Good day, and welcome to Q3 and Nine-Month FY 2024 Earnings Conference Call of Honasa Consumer Limited, hosted by JM Financial Institutional Securities Limited. As a reminder, all participant lines will be in a listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Mehul Desai from JM Financial Institutional Securities. Thank you, and over to you. Thank you. Good evening, everyone. On behalf of JM Financial Institutional Securities, I would like to welcome you all for Q3 FY 2024 earnings call of Honasa Consumer Limited. From the management side, we have Mr. Varun Alagh, Co-founder, Chairman, and CEO of the company; Ghazal Alagh, Co-founder and Chief Innovation Officer; and Raman Preet Sohi, Chief Financial Officer. I would like to hand over the call to the management for its opening remarks, and then we can start the Q&A session. Over to you, sir. Hi. Hello, everyone. A very good evening to all of you. Thank you so much for joining the call. I think I'm gonna briefly share an update on our quarterly performance, and we will then open it up for your questions. Overall, as a company, we have continued our growth momentum with a 28% year-on-year revenue growth. Especially in this environment, this is something that we believe is significantly disproportionate compared to the industry. Like for like, if you look at our product business, we've grown by 31%. Our operating performance also continues to be robust, and we've delivered an EBITDA of 7.1%, which is almost 400 basis points up year-on-year. Our nine-month EBITDA has also crossed INR 100 crore in terms of the nine months to date. In terms of PAT, again, in line with what we have been sort of, you know, talking about, so INR 80 crore in this quarter, and for the nine months, it's INR 48 crore. The business continues to be capital efficient, and we have continued to be a negative working capital cycle operation, minus six days of working capital. All of this has been possible because of our focus on our 3 strong core levers. First, of course, we purpose-based brand building. Mamaearth continues to get consumer love. Over the last two years, Mamaearth, in the two main categories of, you know, for Mamaearth, which is face washes and shampoos, we have gained strong household penetration by 280 basis points in face washes and 110 basis points in shampoos. This is urban plus rural, measured by generators. Mamaearth has also shown very strong versatility by entering and making a dent in a new category, color cosmetics, where we had entered close to about one and a half years back. And in that period, we've actually reached ARR of INR 150 crores in just the color cosmetics business. Just in quarter three, we have sold 1,000,000 units. This not only demonstrates versatility of the brand, but also demonstrates company's ability to build new categories which require, you know, newer capability building, R&D intervention, et cetera. I think we're happy, we've been able to achieve this feat. We continue to scale our younger brands strongly. And, in fact, the great news is that our second brand, The Derma Co., you know, has actually become EBITDA profitable now at a nine-month level. The brand continues to be EBITDA positive. And that just gives us a lot more confidence as we grow, and that our playbooks from brand building and as these brands scale, they will start contributing to the top lines of the company as well, and the investment allocation strategy that we have is really paying off. Of course, the third, and very important sort of, you know, and very important lever has been innovation. We take pride in our ability to innovate and our ability to use data science to trends in capturing what the consumers are looking for. We've launched almost 122 products in this calendar year. An example of our innovation, data-led innovation approach has been our Rosemary Hair Care range, where, you know, we, we recognized the trend, you know, before the start of this year. We launched the range towards Q3, you know, before the hair fall enhancement season. Actually, in just six months, we've been able to take it to INR 50 crore+ ARR. And that sort of, you know, gives us a lot of joy. We, of course, continued to strengthen and expand our omni-channel distribution. In the offline space, so basis Nielsen now, we are present in about 1.7 lakh outlets, which is an increase of 37% year-on-year. In modern trade, we are present in almost 8,000+ stores now across India. And we also opened up 100 EBO stores, which not only helps drive imagery but also helps us drive our range execution in the physical world. So the three levering levers of building brands, providing innovative products, and driving distribution have been fundamental to delivering the growth plans year-on-year. And we've done this, keeping our philosophy in mind, and all our plans around, you know, planting more trees, providing more safe drinking water, recycling more plastic, and we continue to add to those feats. And we in fact very soon will come with our celebratory this year in terms of the impact that some of these plans are making. And we continue to strongly focus on, you know, governance and with our strong internal and external audit partners. We take pride in the fact that we have a diverse organization, which reflects in the, you know, employees, you know. And we were also recognized as a great place to work here and now, and with our focus on engaging our employees in the right way and providing them the right development and learning opportunities. So that's basically, you know, the highlights of what we want to capture in our quarterly results. Would love to answer questions that you might have. Thank you so much. 