Ladies and gentlemen, good day, and welcome to Godrej Consumer Products Limited Q1 FY 2025 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sudhir. Thank you, and over to you, sir. Hi, guys. This is Sudhir here. We had a bit of a tech problem in our office, and our MPLS lines are down, so I'm speaking from my mobile. The tech guys, am I clear and audible? Yes, sir. Please go ahead. You can hear me clearly, right? Yes, sir. Please go ahead. Okay, let me go ahead. Okay, welcome to all. Though they could have been even better, our Q1 2025 results are better than they seem optically. As we laid out in our investor meet in May 2024, our strategy has been to drive volume growth in India and Indonesia through category development, drive EBITDA growth at a consolidated level on the back of improved profits in GAUM and LATAM through simplification. We also spoke about increasing our total addressable market in India. The quarter performance and our announcements are in line with the same. Our organic volume growth in India was 8%, reported 10% on a high base of 10%. Organic revenue growth was 6%, and this will be the last quarter of negative pricing we see. We were able to achieve this despite cutting trade schemes on soaps and an unusually hot summer for household insecticides. EBITDA growth in India was 8% on the back of some sharp and sudden increases in prices. We, however, think we will be able to recover this through the year without changing the quality of our soaps. Indonesia grew volume at 7% on a tough comparator of 12%. Due to currency devaluation in Q1, the rupee revenue growth of 3% and EBITDA growth of 24% hit a much stronger constant currency revenue growth of 11% and EBITDA growth of 32%. We are hopeful that with the relaunch of Goodknight Liquid V aporizer, India volumes grow slightly faster than Q1 through the year and Indonesia sustains. GAUM had an extremely poor quarter in terms of revenue and grew organic volumes at -21% and organic revenue at -25%. This was due to extreme currency volatility, the shipping crisis, some tough calls on pricing, and a one-time distributor base in Nigeria. Given the high interest rate scenario in many African markets, we may continue to reduce the trade stocks in the next 1-2 quarters, and hence, GAUM volume growth may be under pressure, but this is neither having a material impact on OpEx nor on profits. Despite this drop in revenue in Q1, our EBITDA grew at 19%, taking our GAUM EBITDA margins to 14% for the second quarter in a row. In LATAM, the story was similar to poor top-line growth, but high bottom-line growth. In fact, when compared with Q1 2024, the revenue salience of GAUM plus LATAM has fallen from 29% to 21%, while the profit salience has actually inched marginally from 11% to 12%. This led to a consolidated performance of -3% revenue, 9% in constant currency, flat UVG, 13% EBITDA. And this is, when we talk EBITDA, we always talk EBITDA plus Forex, and 14% PAT before exceptions. Our organic growth was -1% revenue, 11% constant currency, and 2% UVG. Our journey to increase TAM in India is also going well. Laundry liquids is growing exponentially as is sexual wellness. In both, we are seeing strong market share gains. Our into body wash has started well. On Deodorants, we remain positive on our business case in the medium to short term. However, living the principle of tomorrow before today, we took multiple simplification actions, thereby risking 10%-15% of revenue. Hence, optically, while growth may look a little flat, there is good underlying momentum. We have seen sharp share gains in modern trade, commerce, and rural, but have lost some share in urban general trade. In hindsight, it was a mistake to have integrated the urban GT distribution, and hence we are reverting to a more focused channel in urban GT for this category, which will also help us in some of our existing products and future innovations. As a consequence, we may be slightly behind the profit targets we had set on Raymond acquisition for FY 2025, but it will be significantly higher than the margins we inherited. We are today announcing the formation of Godrej Pet Care, a subsidiary of GCPL. Pet Foods is already a INR 500 crore category, with many decades of late teen growth ahead. To give a perspective, only approximately 10% of Indians own a pet, of which only 10% feed packaged foods, and that too, only 40% of the time. Calorie conversion in India is only 4%, which is remarkably similar to India 15 years ago, has 20% pet ownership today and a calorie conversion of 25%. While the opportunity is clear, we believe that our right to win as a group is high. GAVL, our group company, is the market leader in animal feeds and has a good understanding of pet foods, R&D, and competitive advantage in supply chain. GCPL will invest the entire capital of INR 500 crore in Godrej Pet Care over a period of five years post which we hope to see GPC becoming cash positive. GAVL will be our manufacturing and R&D partner. Lead time to set up CapEx is long, and we hope to commence manufacturing in the second half of next year. We have appointed Mr. Nitin Jain as COO for the business. Nitin joined us from Mars, and he has extensive experience in pet care. We will shortly announce the appointment of a CEO as well for this company. Thank you very much, and look forward to hearing your questions. Thank you very much. We will now begin the question- and- answer session. Anyone who wishes to ask a question may press star and one on their touch-tone phone. 