden Rusk, which is a yeast-dominated product. Our local competitor had a large play in that. We've just launched that. We've also scaled up Rusk in Kerala. Bread, we continue to grow profitably as far as this product is concerned. On Rusk, we again, you know, it's been a lot of local competition. There are about 2,500 local competitors all over the place, more so in the north. We have made sure that this quarter we became competitive. You know, obviously, we can't match the local competitors, but we became a lot more competitive than we were. We are confident that as we move forward, even in this category, we will gain muscle. You know that we-- this category contributes a reasonable amount of top line, as well as good prof- profitability as well to us. So we are making sure that we become competitive, and we deal with each region in a different way. South, East, and West are different, North is different, and that's how we are making sure that we deal with this category. International has been a good story. Middle East and Africa has been growing in high double digits with much improved margins. We've seen a double-digit profitable growth in the rest of international as well, led by the Americas. Nepal continues to be a very good story with a high double-digit growth and expanded margins. We've started business in Egypt, where it's doing extremely well. Kenya is, we've started a, quite a joint venture there. We've had a little bit of starting trouble with some Forex issues there, we are very confident that even the Kenya business will come in line as we move forward. International has been a decent story for us, with very good growth. Dairy, I has spoke about, the Winkin' Cow products are doing very well. We've taken, you know, the change of identity as far as cheese is concerned. The Laughing Cow is now, you know, moving forward, gonna be a very big driver for growth. We've launched The Laughing Cow portions, which is that round box that you see in the center, and it's doing really well. We are starting to launch our 10 rupee sachets of cheese as well, and we hope to see very, very good growth as far as dairy is concerned. Supply of SMP, which is, you know, our milk powder, and our sweetened condensed milk and butter. Consumption has started from, from our factory, to our bakery division, and that's going well. Moving on to the next slide, which is slide nine. Cost efficiencies across verticals have been moving well. As you know, the teams have been, you know, team consumption, renewable energy, market damages, that we received back from the market, distance traveled, truck utilization, and line throughputs. We've been making good progress in each one of these. Our target for 2023, 2024 is seven times what it was in 2013, 2014. We are stepping up this cost reduction program every year, and we've been able to do so. You've got to remember again, once again, that this is not anything which is carried over from the last year. The meter starts on the 1st day of the year and ends on the last day of the year, as far as this is concerned. Moving on to slide number 10. We've set up some really good factories, and this year, we've scaled up Barabanki, which is in UP. We scaled it up in Q1 of 2023, 2024. We've got five lines running there, and that's a factory which is, you know, starting to perform at efficiency currently. Similarly, Tirunelveli, which is in Tamil Nadu. Both of these factories, we are grateful to the UP government as well as the Tamil Nadu government for the incentives that it's provided for us. This is giving us capacity in the right place and helping us improve our freshness to market as well. Moving on to ESG. On ESG, we continue to follow our programs on people, resources, governance, and growth. Some of these are outlined here. Just to let you know, we won the award by the BW Businessworld, being in the top 30 most sustainable companies in 2023. We're very proud of that. We've also been shortlisted for the World Sustainability Awards for 2023. Some of the achievements in this area have been 100% plastic neutrality. We have moved our Dow Jones score to 53rd, which is third amongst the FMCG peers in India. Our sugar and sodium has been reduced by 2% and eight, almost 8%, respectively. We've been recognized, as I said, as one of the top 30 India's most sustainable companies. Very proud of this, and we are making sure that we take this agenda to the next level in this year. Moving on to, you know, our malnutrition reduction programs. We've extended this to two new centers. We have, you know, we, we made sure that, you know, we've, we've, we've also helped refurbish the Bai Jerbai Wadia Hospital, which is part of the Nowrosjee Wadia Maternity Hospital. We now have 470,000 patients which are being treated in this hospital. We've also got, you know, 3,700,000 patients who've been treated in the last 10 years, with 925 beds dedicated to these patients. We've also got other CSR initiatives which have been extended to 131 new villages. We've got, you know, the Nutrition Foundation helping with, you know, we've gone to additional 625 schools. We've gone to almost 700 new Anganwadi centers, and we've got now 250,000 beneficiaries of this program. Good progress there as well. Now moving on to slide number 14, which is a view on what's happening on the commodity costs. On the commodity side, flour has been, you know, there has been inflation as far as flour is concerned. If you look at versus last year, there's been an inflation of about 3%. Now, these are numbers for us. Obviously, the numbers, because