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 your touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to only use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We have our first question from the line of Vivek M. from Jefferies. Please go ahead. Hi, good evening, Varun and team. A few questions. First, and in fact, a request, to Varun and Raman. If presentation can include, you know, a bit more data, on, you know, let's say, online, offline, a bit more data on, let's say, the brands, this will be really helpful to analyze the performance, if you can take the suggestion on board. Definitely, we will, we will evaluate that. Sure. Now, coming to the, you know, to the questions. First is online, offline. Can you just, you know, give some insights into how the quarter had been for both the channels? I think both the- I'm sorry, sir, you're not audible. The quarter has been good and online... Sorry, can you hear me, Vivek, and everyone else? We can hear you now, sir. Please go ahead. Got it. Yeah, so to answer the question, one, both the channels have grown well. But online has grown stronger, faster than offline for the company. In terms of brands, younger brands have grown strongly in the online space, right? While growth for Mamaearth continues to be driven from the offline space. So that's how the status. Okay. And in terms of, in terms of growth rates for the key brands, Varun? So, from our growth rates on key brands and, our younger brands, of course, are have a lower base and are, growing much more strong, and, which we talked about last time as well. And but Mamaearth also continues to lead the pack from a perspective of, larger brands, and, it is, in double digit value and, in mid-teens volume growth. Perfect. Second, because you know, you are still a very young company from a market perspective, sequentially, how is the seasonality? So if I look at, you know, this quarter, there is a, there is a quarter-on-quarter decline, but base also there is a, there is a quarter-on-quarter decline. Does that mean the second quarter is bigger than the third quarter? I would have imagined, given the, you know- Yes, it does mean. Sure. Please. Yes, actually, we, we do have some bit of seasonality in the business, and, because our largest categories continue to be face wash, sunscreens and, followed by shampoo. And, you know, in order of seasonality, sunscreens show the highest seasonality, followed by face wash, followed by shampoo. And which is why usually, half one is where, you know, for us, the seasonality is higher compared to, half two, where winter sort of kicks in. And, and this time the, winter hopefully itself also wasn't as, you know, exciting in terms of the winter demand. The winter was delayed and, and some of that is, but, in general, and given, the contribution of our categories, we do have some seasonality. Got it. A couple of more refinement- Best to look at it from a year-over-year perspective. Okay. A couple of more refinement. One is the gross margins, which have, you know, contracted both on a YoY and QoQ basis. Can you just give insights other than channel mix, is there anything else, and where should this settle at in the foreseeable future? Actually, like, channel mix is, is not the whole reason, Vivek. Good you asked this question, give this chance to clarify. So, the gross margin contraction is more... So, for example, there are two reasons. One, at a YTD level, if you see, we have the impact of Momspresso, and... Which used to be because it was largely a people-oriented business, and high OpEx with little, high gross margin as well. And so that is there in the base. And, that's if you remove the impact of it, and from a nine-month perspective, there is only about 15 basis points different in gross margin. And even there, and one of the things which is specifically happened in this quarter, which we will, of course, learn and be better at as we move on. Is that we were taking provisions for our, you know, our, our, you know, expiry, et cetera, in every quarter. And, we chose to do the destruction of the chain for the last three quarters in this quarter itself. Because of which, all of that sort of came into just this quarter, which should have ideally been divided into the last three quarters. And so this quarter is a little more depressed because of that. And, so I think if you look at the YTD levels, and that's really the gross margin level, and, which we are at, and that is what you should expect from us as we move forward. Okay, got it. And, Varun, I've noticed, you know, on the volume growth side, so let's say Mamaearth has, let's say, 200 ml of shampoo bottle and let's say, 3.5-4 gram of lipstick. When you, you know, report volume growth, does that mean that, you know, one shampoo bottle is same as, one lipstick, for example? Because your volume growth says that it is on the number of packs. Yes, you're absolutely right. And we treat volume growth as transactions growth, right, which is the number of units. And because in the beauty and personal care business, like you've absolutely rightly pointed, not even 3 gram, 2.5-gram lipstick can be more expensive than a 250 ml, you know, shampoo. And hence, units is not the right way to measure and add them all up, especially if you're building CAGR and other aspects of the business. And so we see transactions growth as the right, you know, measure of volumes. And there we've actually grown faster than our... Interesting. Got it. And last question, Varun, since we have the opportunity to hear it from you directly. There have been obviously investor concerns around this issue of inventories, you know, in the channel, et cetera, et cetera. And I'm sure you know investor analysts will reach out to you. But can you just you know give your views as to, you know, on the distribution side, how comfortable things are on the ground and whatever the reports, you know, can you give any clarification on that would be useful? That's the last one. Sure. So Vivek, I think to sort of, you know, talk about it, I will need to set some context for everyone out there. So we started operating in this channel about 3.5 years ago, and when we started going offline, especially GT. And you know, when you're building a new business in GT, you're really going to partners with no ongoing business. And that