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. Our first question is from the line of Abneesh Roy from Nuvama Institutional Equities. Please go ahead. Yeah, thanks. I have three questions. My first question is on pet food. So here specific questions are, what are the reasons for entering this? Second is, GAVL, you said has good understanding of pet food, so could you elaborate, what exactly they have done in pet food, till now? And, this category, if you see, has a different distribution than, any, other FMCG, plus does have a very strong one large MNC, and, Nestlé has also entered few years back. So what will be our right to win here, given our distribution, our understanding of this space? Till now is not there. Thanks, Abneesh. I think, let me answer the three questions one by one. The reasons for entering the pet care space, I think the opportunity is large. I think all of us know that it's already a large category, growing fast, and will become very large. So I think and it's a globally, a reasonably good high margin category, so I think the size to win is reasonably large. I think in terms of our right to win, it's still early days in the business. It's currently a two-player game. Typically, we can, we can perhaps see a few more players still being able to create value here. We, ourselves, as GCPL, have good consumer understanding, good marketing understanding, good distribution in some channels where pet care, e-commerce and a little bit of modern trade, but mainly e-commerce. We have to build distribution in specialty pet stores, but we broadly understand the principles of FMCG marketing and distribution and consumer understanding. GAVL has two advantages. One is the animal feed business and the fish feed business have similar manufacturing technologies to what is required in pet food. Secondly, the raw materials for pet care, which is chicken, corn, et cetera, these are raw materials that GAVL is one of the largest buyers in India of, and they have a good understanding of the cost and commodity. So I think from a supply chain point of view, GAVL understands it well. From a marketing and sales point of view, we have the ability to understand it well. About half the category is in specialty pet stores, which are few in number, will grow rapidly in the future, and we will have to build distribution there. The rest of it, we already have a distribution presence. Sure. My second question will be on the Raymond business. So you briefly alluded to the urban GT slight change in distribution, which I think you are planning, and there has been some market share loss. If you could elaborate, why did you choose to do what you did, and what is the change now, which will happen? And you also mentioned that there was obviously some portfolio rationalization. Would you need to bring back some part of that portfolio back in the urban GT? When you mentioned slightly behind profit expectation, could you again tell us FY 2025, 2026, what kind of sales growth and what kind of EBITDA growth or EBITDA margin will be possible, given these changes which you'll now do in terms of urban GT or maybe some other change in the portfolio? Yeah. So I think, you know, this merger, we did a couple of things. We merged largely the systems with GCPL system, except for condoms, where we built a separate OTC system and we put some of our GCPL products onto it. I think firstly, the condom. And that has worked. In the rest of business- Sorry to interrupt, sir. We had just lost your audio for a second over there. Okay. I was saying that when we did the merger, we merged the, we kept the OTC system, which was the chemist distribution channel, separate for condoms, and that's worked quite well for us. What we did was we merged the entire GCPL system and RCCL system across channels. It worked for us in modern trade and e-commerce, where we've gained share. So for example, in the two top modern trade channels, stores, we have gained close to 1,000 basis points of share. In rural, we have gained market share, but in urban, what happened is that the footprint was actually pretty similar to our footprint, and there are specific cosmetic stores that do a lot of deodorant sales, where the task is more selling than distribution. So our realization is that in urban cosmetics, we need a more specialized selling channel, and we have started rolling that back. So that, that's the reason that we're doing it, and, and that's what we did. Our original. See, when we inherited this system, it was roughly INR 60 crore EBITDA business. We wanted to do EBITDA accretive by the end of this year, which is about INR 160 crores. We may do anywhere between 15%-20% short of that. Maybe we may do 15% short of INR 160 crores, is what we may end up doing. So significantly ahead of the EBITDA that we inherited, a little behind what we wanted to do. So last quick question on the HI business. So HIT Spray Matic looks very interesting. So here, the molecule again will be the same, RNF, and, given this is the industry first, is there any other market globally, where this is, successful? No, so I think there are two questions here. We moved the molecule over a period of time. We have not yet moved it to the RNF molecule. We've not yet got clearance for it. So right now we're using the older