we were covered last year, our inflation, or, you know, last year's numbers for us were much better than the industry. You know, other companies probably have seen a flattish story as far as flour is concerned. Palm oil has been a huge deflation. We've seen a deflation of almost 21%. On sugar, there's been a slight inflation of 1%, and versus last quarter, it's been an inflation of 2%. On laminates, again, there's been a deflation versus last year of 18% and versus last quarter of 3%, and similarly on corrugated boxes. Basically, slight inflation on flour and sugar and deflation on the other commodities that we buy. Moving on to slide number 15. On the cost and profitability front, we've initiated pricing actions to stay competitive and drive market share. Now, as I was saying on the last slide, some, some of the companies had not covered, as well as we did last year, so their commodity prices were much higher than us last year. They have seen a deflation which is much larger than what we've seen this year. As a result of that, there's been quite a few price corrections which have happened in the market. Being the market leaders, also, we had taken the first mover advantage on all price increases because we wanted to make sure that all inflation was covered. There were, there were lots of corrections which had to be made because in certain cases, some, some large competitors had taken pricing downsides, and in certain cases, they had not followed us on the price increase. On a case-to-case basis, we've looked at what needs to be done to make sure that we remain competitive. We've also increased our A&SP to support our brands and drive innovation. We've obviously doubled down on our cost efficiency programs across all functions to make sure that we remain extremely competitive, and we remain the lowest cost operators in our categories. On outlook basis, we are very vigilant on competitive pricing actions. We are also closely monitoring stock price situation of commodities. Finally, we are employing the necessary pricing strategies, which would be deployed to remain competitive and drive market share, as well as drive profitable growth in the future. As a result of that, our numbers for the quarter have been very healthy. If you go to slide number 17. We've had on the top line, we've had a 12-month growth of 9% and a 24-month growth of 18%. If you go to the next slide, our operating profit has grown in the 12 months at 27% and in the 24 months at 22%. A fairly healthy and robust growth, both top line as well as bottom line. Moving on to slide 19, this gives our certain parameters on. I've already spoken about the top, you know, the top table. Net sales, 9% and 18%. Operating profit, 37%, 12 months, 22%, 24 months. Profit before tax, 34%, 12 months, and 17% in 24 months. PBT, again, similarly, 36% and 17%. If you were to look at some of our ratios, profit from operations, still a very healthy 15.6%. Profit before tax is at 15.7%, and profit after tax remains at a very healthy 11.5%. That's where it is. The, the, you know, obviously some factors, there were some profits which were booked last year, so we are cycling certain profitability which was taken for a larger period. We will take that in our questions as we, I'm sure you'll have questions on that. That's all from me. Let's open the house for questions. Thank you very much. We'll now begin the question and answer session. Anyone who wishes to ask a question, may press star and 1 on your 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. Participants, you may press star and one to ask a question. The first question is from the line of Abneesh Roy from Nomura Institutional Equities. Please go ahead. Yeah, thanks. I have three questions. My first question is on the volume growth, which was sluggish. Could you elaborate what exactly you are doing to the overall pricing initiative? In case you have passed on grammage back to customer, when do you see the volume trajectory benefit because of that? Because if you have passed grammage, why is the volume still sluggish? Related question to this is related to market share, data which you have given. Number two, share has lost significant market share, that benefit does not seem to have come to us. You have also lost, I think, a share. Is this data credible, anybody credible who has gained market share? Yes, so Abneesh Roy, that, that was like, being in a firing squad with, many questions coming my way. Let me just understand. Your first question was on volume growth, was that? Yes. Yeah. Abneesh, the fact is that we've not equated prices everywhere. We have taken, you know, a very cold call on what is necessary and what is not. Second is that the markets are little sluggish compared to what we've seen in the past. What we've seen this quarter, and I'm not sure, I think I've heard the same commentary from other FMCG companies as well. There have been there has been sluggishness in the rural markets, even for us. While we've been growing faster than the market in rural, the sluggishness is definitely there. Even, even the urban markets, while, you know, modern trade has been robust, and so has e-com, the, the, the traditional trade markets, both in rural and urban, have been little more sluggish than what we've seen in the past. It, these are all passing phases. You know, what we've seen in the past as well is that we tend to get overly worried about a quarter which is a little slow on the on a certain channel growth. You know, it, it, it sort of eases out, and we are seeing, I would say, slight