led to the kind of partners that we were able to attract at that point of time, and was not the best quality partners. And the second thing that, of course, happened was when we were doing that, we were largely an online company, and hence, our distribution center was largely one mother warehouse from which we were operating. To service the general trade distribution system, you need far more number of distribution points, right? Which we could not sort of, you know, just open up, you know, lightly. Hence, what we did was we went into a super stockist model, whereby we appointed super stockists as bulk breakers, and who would then service the distributors. They also solved the problem of supplying to smaller, you know, lower quality, sort of, you know, let's say, distribution partners who might have had credits. That said, over time, and as our business has increased, you know, that layer has led to significant, you know, sort of, you know, relatively higher inventory compared to others, you know, FMCGs that we operate, because they are really our inventory bulk breakers. And the contribution of that also increased. And of course, there is a cost associated with it. We pay 5% extra to a super stockist to sort of, you know, manage this. As we speak, I think we are undergoing that transition, where, you know, one, we want to improve the quality of our distributors, right? Given this is a channel for growth class, right, and hence there is financial infusion which will be required by our partners, right? As well as they need to have stronger capabilities on deploying the technology products that we want to deploy for significantly better visibility of assortment, sales, et cetera. Now that whole attempt of changing and running some of this did cause some pain, whereby certain associations did raise concerns. You know, we are actively addressing and working with the system. That said, we believe it's structurally the right thing to do, and which is finding the right partners over time and actually deploying them with better manpower, capital, as well as better technology capabilities. Over the next three to four quarters, we'll continue to engage and, you know, work with the system whereby we will make sure that both the quality of partners, right, as well as the inventory levels in the system, and sort of continue to move in the right direction. Perfect. Thank you for the elaborate answer. Wish you and your team all the very best. Thank you. Thank you. We have our next question from the line of Latika Chopra from JP Morgan. Please go ahead. Yeah, hi. Thanks for the opportunity. My first question was, you know, if you could share the ARR for The Derma Co. and Aqualogica. I think you shared it with prior quarter at INR 300 crore and INR 100 crore, respectively. Any updates on that, please? Yeah, no, those were the numbers that we had shared last time. As we make material gains in these, I think we will surely come back and share. Because ARRs benchmarks, ideally, we would like them to be materially different when we actually come back and share with you, right? So currently, they have grown sequentially and but there's no material sort of, you know, difference from... Hence, we would surely, as they hit newer benchmarks, we will come back and share. Sure. The second was, you know, I know you mentioned, you know, in your response to gross margins, that there was an adjustment for nine months that you made in this quarter, right, in terms of stock write-offs, probably. So should we now look at the nine-month gross margin as a realistic gross margin of 69.7, or is this, like, only the third quarter of, you know, 68.5, which is more realistic? And do you see any risks to this from a class-based perspective or, you know, the offline, online channel mix or brand mix going forward? Yeah, so I'll take that, Latika. So, so like you said, I think the first nine-month gross margin was quite representative. Having said that, of course, the big sort of implication going forward would be a significant change in the channel mix, which of course, as we speak, I think you know the online, offline growth mix will sort of balance it. So I think at least in the sort of medium term, we don't see any major change in how our gross margin profile will move. From a nine-month perspective, the only, like, bit of adjustment is the 20 basis points odd, and which is on account of months of sale. So I think outside of that, that 69% is the gross margin that you should expect us to deliver as we move forward. All right. And, you know, any flavor on, you know, how should we think about, you know, brand advertisement expenses, you know, on a YoY basis, percentage of revenue will be stable at 34-ish kind of percentage, you know, 40 basis points lower as I can see on your, on your deck. Where do you think this is gonna settle at, what place for A&P to be? And lastly, would it be possible for you to share the offline, online business? I understood that, you know, online is faster, but any rough sense on, whether the Mamaearth portfolio or on an aggregate basis, you know, any, any rough sense on online, offline mix? Thank you. Yeah. So, Latika, firstly, to the first question, and I'm sorry, I lost the first question. It was on the ad business expense, you know, as a percentage of revenue. Got it. Sorry, sorry. Thanks. Thanks very much. So Latika, we build an annual plan. And you know, like I said, there is a bit of seasonality in the business. There are areas where we want to invest, and we invest. So I think from a P&L's perspective, we look at it more as a year, and we build an annual plan where we look at how and when we are going to activate which brand, and according to that, we are executing. But we've been delivering, you know, the gains that we've delivered, again, you should look at more from a nine-month perspective, and we've delivered it in line with what we had planned them to be. As we move forward, and again, we've called out and we continue to support the fact that