molecules, which are higher dosage than the regular things. So it is the, it doesn't contain the new molecule yet. And when we migrate HIT, and maybe a few months later, we migrate Matic as well. So it's part of the journey, but it's the old molecule. No, we don't know of any market where the HIT Matic product is big as things stand today. We, however, do think, and it's, you know, in e-commerce, we've launched it, and Amazon did there, and we've been quite pleased with the results that we've gotten it. Sure. Thanks. That's all from my end. Thank you. Thank you. The next question is from the line of Aditya Soman, from CLSA. Please go ahead. Hi, good afternoon, and thanks for the opportunity. So two questions. Firstly, on the Africa EBITDA that you said has improved, does this include the amount that we received from the entity that we sort of franchised out? That's one. And if you were to exclude that from the EBITDA, then what would be sort of the underlying EBITDA of the businesses that we retain? And secondly, on GAVL, when we've done this pet food launch, how would the transactions with GAVL work, I mean, in terms of transfer pricing or will there be a JV with GAVL? I didn't get that clearly. And lastly, on deodorant, just to clarify, how much would be the proportion of urban GT as a proportion of overall deodorant sales? Yeah. Okay. Three questions. Firstly, the amount that we have received from EBITDA, from the entity where we are getting royalty, is very minor in Q1. We only consummated the transaction towards the end of Q4, and it's... I don't know the exact amount, but it's almost nothing. So I don't think it makes any difference to the EBITDA in Africa. EBITDA in Africa has done well, mainly because of cost cutting, right pricing, right shaping the portfolio, et cetera. That's been the driver of the EBITDA. And when we talk EBITDA, is, you know, just to clarify, we're always referring to EBITDA plus Forex, which we've always done in the past. So actually, in a way, you know, 21% decline is a painful, but in the context of the role of Africa, 20% profit growth despite a 20% decline in revenue is actually a good thing. Getting to mid-teens margins is a pretty good thing in Africa. Coming to the question on pet care, with GAVL, we don't have a joint venture. GAVL will be an exclusive supplier. So we have a transfer pricing agreement along with a small management fee to GAVL, which will be a supplier to us, pretty much like anybody else, but an exclusive supplier. So question three on urban GT. Urban GT is about 30%-35% of the business, so it's not a huge part, but it's still a large part. Very clear. Thank you very much. Thank you. The next question is from the line of Percy from IIFL. Please go ahead. Hi. Just wanted to understand this Africa performance. Even after removing the areas that you've franchised out, even after that, on organic basis, the performance is down. So I understand you mentioned this is a pipeline correction. Just wanted to understand again, is this mainly in dry hair or is it in the wet hair products? And if so, which are the main geographies where this is? And is it just a normal pipeline correction that the pipeline was too bloated, or are you changing something in the distribution system due to which this is required? Percy, there's a combination of several reasons. In South Africa, we were hit a little bit by the Red Sea crisis and the shipping crisis, and, you know, the volumes are coming back in July. In Nigeria, it's a combination of two things. One is, last year in the same quarter, we had appointed a national distributor, so we had given some primary stocks there. But more important than that, for the first time in Nigeria, we saw currency appreciation. Normally, we have been seeing currency devaluation in Nigeria. So when currency depreciates, trade tends to stock up, because for them, stocks are like currency, because prices are constantly going up. They like to sit on 60-70 days of stock. What we saw in Nigeria in the previous quarter was wild swinging of the currency. It went from NGN 1,200 to NGN 1,800, then came back to NGN 1,200. So for the first time, the currency actually appreciated to the dollar, and then it settled down at about NGN 1,500-NGN 1,600. So in an appreciating currency, nobody likes to keep stock because prices will fall and then their stock is not worth much. So what we saw was massive downstocking of retailers in Nigeria. We, we don't think it has affected offtakes or market share, so we think both these are temporary. We also used this opportunity partly to correct our portfolio, to sort of reduce low-margin SKUs, to take up some prices, to first get the health of the business in shape. You know, our objective was to get this business to 15% EBITDA margin, and we're sitting at 14% this quarter, so we're quite happy with that. We don't think there's any offtake loss, and as a consequence of all this, things will recover and we'll anyway be a substantially more profitable business than we were last year in Africa. So this pipeline correction, do you think that pipeline will build back, or this is a permanent correction? It may or may not build back. It depends on how much the currency depreciates, because, you know, the currency continues to depreciate in Nigeria, and it doesn't seem to be-- It seems to be moving towards stability, then trade will stock up. If it doesn't, and it remains