signs of that happening, although it will take a little bit of time for the growth to pick up. You are right about market share. We have been flattish, the reason for the gainers of market share have been all local players. The local players, because of the pricing actions that they're taking in their small vicinities, have gained a little bit of market share. That's, that's a phenomena that we've seen in the past as well. When the, you know, inflation is high, local players just walk away. When things start to become a little more normalized, local players come into the market and start to operate large schemes for customers as well as consumers. That's what we are looking at currently. It's a matter of one or two months.... You know, we are very confident that with all the actions that we've taken, and most of the actions have been attended in the first quarter, we are, we are very confident that we will be back, and we will get back onto our trajectory. Does that answer your question, Abnish? Did I miss out anything from your firing squad? Only one thing. In terms of pricing, it's largely price cut in select SKUs, or is it damage addition also there? It's, it's basically damage additions that we've done in certain cases, and in certain cases, we are looking at doing some article promotions and price cuts. It's a mix of all, Abneesh. Thanks. My second question is on dairy. In dairy, you have mentioned captive consumption of FMC, FCN. What does it translate in terms of, say, any savings in terms of cost? Captive, new architecture has already been done in terms of The Laughing Cow. In terms of distribution next one-two years, what kind of scale-up or could be achieved? Now, obviously, you will become more accessible to consumers and gradually as your subscription and manufacturing becomes normalized, so it will affect the more, more directly. What it does is, it helps us fulfill our commitments to the farmers. We are collecting a lot of milk from our farmers. We are processing that, and we are whatever is required from the company's perspective, we are fulfilling that. At this point, there is no cost advantage of doing that, but there is no cost disadvantage either. We are in the process of scaling up the factories. Yes, once we've scaled them up fully, we will start to see cost advantages as well. On the cheese part of the business, yes, we are really looking forward. The initial signs are looking very positive, Abnish, on cheese, and we are really looking forward to good growth. You know, we, we don't give forward-looking statements, so I won't give you a number on that. All I can tell you is that we are very optimistic on what we can do with our cheese portfolio now. One last very quick question. Taking Rusk, your commentary was that not very strong, reasonably strong in terms of growth, and you have been seeing innovation very aggressively over the past many quarters. What is the issue here? Is the overall market not living up to the digital expectations which you had, or is there again, a pricing and regional competition, which is also there? It's a mix of both. One is, the market growths have been a little tepid, and second is that regional competitors, again, similarly, what I told you about biscuits, same phenomena is happening here as well. As I told you, there are 2,500 regional competitors as far as Rusk is concerned. The owners of making sure that we protect ourselves and grow our business and make sure that, you know, we do what is right for the business is on us. We've commissioned Rusk lines all over the place. We never had our own Rusk line in the north. We've just commissioned it in UP. That will give us a major advantage as far as Rusk is concerned in UP, and similarly in Ranjangaon. Now we are taking Rusk capacity also in-house, which will give us a big advantage, not just from a cost perspective, but also from a quality perspective. Abneesh, you've taken almost 30% of the time in your firing squad. Okay. Thank you. Thank you so much. I request all the participants, please restrict your questions per participant, so the management can address all the questions from all the participants. Next question is from the line of Ravi Mehta from Equity Group. Please go ahead. Yeah, hi, sir. sir, I just had two questions. First, would it be fair to say that once you reflect the entire impact of the rise in price-based competition, hence we should maintain our expectations of flatish EBITDA margin for the full year? Well, I would not say that it's not flatish. If you look at our trajectory for many years, except for, you know, if you look at it, if you look at 2021, 2022, we were at an average of about 14%, right, on operating profits. In Q1, we are at 15.6%. What you are really looking at is the COVID periods of high numbers. Whether it's a 2020-2021, and obviously last year, we were taking price increases to make sure that we managed targets as well, as far as inflation was concerned. If you were to look at if you were to draw a line, progression line, I think we are moving in the right direction, and I think that will continue. Sir, I'm sorry. Should we say that, I mean, at least from near term, we are already done from a pricing or price-based competition perspective, that 17.5 or 71.4 period, for this number, we should say, the right understanding? I just wasn't sure if I got that correct. Okay. Yes. The second, sir, is on the pricing growth. I'm just revisiting some comments. You had said that we should expect about 2% growth is what you have built in, or you would expect for next year or