A&P is the bucket from which we will get the maximum leverage as we grow. And you know, we called out that every year, and we will continue to improve on our bottom line performance by using that leverage, and where we not only are becoming you know, more efficient, but also our awareness levels are getting driven to a certain level. So, I think what I would say is our objective would be that every year, say, in the medium term, we continue to become better on the bottom line by leveraging on the A&P. And I think just, just to add to that, Latika, if you actually look at nine months, right, it's a 250 basis points plus, you know, optimization on the A&P side. So like Varun was mentioning, it's about brand, budgets and how we sort of invest in brands. And this, despite as, you know, as we're building younger brands as well, we've been able to optimize A&P spends during the year. ... Sure. And any flavor of online-offline mix? So from an online-offline mix perspective, right, like we said last time, continues to be similar to what we mentioned last time, right? So about more than one-third it continues to come for the overall business from offline, right, while the balance is online. But for a brand like Mamaearth, it's mostly 50/50 is where we see. Right. And one, sorry, for one more question. I was going through the slides, and I noticed that you mentioned that the online growth is driven by platforms with strong Tier Two presence. Are we really across the Tier One platforms like Nykaa or, you know, Amazon or any, anything that you wanted to say about them? This is just- Actually, yeah, that point on the online growth is also far more driven from Mamaearth online growth, right? Where we've seen that, you know, for Mamaearth, now the growth is coming more from platforms which have stronger, you know, Tier Two and beyond presence, like, you know, Meesho, Purplle, and Flipkart. Right? That's been a learning, at least in the last 10 months. Right. For younger brands, you know, we have seen it to be actually more driven by platforms like Nykaa, Amazon, et cetera. But then companies have, of course, we are gaining share on each of those platforms. All right. Thank you so much. Thank you. We have our next question from the line of Manoj Menon from ICICI Securities. Please go ahead. Yeah, I think, just, earlier about, you know, the, the formula which you use for volumes. Just curious, you know, why not use the underlying volume growth formula? But I'm sure you know this, right? So, you know, just trying to understand, why not use UVG, because this kind of normalizes the numbers. Manoj, we'll take that as a feedback, right? I think we are, we're fairly young, and some of these issues are things that we are still to take into account and ensure we are able to build it. UVG is a good concept, but it's also, you know, slightly complicated in terms of execution. Currently our objective was to understand if our consumer transactions are growing, right? And that's the first point we wanted to keep a strong hold of, especially as we also get into B2B businesses. And we wanted to know if the number of times a consumer is engaging with our products is growing, and this current method and actually is a very good demonstrator of that. And so it gives us a very healthy picture of how our brands are doing in terms of driving the consumer interactions and transactions. And we'll take this into account and evaluate how we can move forward. Thank you. The only reason I ask is because, you know, I have observed this now for many years, you know, many, Indian companies, because it obviously because it kind of normalizes, you know, the volume, right? I mean, so, my theory is, you know, given the stage of growth, which you are currently, it now has a very high company to now you know. So that's only what I was trying to ask. And maybe I'll come back a little on, you know, how this works. Secondly, Fair, fair point. Yeah. On seasonality, you know, do you, there is a review, the skincare portfolio could have benefited, you know, from seasonality or is it not material in the portfolio currently? So in fact, you know, even under skincare, it depends on what part of skincare forms the largest chunk. So if we were a creams-oriented company, then you're right. And that part of skincare does see positive gains. But even there, in fact, at least our learning has been, it is not the day creams, but night creams, moisturizers, which see a larger sort of skew towards seasonality. But actually, that's the third segment in skin. And the top two segments are face wash and creams, which actually see entire seasonality in history. Okay. Okay, got it. Okay, got it. And, last year, you said, you know, some updates on the retail. I mean, what is update? You know, help us understand, how do you look at retail internally? Is it, let's say, the retail ramps have come from your, you know, capped sort of budget or your retail as planned and, let's say, the last six months, you know, on top of retail? Manoj, I'm assuming you're referring to the EBOs when you're talking about retail? Correct. Offline, offline EBO. That's right. Yeah. Offline EBOs, right. Yes, right. So, you know, I think we... and you mentioned capped budget. I did not understand that point. If you can sort of, you know, just clarify that. Let me give an example. You know, so working on a different retail project, maybe long back, where the internal processes was like actually mark an expenditure, and you obviously looked at this as from an, you know, perspective for the few. So are you looking retail more from a brand building point of view, or is it something? Yeah, I know it's involved, that's why I'm just trying to understand where are you looking at this point? No, we are looking not just at retail from a brand building or imagery point of view. In fact, the reason for us to get into the exclusive brand store format and was, one, of course, the imagery piece that you talked about, but two very important things, and the fact