stable, you know, what they were sitting on was too high, maybe it will go up a little bit. But I would say these are all on the margins, Percy. I'm saying offtakes are what they are. The hit has been taken in this quarter, and there might be a little bit more hits in the future quarters in terms of revenue and UVG, but I'm reasonably certain it will be profit accretive or profit positive. And Percy, if I may add just an additional piece, you see the interest rates in West Africa also have significantly increased. As we speak, in Nigeria, interest rates are anything between 27%-30%. In Ghana, they are 30%+, and some bit of the cost of borrowing for trade is higher. So, it's in everybody's interest to run a more efficient operation with lower stocks as long as offtakes are not impacted. Understood. Coming to the Indonesia business, you, it was at one point of time struggling, and then FY 2024 has been quite good. Margins, top line, everything has recovered. Can you give some idea on what is happening here in terms of the different segments that you have? Which of them, I believe, HIT last year did very well. So do you think it can continue to sort of grow at a high pace and therefore pull up the overall business? Because I believe last year HIT growth was significantly ahead of the rest of the business in Indonesia. And in fact, I don't know if I'm deriving this correctly, but excluding HIT, the rest of the business did not really grow much. What's the prognosis there for the future quarters or future years in Indonesia? Firstly, you know, Indonesia, as I said, grew 7% volume on a 12% base, anywhere between 6%-8%, we'd be quite happy with Indonesia in terms of volume growth. Margins have to inch up. They've gone up, you know, we've grown EBITDA. Even in rupee terms, we've gone up by 24%, in local currency, rupiah, by 32%. So our strategy in Indonesia is to be in this kind of high single digit range and to take our EBITDA margins closer to 25, from the roughly 20 that they are right now. I think this year the growth will be more broad-based. Last year, it was only HIT. This year, Stella, which is the other big part of the portfolio, has also done very well. So unlike last year, this year, I think both HIT and Stella. In fact, Stella may grow slightly faster because we've got big businesses and a host of small businesses, so it appears to be more broad-based growth, Indonesia, this year. One quick question on your innovation rate, however you define it, what is the contribution of new products? And also let me know what your definition of that is. We have a technical definition, which is launched in the last three years in incremental turnover. I don't know the exact number, but we launched in the last one year three or four big innovations. We launched Incense Stick, which is doing extremely well, especially towards the end of Q2. Beginning of Q2 was a bit hot. We launched Laundry Liquid, which is also doing very well. And the third thing that we've launched in the last one year was Aer O, which is our car air freshener, which you will see all over cars. That's also doing well. So we've got three blockbusters that we've launched in the last year. We've launched two new innovations this year. One is, as we speak, in this quarter. One was Cinthol Body Wash, and you know, it's a strategic play to upgrade soaps to body wash, and this is our second entry here into body wash after Magic, which didn't do so well. That again, we launched it in Tamil Nadu and in e-commerce. Early signs are good. And we launched HIT Matic, which is the automatic HIT spray, which also the early response in e-commerce has been good. So I would say in the last two months, three big innovations. You know, we're also moving to fewer innovations, so we do only one or two innovations a quarter, a few a year. But last year, I would say all these three have been big hits for us. Okay. Okay. Thank you very much. Of course, you know, 8% volume growth in the context of a hot summer with household insecticides is not easy to drive without these innovations. Sure. Sure. Thank you. Thank you. The next question is from the line of Harit Kapoor from Investec. Please go ahead. Yeah, good evening. I just have three questions. One was on the pricing. So if you look at this, this quarter, the India pricing is close to negative 2%. You know, while you did mention that it's the last quarter of price deflation, how do we see pricing going forward over the next three quarters in India? You know, do we come back to pricing growth? And if yes, what's that kind of ballpark? That's my first question. So the answer is, from this quarter onwards, we should get pricing now sequentially. By the end of the year, it'll be a couple of percent. So if we end up with high single-digit volume growth for the full year, I expect to be at, low double-digit volume growth is what I expect, and I hope for. So we will get a couple of%. By Q4, it may be quite significant also, but overall, for the weighted average for the year, maybe 2%-3%. Got it. Got it. And, and this would largely be soap or across categories? The large delta is on soaps. The rest of it, you know, even last year we got some pricing growth, so the delta will be on soaps. Got it. Second question was on the LV launch. So, if you could just give us an update of, you know, how far ahead are we on having put it in the markets now? And also, is there any kind