this year. Does that need to be revisited given the recent-... is broadly in line with you were kind of assuming? What 2%? I am not aware of this 2%. What are you talking about? The FY 2024 pricing, you said volume groups will move up from what we saw in FY 2023, and pricing will come off. You know, at last, in 4Q, we were discussing that, that was good. Yeah. No, so that 2% will probably not happen this year. It seems that it will be a flattish year from a price standpoint. Yeah. Yeah. It, it's not gonna be a 2% increase, and the reason for that is the commodity prices. We, you know, with that, I think we should be in a good place to, you know, make sure that we are able to grow. Yes, on the volume front, I think we will start to see the volumes come back. You've got to remember that last year, second quarter, we'd grown 22% or something like that. Correct, sir. Yeah, we'd had a very big second quarters. I think post that, volumes in any case will start to come back. I mean, okay, so volume growth should be high single digits. That kind of expectation should probably have an upside, given the pricing growth probably kind of changes. That's how I should kind of read it. Yeah, and, you know, in our category, the way to look at, volume growth is actually the way I look at it is transaction growth. You will see, if you've taken out, three grams from a biscuit, the consumer is not gonna go and buy one more packet of yours, right? That does impact overall volumes in terms of tonnages, but it doesn't impact the number of packets that we are selling. Our transaction growths have still been a very robust 9%. They are equal to our revenue growths, and which is what we look at. Having said that, I understand where you're coming from. I think even tonnages will start to grow as we move forward through the year. Okay, sir. Just to confirm, sir, is it possible to share the ICDs on book? That's my last one on the list. Thank you. Yeah. ICD as of June 30th stands at INR 760 crore between Bombay Dyeing and Bombay Burma. Okay. That's all from my side. Thank you very much, sir, for this question. Thank you. The question is from the line of from IIFL Securities Limited. Please go ahead. Hi, good morning. I was just looking at your gap between the volume and value growth. This quarter, it's a 9% value growth and zero volume, so it's a gap of about 10%. If I look at it in Q4, it is also about 9%. It doesn't seem that there has been a lot of price cuts or anything of that sort in the last three to four months. Yet, if I look at your EBITDA margins, even adjusted for the CLI one-offs, I think it was close to 19% in Q4, which has come down to 17.5%. how do we explain this, that, without too much of, pricing, the margins have still come off and the volumes are also, weak? In this quarter, we've taken price reversals of about 1.8%. There were fiscal benefits, which were one-time CLI, cool, which was taken in Q4 last year, which was 2.4%. Price reversals are 1.8%. Fiscal benefits are because they were taken in Q4 and not in Q1, so that's 2.4%. There's an employee cost increase, which is flattish, and there is a decrease in other expenses, which is led by advertising spends, which is about 1.2%. Versus Q4, we are negative by 3.3%. That is, that is the, you know, that is the number that you're looking for, I believe. Okay. How do we look at margins for the rest of the year? Should we believe that unless the commodity prices change versus the current levels, the margins that you have currently sort of done is a good representative of what should continue in the future? Do you think that it would drop further because you might take further price cuts? I mean, how should I approach this? I'm not looking for a number, but more of a guidance on how to think about this. No, the way to think about it, the way I think about it is that, the priority for us, we are, reasonably profitable. I think we are, our margins are very robust and healthy. The trick is, growing our top line and, making sure that, you know, we get, the, the, the volumes and the shares, which are required, and with that will come the margins. Okay. It is possible that, in net terms, the margins might go below what we have seen this quarter. Am I reading that right? No, you're not reading it right. I didn't say that at all. Okay. Okay, understood. Basically, we should see a gradual recovery of volumes and tonnage, and at the same time, more or less, maintaining our current margins over an average of the next three, four quarters, would that be right in the prediction? Yes, yes. Okay. Okay, understood. Secondly, I just want to understand in terms of your main growth drivers, of course, innovation is one of them, but the second has been distribution expansion. Do you think that driver can continue to contribute at the same rate over the next couple of years as it has contributed over the last five years, given that as we expand more and more, the opportunity to expand sort of reduces because it's a finite game at the end of it? I, I wouldn't say that. I do think, see, as I've told you in the past as well, you know, the, the, the clear opportunities are in these Hindi states and certain other states as well. We are really digging in to make sure that we, you know, neutralize those efficiencies that we have in the system. I do think that we have a runway to gain distribution gains. Beyond that, it's also about our new categories. I think our new categories have started to perform much better. We've seen croissants doing very well. We've seen, you know, drinks and, you