that general trade and modern trade do not allow you to execute your overall assortment, right? They are more hero product kind of channels. And a lot of our consumers, you know, were asking for our overall assortment to be seen in one place where they can actually experience and buy more categories. So that was the reason why we started this. But for us, we are seeing that as a clear business, the way we evaluate all channels from a profitability perspective, that's how we look at this channel. In fact, you know, as you know, all the overall channel already in very nascent stages is store level profitability. And we follow that very strongly, and we believe that as it grows and the older stores are actually showing a much better, you know, store level profitability compared to, you know, younger stores. So as a store gets more mature and it starts to show better sort of bottom line. So I think that's how we are looking at this one. Thank you. Just one last You know, all of them are owned, no franchisees. Thank you. Thank you. Thank you. We have our next question from the line of Manish Poddar from Invesco Asset Management. Please go ahead. Hi, just so first is on the competitive intensity. Could you probably talk about competitive competition, both from incumbents and new entrants? For the fourth brand, it's a Mamaearth. This can be a long answer, but, No, no, on a related basis, that's it. Because of the entire category. No, no, yeah. Yeah, I think, you know, last three months, and we have seen, significantly enhanced competitive intensity. I think, you know, till about three to four months back, there wasn't any urban growth concerns that companies were looking at or talking about. But, it started with, the festive not going as well for the e-commerce players in terms of the overall traffic and growth. It was then sort of, you know, followed by, a weaker winter, you know, in the last quarter also. And then also finally followed by, GT, you know, not growing as fast, for most companies, right? And in consumption in GT slowing down and hence inventories and everything. That has been the scenario, you know, therein, and which has led to actually very high discounting that we've seen from most players, be it incumbents less or the younger players, right? In terms of number of days of discounts or the steepness of discounts which have gone up. Now, our view is, this shouldn't last as long, right? And hopefully, post-elections, this environment should completely change and focus on the basic penetration gains and growth should sort of come back, and hence, this need wouldn't be there. But in the short term, we have seen this, and it does have impact on the consumers and competitive intensity and how one needs to react, right, to some of this. So I think, that'll be, that'll be the long answer to it. So then it is interesting to see the entire growth in the margin for customers. So, just one more thing. Could you probably talk about, let's say, distribution expansion for the, you know, Derma Co. and let's say the other brands, you know? Because you have to build the pipeline and both, let's say, own stores and, you know, the GT, GT channel. But, like, what are your thoughts of taking these brands across channel Given that, you know, some of these are started taking it in, so. Yeah. So Manish, I think the plan for us is that next year, for example, Derma Co., we do see has come to a stage where we are seeing demand in offline stores. And where more demand oriented in our approach here. And hence taking it slow, right? Because while you can put stock in, if there's no demand, then it won't move out, right? But now, last 4-5 months, we've actually seen active demand coming, right, especially in pharma channel or in modern trade. So I think this year, the objective would be to have a targeted, you know, store strategy, getting into hypers, getting into the right kind of pharma stores for Derma Co. and expanding that presence. And similarly, for other brands, right, we might go very tactically or, you know, let's say one category, which is very strong for that brand, and take that into respective stores and see how the demand and off-take shapes and accordingly expand it. ... Just one clarity, if I can. Would it be right, let's say, you know, for a new product from Derma or any of the other new brands, you take the feedback loop from the BA channel, which you ask for your, for your, you know, products? Well, in, I did not answer. So you mean that is the first port of distribution are BA channels for Mamaearth? Yes. For the new brands. I'm just trying to take, understand, let's say, from a feedback loop. You're right. You're absolutely right, right? Those are... You know, we have almost 1,000 points where we have BAs, and these BAs are feeding data every day to us around what's moving, what's not moving. So these are the places where we do pilots and understand for the new brands what's moving and how it's moving. Sorry, just to understand it. So for this, the entire The Derma Co. products would have already started, you know, getting actually rolled out across this BA distribution channel or, you know, that just on NPD basis? No, actually, it's... You know, we never take NPDs into offline, Manish. We only would take our core products of a brand in offline, where we are seeing significant traction and which have become large in the online space. For example, Derma Co. face serums, salicylic, kojic, Vitamin C, niacinamide, have become large in the online space, or the sunscreen, which is the 1% hyaluronic, has become large in the online space. And those would be the products that face wash again. So those would be the products that we would lead, you know, our offline distribution team. So that we would do in the BA channels as well, that we would do in the GT, majorly modern trade stores as well. Like I said, we always start with a certain universe, see the response there, and then expand in that channel universe. Got it. Thank you so