of impact that we see when we put out a new, you know, LV in and, you know, we have to phase out the old one? You know, how do those dynamics work with, you know, between quarters? So, you know, that we've just launched it on July first, and we're just launching it across the country. Honestly, the real results of the LV will be known only five to six months from now, because, you know, these things in India take time, because there is old LV in the market that gets moved, then this moves in, then consumers try it, then they see a material difference, they tell their neighbors, or they see the advertising and then buy it. So if we're lucky, four months, if we're not, six to seven months is when we hope we start seeing results here. There's no problem on phasing in and phasing out because it's a replacement. LV, which is a liquid, is the same. The machine also is functionally the same, aesthetically different. There is no problem of phasing in and phasing out. Got it. Got it. And last question is on India margins. You know, this quarter it's been in, you know, similar range as last year. We do have a big kicker from the Raymond piece where even though you'll be below 15%-20% below your numbers at an absolute basis will be more than doubling EBITDA. So, you know, optically, EBITDA margin also, that kicker is there. How do we think about it for the balance part of the year? Is the non-Raymond business we expect to be in similar range as last year or will pricing give us some benefits, et cetera? See, see, you know, without getting into exact, roughly we should be, you know, in, EBITDA. That's what we've roughly done this quarter, and that's what I think we will do in, future quarters. Remember, the Raymond, while is giving us a delta EBITDA, it comes in at a lower EBITDA than average. Sure. So, I would say that, you know, holding on roughly to the, I mean, every quarter in which you do have a bit less and more, but roughly holding on to these EBITDA is doable. There is a bit of a headwind in terms of palm oil prices, which are not unusually high, but they are higher than what they were last year. It gives us some opportunity in terms of pricing, but it is probably still a bit higher than what, so you know, that's the headwind. We have the cost saving, et cetera, et cetera. So, I would say that no major change in EBITDA from where we are right now. And, I hope we pick up a slightly better volume growth than 8%, is what I hope for the next few quarters, but slightly better. Got it. Wish, wish you all the best to achieve that. Thank you. Thank you. Thank you. The next question is from the line of Vishal Gutka, from HDFC Securities. Please go ahead. Yeah, hi, team. My question on liquid detergent. So one of your competitors has launched, at a significantly lower price, I think, INR 1 per liter. Do you think there is a scope for you to rationalize the prices further to drive conversion, or are you okay with current numbers? And secondly, if you can give me color or comment on the other two brands, Genteel and Ezee, how are they performing in the overall liquid detergent portfolio? Yeah. I mean, we have now three brands in liquid. Actually, we're doing very well in liquid detergent. We have three brands, Ezee, Genteel, and Fab. Giving a specialist wash, and it has limited growth because it's mainly used for women in the north during winter. So Q1 also is not a particularly big quarter for Ezee. The other two have their own role to play. Genteel is positioned on gentle on clothes. Fab is positioned on whiteness, a bit of a value brand. So I think the size of prize there is enormous. I mean, it is genuinely an enormous size of prize from an HPC. So, I mean, what others do is of less relevance and what's important is the kind of growth that liquid detergent is seeing and participating. Over a period of time, we'll figure out how to make respectable margins on this. So I think it's an exciting entry for us. Right now, our objective to build these two brands in consumers' minds and to rapidly get some shares there and get some volumes. So I would say an exciting journey ahead in laundry liquids. Great. Great. One more question on the soap side. So recently, HUL has reformulated or they have come out with a revised formulation in the soap business. So how do you view that development? Do you think that you also need to change your proposition or formulation, or it is too early to comment upon? It's not easy to comment on what a competitor does, but let me sort of reiterate our position on soap formulation, which has been the same for the last two decades. You know, the position that we have on soaps formulation has yielded very, very rich results for us in terms of market share. The BIS, the Bureau of Indian Standards, defines soap based on quality of soap based on total fatty matter or TFM. So it says 76% TFM is grade one, 70 is grade two, 60 is grade three, and 40 is baby bar. We broadly concur with the government's view on quality of soap. So we broadly believe that TFM is an absolutely important and essential component in quality and the margins, you know, one can argue a little here, there are new technologies, but they're all margins. Before, we have for the last 10 years, we have been giving great value to you once. We have done this despite extremely high commodity prices, we have not touched the quality of the soap, and we will not do that in the future