know, flavored, you know, milkshakes, et cetera, doing pretty well. Even wafers, you know, we are, we are putting a solid strategy to make sure that we take that into a reasonable sized business as we go forward. All that, I think, is gonna start to contribute more to our business as well. Obviously, as I've said, that even cake and rusk, while right now they are not, you know, overweight, but as time goes by, I'm sure that they will bring their weight also to the, you know, to the other categories growth. So I think. Obviously, dairy, which I have spoken about already, cheese, we've started to see green shoots of very good growth with the joint branding and the new products that are coming in. I think all that will also add to what you're talking about. Thank you. For your complete policy, I'll request you to join the queue again. Participants, please restrict to two questions per participant. Next question is from the line of Shirish Desai from Centrum Broking Limited. Hi, good morning, Varun. Thanks for the opportunity. Two questions from my side. We have already started commercial production at our Bel JV. I just wanted a little more understanding on the entire dairy business. We have our own products, and now we have Bel products, which you have said that The Laughing Cow has gone into the market. Questions here, of, what is the daily sales contributed in this quarter? In terms of distribution scale-up, what has happened, in terms of Bel portfolio? More, little more detail. We've, we've seen double-digit growths. Well, this quarter, we were just starting up, so there were some shortages as far as cheese was concerned, because, you know, the Bel product had, had stopped coming into the market, and we were starting up to do the joint branding. This quarter wasn't a great quarter overall, but in the third month, we started to see cheese volumes and revenues start to look very good, and that, that continues as we speak as well. It's been, it's been, I would say, this quarter has been a reasonable performance, but it's very clearly showing a path to the future to us. Okay. Yeah. It is last year, INR 550 odd crore, we should be targeting some strong growth. That's what you're saying? Yes. Okay. Okay. My, my 2nd question on UP and Tamil, you mentioned that there are some incentives which we have got. Yeah. What is the quantum which we have already booked in this quarter or maybe this year expected to come? Is that what it means to... You said both the location, we have started some lines. Could you explain what are these lines you have started? On the incentives, UP, we have still not got the eligibility certificate, so nothing therefore is recognized in the books. TN, we have got the eligibility certificate, and a very small amount has been booked in quarter one. It's about INR 7 crore-INR 8 crore have been booked in quarter one. Sir, for full year, what is the expectation for incentive? We are in the process of. Going to find out, yeah. Some of these in TN, for instance, it is incremental sale, so it comes out of all the factories in TN. It's not a straightforward calculation. It will take us some time before we can verify and see what are the products which are happening in this factory and four other factories which are also there in the state. We'll make an assessment, probably H1 end, we should be able to make an assessment. Okay. What are the lines- One moment, I'll stop you. May I just go straight to the other thing, please? Thank you. Participants, please restrict to two questions. This question is from the line of Anna Mitchell from Goldman Sachs. Please go ahead. ... my first question was again, actually on margin. You mentioned you probably need to take some more price corrections. Our understanding is there is a bit of a sequential up move we are seeing in edible oil, sugar, and possibly even in wheat flour. In this environment, do you not feel that there could be more pressure in margins in the near term, or are there other ways you could offset this situation? No. See, edible oils, there, there is no uptake. Edible oils actually are at the lowest, ever, ever in the last, three, four years. Sugar, yes, there has been a little bit of, inflation, but I think the government is very clear that they want to control this. I don't think there's gonna be, much inflation as far as sugar is concerned. Flour is the one which we really have to watch, because, there is, the, the production hasn't been as good this year. While the inflation currently is, is low single digits, but we've got to watch that. At this point in time, it seems we are covered for the next, three or four months. We just have to make sure that we, you know, do this, carefully. Obviously, you know, we are doing things in a way that they are reversible at short notice. We don't see a risk, but if there is a risk that emerges, we will be able to make sure that we mitigate that very quickly. Okay, thanks. Very helpful. The other thing I wanted to ask was on employee cost and depreciation. This seems in the standalone and console, both, it seems to be YoY as well as sequentially. Is this largely new capacities? Do we see this going up also as more capacities probably are in line for getting commissioned or ramping up? You will see some, you know, increase there. There are obviously savings that we make in commitment charges as well as conversion charges from CPs. It's a bit of, you know, left and right. Venkat, would you like to comment? Yeah. No, absolutely right. The increase in depreciation is on account of some of these units which