much. Thanks, Alagh. Thank you. We have our next question from the line of Mudit M. from M3 Investment. Please go ahead. Hi, thanks for the opportunity, and really appreciate the consumer brands that you're building. So, my first question is, can you help us understand what's the gross growth on the base business by the new ex new launches? So I just want to understand ex new launches, while we appreciate the number of coming up with these products, but is the base also getting built and there is attrition there? Yeah. Hi, Mudit. Yes, the base has also seen good growth. And, so we've seen good volume growth on base as well costs. Right. So, to build on that even further, how many of the... Because you are expanding your store network very fast, so for an outside investor, it's very difficult to understand how much is coming from the new stores getting added, and how much is from the repeat, repeat orders from the distributors. Could you help us qualitatively understand, is there a growth in the repeat salience of the business also? In GT? Yeah, in, like, GT, it's a bit difficult to track at this kind of size, in terms of what are, for example, our BA stores continue to grow at a same store level, right? As well as if you look at Nielsen data, it is also telling us that same-store growth is there, as well as distribution growth is there. So finally, the growth that is coming for, from us in offline is combination of both, and it is not that one is at the cost of other. Both same store is growing as well as distribution expansion is adding to the growth. So, just question, last two small questions. Can you help us explain the percentage of repeat orders on your own website? Because that you have put in your RHP, so what's the action like in nine months? So honestly, I think we've talked about this in the past as well. And as a- Sorry, sir. Where our products are listed on our website and, you know... Hello? May I continue? Yes, yes, please, sir. So I'm saying as a cross-channel brand, where our products are present not just in, our own DTC, but also on Amazon, Nykaa, or in a DMart, Apollo, or in a GT store near. We've always talked about the fact that, you know, the same consumer, ends up buying from cross-channels. And hence, we're not able to truly triangulate what the repeat sale of that consumer is. But we've disclosed that, you know, almost, 55% of our sales, is coming from repeat consumers on our DTC platform, and it has actually gone up to about 58% now. So what we seem to be in that, in that zone. Just a question, one small last question. Do you get any substantial pricing from e-commerce channel, or is it the same that everyone else enjoys? ... So in fact, we would be the most, you know, the most commonly repeated in terms of squares, because we operate as sellers on these websites. And when you operate as seller, you're basically, operating with the same framework, you know, that Amazon has put out for any seller in the country. Of course, that framework has slabs where as you increase in size, you can get better sort of, you know, logistic costs or better. But finally, we are going by that same framework that Amazon or Flipkart have created for any seller, in the country. Most other companies operate in a B2B model, and, where there is less transparency in our model, right? It is actually, you know, very transparent in terms of the, cost that we apply. That's great. That's great. Sir, sorry, operator, if I can see one more. Could you also tell us how much is in the marketing goes in performance and how much goes in performance marketing and vis-à-vis the other brand building activities? Mudit, what I would say is, you know, while we're calling it performance marketing, it finally is consumer marketing. Just because I serve the consumer from Facebook with the advertisement, where I'm trying to capture what kind of feels it generated. And we call it measured marketing rather than performance marketing. And that's the form of marketing probably 10 years down the line will only exist. And hence, you know, it's just a form of digital tool and marketing available. We focus more on how the content, the messaging, what we are sort of, you know, communicating with consumer. Otherwise, all of this marketing is also consumer marketing, and that's how we at least like to look at it. Fine. Thank you. Thanks for the time. Thank you. Thank you. We have our next question from the line of Latika Chopra from JP Morgan. Please go ahead. Yeah, hi. Follow-up opportunity. You know, but one of your comments, you know, you talked about the pressure coming on a bit officially, but just wondering, you know, we have this aspiration of, you know, 30% growth, you know, for the year. Obviously, on target so far, you know, around those numbers. But if you have to, you know, different days over the years, where would you peg, you know, the revenue growth potential for the aggregate business? I also heard comments around, you know, you wanting to promote tactical expansion into other channels for your new brands. So, any rough sense on, you know, whether the revenue trajectory is more going to be like 20-25, where do you think at this point, you know, the next year growth potential for the business looks like? Latika, we have, whenever we have talked about this in the past, we've talked about the fact that we will, we will continue to grow significantly ahead of the, industry peers. We would still retain that as our goal. We've talked about the fact that we would be, at a 2-2.5x of where the market growth, would be. And that's where we would like to be. And, in the very near term, we do expect consumption slow down, and we are seeing some of that. And, where you can see industry is, also reporting fairly slow sort of, you know, volume value growth numbers. And, and that, you know, is now happening in urban as well, not just in the rural area. So, from a short-term perspective, where the market growth, growth benchmark might itself be on the lower side, and that might impact us