either. Got it. Got it. Great. Wishing you all the best for future quarters. Thank you. Thank you. Yes. Thank you. The next question is from the line of Karthik Chellappa from Indus Capital Advisors. Please go ahead. Yeah, hi. Thank you for the opportunity. I have two questions. The first- Sorry, Karthik, sir, you're sounding a lot muffled, so if you can bring the speakerphone. But I'm able to hear him. Don't worry, I'm able to hear him. Okay. Is this any better? It doesn't matter. Go ahead, I can follow what you're saying. Okay, sure. My first question is on Indonesia. What we hear from on the ground is, there have been a kind of like a soft boycott of MNC brands, in view of the geopolitical situation there. So from a competitive landscape point of view, are your competitors predominantly MNCs or are they local companies? And are you benefiting from this trend of a soft boycott in any of your categories? And, just related to that, from a portfolio point of view, what percentage of your volumes or revenue will be hit? Oh, sorry, what percentage of our revenue and volumes will be hit in Indonesia? Yes. Yeah. I think HIT in Indonesia, maybe roughly 30%-35% of our portfolio off the top of my head, but it's in that ballpark. In terms of the, you know, there is a story. I had heard it a few months ago; it was stronger than what it is today. It keeps growing. Our competitors are both Japanese and American. I mean, I can't really. But they're not necessarily well-known as those. I can't necessarily say in the two relatively narrow sectors that we operate, this seems to be a big driver of choice in market right now. It doesn't appear to be in any case. Okay. The reason why I asked that question is, if I look at your category-wise volume growth in Indonesia, basically, like, Stella has grown double-digit, and your hair colors have also grown double-digit, but it's only HIT which has grown single-digit. But if it's only one-third of your portfolio, shouldn't the organic volume growth in Indonesia be higher? See, we have in Indonesia, a tail of brands which are B2B brands and very, very small brands, which are about 20%, 15%-20% of our portfolio. Those are generally in decline, which we don't report to you guys. So we've got a brand called Carrera, which is a car wash and a long tail of brands. So I suspect that the reason that, your math is not working out is that we've got a portfolio much more than those three categories. Individually small, but collectively reasonable size, and doing. I mean, and structurally doing badly. I mean, they're not focused categories either for us. Okay. My last question is, you've remarked that the Agarbatti is scaling up well and gaining market share from the illegal incense sticks. Is this across states that you have launched in, or is this, like, very specific to some states where it is doing better than others? Or how broadly is this market again? Yeah. See, we launched our incense sticks in the end of Q4, and by the end of Q4, in the south, the season had gone over, so it really sold only largely in the east and north. Then, you know, over in Q1, generally in April and May and half of June, this category just doesn't sell, I mean, especially at the bottom of the pyramid. Then, you know, in second half of June and July, it picks up. But what we are seeing is, we are seeing broadly incense sticks on or better than our plan that we had set for the year. Like we're seeing, laundry we're seeing significantly better, incense sticks we're seeing better than the plan we had set for the year, is what our view is. It is broadly doing well across. In some ups and downs in large incense stick geographies, it's doing better. In slightly smaller incense stick geographies, it's doing slightly less. But there is no immediate pattern of performance across the country, which we can tell you. Okay. Okay, this is clear. Thank you very much, and wish you and the team all the very best for the remaining quarters. Thank you. Thank you. A reminder to all the participants, if you wish to register for questions, please press star and one on your touch-tone phone. Our next question is from the line of Jay Doshi from Kotak. Please go ahead. Yeah, hi. Thanks for the opportunity. Now, if I actually exclude RCC, then it looks like your India business margins have, you know, declined by about 250 basis points YoY EBITDA margin. I just want to understand what is driving this, and also your earlier comment that margins will be around these levels. So if you could sort of, you know, clarify what do you mean, you know, when you mentioned that margin will be around these levels for India business? I mean, look, we got a sharp increase in palm oil prices as the quarter was turning, and it's taken us a month or two to respond in terms of prices. So I would say we lost a little bit of margins on soaps in the quarter, but the cost increases on palm are not high enough for it to be worrying for the full year. Understood. Then to add on, you know, I mean, I think the math we can kind of offline pick up, but it's not in sync with what you are mentioning. So, there has been a mild kind of impact on margins, but nowhere close to what you are referring to. Okay, maybe my assumption for RCC this year could be on the higher side. Understood. I'll take it offline. RCC, last year, was acquired through the quarter, so there was only a particular volume in the base. So