have come up, Dairy, UP, Tamil Nadu, et cetera. It's also some of the increase in employee costs that you see is partially, partially on account of that, plus on account of the increments that have happened in the current financial year. Like Varun said, what really happens is that while, while some of these lines see an increase, there is a reduction that happens in the conversion costs, which goes as part of the other expenses. We, we have been tracking that quite closely to ensure that overall, we stand to give, and that's one of the reasons why we are putting up these factories closer to the markets. Having said that, one thing is clear, that we have to start to grow our top line faster as we go through the year. We've got capacity and, you know, that's, that's, we, we've gotten new lines, we've gotten incentives. Now, the onus is on us to make sure that we grow our volumes and our shares in each one of these markets, because that gives us better profitability. I think we are poised very well on that. Thanks. Thank you so much. All the best. Yeah. Thank you. Next question is from the line of Kunal Vora from BNP Paribas. Please go ahead. Yeah, thanks for the opportunity. My first question is on advertisement spend. If you could explain, September was up more than 50%, which is much higher compared to what the industry was doing. How are you looking at the number in FY 2024? With increased competition, would you look to raise it, or with moderation in revenue growth, you would want to reduce it? Can you, can you repeat the question, please? Yeah. I was looking at FY 2023 annual report, and I see that your advertisement spends are up, like, 62% year-on-year. Which was like, unlike most of the FMCG companies. Oh, you're talking about last year? FY 2023. I was looking at FY 2023, but I'm now asking for thoughts on FY 2024. About, like, say, how do you- Yeah. 2023, see, if you think about it, in 2022, 2023, we were cycling the 2021, 2022. In 2021, 2022, because of COVID and because of the inflation, we had really clamped up on our spends. We had just normalized our spends. It was not like we'd gone completely out of whack. We had normalized our spends after, you know, those two or three years of COVID, and that's why you're seeing the increase. I think we will remain within these parameters. It's not like we are looking at taking this completely, you know, off of the charts. We will remain within those parameters as far as these spends are concerned. When we were at INR 400-INR 500 in the earlier years, it went to INR 675, which is a sizable jump. Will you remain closer to INR 675 or go back to the INR 500 levels which you had earlier? See, we are at about, you know, if you remove the sales expenses, we are at about 3.5%-4% of our revenue, right? It will remain in that percentage, roughly. Sure. Okay. My second and last question is on, on innovation contribution. You have about 10, you mentioned about 10%, which is like, it seems higher compared to previous. What is your definition of innovation, and how much of this will be new products? How much of this will be innovation by existing products? That 10% that I spoke about was dairy only. Our total innovation is about 4% currently, and it will remain in that 4%, and I have defined that for you. The definition is that products which have been launched in the last 24 months, after 24 months, they go out of the innovation packet. If new products are launched, they come into that. It will remain between 4%-5% of our total revenues. Understood, thank you for my question. Thank you. Thank you. Next question is from the line of Richard from CM Financial. Please go ahead. Hi, thanks for taking my question. Varun, hi. I wanted to get your inputs on how you think the metrics pan out, you know, here onwards as we go into Q3 and Q4. The genesis of this question is that pricing growth annualizes completely sometime in Q2. Moreover, the price cuts that you've taken or will take further will add on to, you know, to the price decline that, that could come by then. Unless volumes pick up substantially, my guess is that top line growth could look like, you know, zero, with whatever volume growth being there, getting offset by the negative pricing. This is on top line and on profits. Your H2 last year gross margin, as well as EBITDA margins, were already, you know, pretty rich at 80%-90%. Even if I were to strip out, you know, the bootstrap PLI from the equation. Grateful if you can comment on this, you know, if there's something, I'm missing or if you, if you would like to throw some light on what ways are there to proper value growth and margin, as the quarter progress? No, you're right. See, the pricing we had, in fact, we had kept taking price increases even till the end of Q4, right? There were some price increases which were even taken in Q1, right? While there were price increases, there were also rationalization on certain SKUs. We worked at both ends. You're right about... See, last year's price increases continued till the end of the year. The max number of price increases that we took was till Q3, right? Yes, next, you know, we are cycling pretty high base as far as these quarters are concerned. We will have to make sure that we work doubly hard to get our top lines to grow. Okay. Varun, also wanted your view on, on, on this line called other expenses, right? I mean, this is a line that used to grow in, in single digits, some years back, and used to be the key source of margin expansion for a long period of time. you know, the rate of growth in this line has been much higher than usual in the last five quarters. if you can just throw some light on the reasons for such a sharp increase in these overheads suddenly in recent past, despite your, despite your extremely, I would say, high level of focus on costs, usually. If you were to compare our expenses from, let's say, last year to now, the single largest contributor in the increase has been, advertisements. Okay. Advertisements are not counting, promotions and trade spends. Okay. That has grown from 3.5% of top line to 4.2% in the current year. That's, that's something that. What has been happening, Richard, is over the last three years or so, 2021 onwards, we have been spending A&SP. We have been coming back to normalcy. We have been pulling it down. 2021 was a, was a very low spend. 