in the short term as well. But from a medium-term perspective, which is over the next two years, I think that goal of remaining 2-2.5x for the market remains to be there. And you know, where I think we would look at around that 20% mark, because that's the way we see market. You know, any thoughts on further brand launches, or you will first want to, you know, scale up the existing portfolio that you have and then look at a new brand launch into any of the white spaces that you see in the BTC space? Latika, it's an ongoing process for us, where we identify opportunities which are white spaces, and we action pilots and POCs in that opportunity. And wherever we see, you know, that our view and hunch was right, we double down on that opportunity. So I think, and we've also created an organization which can easily support that, because we have a separate brand team which works on only new brand creation and scale up while the CA focusing on the core brands. So I think in that line, we will continue to look at newer spaces, coming up with the right mixes to take on those spaces and build newer engines of growth for future through those channels. ... You know, one of the things, you know, already INR 150 million ARR, the Mamaearth brand. So you want to tap into the category via Mamaearth brand itself, or, you know, the success of this specific portfolio within Mamaearth allows you to look at a bigger, you know, bigger target audience, price points against the brand. Is this something that on plate? Yes, I think the experience with the category has clearly given us more confidence, and we're able to look at it, you know, in a standalone manner. We know that, you know, globally as well as in India, and the naturals is a very small part of color cosmetics category. Performance is where the category really lies. But this early success has clearly helped us build capability and given us confidence that we can play aggressively in that category in the medium term. On employee margins, you know, your margins, you know, around 7.3%. Given you alluded to higher competitive intensity in general, how should one think about, you know, the time frame for you to reach, you know, double-digit kind of a margin profile? Again, Latika, this from a two to three years perspective, we will stick to what we have said in the past. We'll continue to gain every year. And hopefully, over the next three years, we should be in the double-digit space. All right. And then, last one from me was, you know, if you can please share, you know, the revenue ratio of stable at 30%. And, and you talked about, you know, market share face washes and shampoos. Are they also trending up on a year-on-year basis? I know you've shared why they haven't, so give us a little review as well. So yes, on the first point, last week, yes, we do. And honestly, it should be looked at from a quarter perspective, because we launch sort of, you know, it is cumulative gains that we usually get, they are stable, from our entry perspective. And on the market share front, again, I would say better to see it from a YoY perspective, although we sequentially also gain, but better to see it from a YoY perspective, because, you know, that's really, you know, the importance of that data that we have provided. But it's actually healthy compared to what we have reported in past and sequential as well. Sure. Thank you so much. Thank you. We have our next question from the line from Chintan Desai, from Swiss Capital. Please go ahead. Thank you. Thank you for the opportunity and, just to understand better, the gross margin you see this on the nine-month basis, is the impact on the inventory front, right? Just a clarification. No, we'll try to explain that. So I think we... Hi, Raman this side. So what we're trying to say is that if you look at a nine-month, year-on-year comparison, from a gross margin perspective, and if you exclude the impact of discontinued business, Momspresso in the base, then, the impact, of, you know, gross margin year-on-year is only 15-20 bps. And that's primarily coming in from certain category mix color, channel mix, changes. So that's what we're trying to explain then. Okay. And just on the Q3 perspective, the same number on a YoY, even after removing the impact of Momspresso, is one point basically. Yeah. So I think the impact of that one, you know, the accumulated inventory impact between Q3 is about 1.2% for the quarter. And ideally, it should be spread across the first three quarters. So you can assume that it's a 0.3-0.4 impact. Yeah. That's how one should look at it. Okay. That's exit of Momspresso, right? That we need to- It's ex Momspresso, yeah. There is no Momspresso impact in the current quarter. The impact is in the base quarter. Once you remove that from the base quarter, like for like, year-over-year, nine months, it is only 15-20 impact. Correct. Specifically for Q3, you see inventory, once the accumulated impact have you taken into. Sure, sure, sure. In terms of the interest, which was last quarter was favorable, and this quarter we have kind of normalized. What we can expect going forward? Are we continuing to see some trend of impact, or there will be some leverage we can expect, at least on an absolute basis, whether we can expect the revenue to continue or grow at a near inflation or, you know, lower than the single growth, that one, that we should expect? Yeah. So, yeah, just to clarify, so I think, you know, when you look at like for like, here also, given Momspresso was a service business and had integration and former employee shareholder cost, the like for like impact is only 1% year-over-year. And in fact, that's in Q3, that's also similar, close to 100 basis points. So that's how you should see it. I, I think we are at about 9%, and we - I think going forward also, we should remain around the same, you know, you know, as a percentage of sales in terms of our payroll. Okay. It will grow in line with the revenue growth. If you consider 9%, it means the employee cost