I mean, that impact in terms of base was also not as much. But we can take it offline. Understood. Aasif, maybe you can tell him, but what, so, yeah. Okay. Yeah. Maybe you can take it offline. Sure. Second is, if you could, you know, what is the, what will be the positioning of, you know, your brand in terms of price point perspective versus the existing brands in pet foods space? I think it's too premature to say that. I think what is adequate to say is that it's a large market opportunity, and we are not the kind of company to play at just the top of the pyramid or something small. If you play, we want to play pretty much the belly of the market. What exactly the positioning and prices, we'll figure out with time. Understood. Thank you. That's it from my side. Thank you. The next question is from the line of Aditya Gupta from Tara Capital Partners. Please go ahead. Hi, good evening. A couple of questions on the pet food business. Sorry if you've answered it earlier. So the agreement with Godrej Agrovet, I mean, will you be buying finished goods from there and distributing and marketing it? Or will work in progress come from there and some of the CapEx has to be done on your part. I'm guessing you will own the brand. So if you could share some additional color on what the agreement exactly is, and what would you be buying from Agrovet? Yeah, no, we will share something, but we will be, we, Godrej Agrovet CapEx is underwriting. We will try to be good to come to the table, be a transfer pricing and a return on capital invested for them, not a small business to see. And that is how we operate. So we will, as a company, really be involved in sales and marketing, and Godrej Agrovet will be involved in manufacturing and R&D. Got it. So this INR 500 crore is more, operating expense, capital infusion that you have to do over a five-year, not- I think there's a lot of work to be done. I think what also excited about the category is that there's huge category development opportunity. We've seen over the last few years, we've developed massive category development, and we feel this is a category that can benefit with category development. So that INR 500 crore is not for CapEx. It's mainly for OpEx and marketing and sales investments. Got it. And last question on this: how is the margin structure of that industry? Because if you're gonna make marketing margins on that, would you be able to make 20-odd% margin like your India business, in that category? Or the growth is too high, and even if it's slightly lower margin, that works for you? See, globally, what we've realized is that the category seems to be 40%-50% gross margin and anywhere between 16%-25% EBITDA. This is so, so it doesn't seem to be on average as high a margin as HPC businesses are. But I would say that, you know, it has to justify itself on its own return on capital invested, and, and, and we just see, like, laundry, a really massive, huge opportunity ahead. And as a group, we are also thinking long term. You know, it's not about two or three years, it's about what happens in a decade or two decades. So in a decade or two decades, already this category, foods itself is likely to be INR 5,000 crore or in the vicinity of. It's growing. Last decade it's grown at 20%, so it's likely to continue in the mid- to late teens going forward. So, I think penetrations are really low right now. I mean, dog penetration is low, packaged food penetration is low. So there's a multiplier effect. One of the exciting categories like hair care, the penetration is low of the pet food, and consumption within those who are penetrated is also low. So you have three vectors of growth, and I think there's scope for a lot of people to grow and make reasonable money. I doubt this will be in the 25%-30% EBITDA, which is where GCPL is. Got it. So basically, you're saying that 15%-25% range is gonna be split up between you guys and Agrovet. Short, short term, I guess EBITDA is not very important for us. Short term, it's important for us to get volume, gross margin. We'll see with EBITDA with time. No, that's fair, that's fair, and obviously to, to grow a category, you need to invest. But on a sustainable, let's say, 10-year out basis, that 15%-25% range will also be split between Agrovet and you guys, right? If that's, that's the right way to think of it. No, no, no, that, that won't, because we are 100% owner of the pet care business, and. Okay. Agrovet is operating on a return on capital invested. Okay. Majority of the value creation will remain with GCPL here. Majority of the margin is not, it's not a joint venture. Got it. Share the margin. Yeah, you should keep Agrovet in this as a co-manufacturer, with all the risk and returns being in a subsidiary of GCPL. Got it. Perfectly clear. Thank you for answering the questions. Have a good day. Thank you. A reminder to participants, if you wish to ask questions, please press star and one on your touch-tone phone. Participants, you may press star and one to ask a question. If there are no further questions, shall we wind down? Sure. As there are no further questions from the participants, I now hand the conference over to the management for closing comments. So that's all from the Godrej Consumer Products senior management. Thank you for attending the conference. Thank you. Thank you. On behalf of Godrej Consumer Products Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.