2021, 2022, when the, when the second wave of COVID happened, again, we dispatched a little bit. Even sometimes spending are normal, normative levels and sometimes not spending at all. Therefore, you tend to see that growth. It's essentially driven by A&SP spends. This is now going back, Richard, to our normative level. As I said, it will remain in that ballpark of four, 4.2%. You know, you'll see growths and you'll see... Now I think things are much better. COVID's out of the way, and we are back to normal life, so it will stay at about that. All right. Thanks. Thanks. Wish you all the best. Yeah, thanks. Thank you. Next question is from the line of Latika Chopra from JPMorgan. Please go ahead. Hi, thanks for the opportunity. My question was on the market growth. You know, you mentioned that the market growth has increased, and your market shares were increased. If you could, you know, elaborate a little better on, you know, any specific product segments, you know, which are, which have seen a lot more slower growth or lot more competition, or any specific geographies you may want to call out. I also heard you said that this could be a temporary phase. Based on your past experiences, you know, with local competition coming back, you know, what kind of time frame do you anticipate, you know, before, you know, the national players, you know, coming back to the market share front? Ritika, it's also a little bit of a vicious cycle. What happens is that, in every product life cycle, you see phases when the growths or the, you know, what I've heard, even restaurateurs saying that this quarter's been, you know, one of the largest restaurant companies told me that this has been the slowest quarter. In fact, they're running negative, double digit negative, in this quarter. The reason for the same, given to me was that, you know, last year there was a revenge eating happening, and people are normalizing, you know, they're going out, et cetera. I don't think, you know, it's, it's such a severe impact. Yes, there is, there seems to be a cycle. What happens during these times when there is, when, you know, everyone in the category is hitting a wall, what happens is people tend to be desperate, right? In their desperation, the local players especially, they tend to then, you know, be a little irrational in what they do. You've got to just ride out these phases and make sure that your strategic agenda doesn't change, and you do not become tactical, and you also start to do what the local players are doing. We are doing exactly that, yeah. We are trying to make sure that our strategic agenda remains our main agenda. Yes, we will do what is necessary to make sure that we do not lose space to them in the short term, then we will come back with a bang once things have normalized. The slowness that we've seen is basically in the traditional trade markets, more so in rural. While our agenda on rural has been fairly robust and we've been growing our distribution, but we still have seen some amount of slowdown there. We are hoping that, you know, that's a temporary phenomena and things will come back. I don't think it's restricted to only our industry. I think it's a overall situation which nobody's been able to point a finger at what really is driving it. My own hypothesis is that it will slowly and steadily come back. We just have to make sure that we drive our own agenda. Sure. My second question was on CapEx plans for FY 2024. We saw system step up in FY 2023, so just wanted to know what you're thinking about FY 2024. If there's any clarity on FY 2025, CapEx plans also, if you could share. Thank you. It's gonna be a continuation of what we are doing. We've got the factories which are already in process. There's a little bit of investment coming up in Ranjangaon now, which is dairy related. We've got a factory coming up in Bihar, because Bihar, we've been running out of capacity, and that's coming up, and it's coming up with incentives. We've got a little bit of expansion in Orissa. That's about it. We will continue with these projects, and we are not looking at any more capacity expansion till we are able to scale up, you know, our, our volumes and our revenues in the coming quarters. Any number you want to put for FY 2024 CapEx? Yeah, it's gonna be about INR 400 crores, INR 450 crores. All right. Thank you so much. Yeah. Thank you very much. Ladies and gentlemen, we take that as the last question. I now end the conference. Mr. N. Venkataraman for closing comments. Thanks, everyone, for spending time with us on this call today. We look forward to interacting with you again. Thank you very much. On behalf of Britannia Industries, I'm ending and closing this conference. Thank you for joining us. You may now disconnect your lines. Thank you.