will grow in tandem with the sales growth. That's the expectation, currently? In the, you know, over the next couple of years, at least, yes. Okay. Okay, got it. Yeah, in the near term. Right. Right. Right. Right. Right. And, lastly, on the depreciation and interest, across this quarter, I believe, the ramp up, which we have seen largely because of the EBOs, you know, ramping up, and impacting the P&L. And, where is there any specific you need to call out? No, it's just the EBOs. There is, you know, we, we don't have any other, capital intensive, Simple lease, lease accounting getting impacted there. Absolutely. It's, it's exactly that. That trend will continue. That it will grow in tandem with the number of EBOs will continue to open? Yes. Okay. Yes. Got it. And if you can just call out, you said Mamaearth brand as a whole grew double digits, right? That number you in terms of revenue growth and mid-teen in terms of volume growth. Correct? Yes. That is for nine months. Yeah. For the nine months. I did, yes. Oh, okay. Okay. Got it. Sure. Thanks. All the best. Thank you. We have our next question from the line of Sahil Chotalia from Mount Bliss Capital. Please go ahead. Yeah. So all my questions are answered. Thank you. Thank you so much. Thank you. The next question is from the line of Mudit M. from M3 Investments. Please go ahead. Hi. Thanks for calling me to ask me questions. Could you also take this as a note or maybe give some highlight? Like, for you must have categorized some hero products, and what's the growth of those hero products? If you could highlight those in subsequent quarters, it would be good to understand the longevity of franchise, and I would like to know the comments on the same. Then I'll ask my next question. Mudit, at least as we see, we realize the way market is shifting. Usually in personal care, as a market is a very, you know, innovation-driven, trend-oriented market. Whereas, where especially in online, which is a large majority of our business. Fresh innovations and launches is what fuels consumers' excitement and gets you the consumer franchise going. So, in that sense, and for a 90% offline business, and it actually makes far more sense to just talk about and focus on hero products. But for our kind of business, which is far more online heavy, innovation and how innovation continues to add and drive growth is a far more important metric that we track. Of course, we have hero product franchises like Ubtan, Onion, and these are all fairly large franchises. The, the GT growth that we're talking about or the market share gains that we're talking about are driven by these franchises. But we still feel innovation is far more important because that's how the, the categories are. I really appreciate. But just to get sense, to also understand your GT strategy, and the quality of GT networks. So how many of the distributors that you have onboard are already existing distributors of large franchises, maybe in adjacent category, but same? That gives the confidence that they have financial bandwidth and customer touch time. So as I talked about earlier, and, you know, we are a, we're a young business in GT, and when initially you go to find a partner and you don't have any business deal, you do not attract the highest quality partners in the market. And that's what sort of, you know, earlier happened to us as well, where we were working with a lot of local cosmetic FMCG players, baby product sort of distributors. And it's only over the last one year, where business has become sizable, is when we have actively started moving towards the FMCG distributors, as you would call them, and we've been working with larger FMCG companies and are now interested in working with us. And that, that's an active transition that we are going through. I think over the next four to five quarters, our objective is that 80%-85% of our distribution partners should be of that, you know, of that variety, as you call it. And that's the ongoing strategy with GT. Maybe last one from my side. So how many, I mean, how many SKUs do you carry in the modern trade, you know, large modern trade businesses, marketplaces? Because that's where the mass consumption could drive. Just want to get a sense of what the SKU that you could carry in yeah. Again, it differs, but in general, like, like a DMart would have probably 30 odd SKUs for us, right? Or, even Apollo would have a similar number, right? But then possibly, in, in a hyper store of Reliance, where we have a partnership to do a stronger brand block and along with assisted sales, then we might have 70-80 SKUs in that kind of store. So depending upon the format, the customer and, and, you know, the, the intervention that we've been able to align, it varies. But in general, you know, about 20 is what we should take. Yeah, thank you. It's really great and appreciate your time with, on the- Thank you. Thank you. Ladies and gentlemen, this was the last question for today. I now hand the conference over to management for closing comments. Over to you. Thank you. Thank you so much, everyone, for joining in. We're a young company. We are really happy to sort of, you know, answer some of these questions and engage with you on different times to further strengthen how we will build this business going forward. We are super kicked and excited with the beauty and personal care opportunity as it exists and will shape over the next decade. We continue to very strongly believe that it is going to be the strongest and fastest growing FMCG segment and with the highest growth, right? Especially driven by women joining workforce and more women going to college as a trend. We believe we generally excel at building for Gen Z and Millennials, and that excellence on innovation and brand building in that sense will continue to drive strong gains for the company in the long term. Thank you so much for your patience with us. Thank you. On behalf of JM Financial Institutional Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.