Ladies and gentlemen, good day, and welcome to Honasa Consumer Limited Q4 FY 2024 earnings conference call, hosted by Kotak Securities Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that the conference is being recorded. I now hand the conference over to Mr. Jay Doshi from Kotak Securities Limited. Thank you, and over to you, sir. Thanks, Nico. Good evening, everyone. On behalf of Kotak Institutional Equities, I welcome you all to Q4 FY24 earnings conference call of Honasa Consumer Limited. We have with us Mr. Varun Alagh, co-founder, chairman, and CEO; Ms. Ghazal Alagh, co-founder and chief innovation officer; and Mr. Ramanpreet Sohi, chief financial officer. I now hand over the call to Varun for opening remarks. Over to you, Varun. Thank you. Hi. Thank you, Jay. Hello, everyone. Good evening to all of you. We welcome you to the Q4 and FY 2024 update of Honasa Consumer. Like, Jay mentioned, we have with us Ghazal, Raman, as well as Mohit, who leads investor relations, from Honasa Consumer, as part of this call. The way we have structured this is we have a quick presentation, in which, you know, for the purpose of clarity, I will take you through what has been the highlights for the quarter. And we will open up for questions after that. So without further ado, let me just jump in and talk about the highlights for the quarter. To start with, of course, the quarter has been shaped up really well. While there has been a lot of conversation of, you know, consumption slowdown, Honasa Consumer has continued to deliver strong growth. We have delivered 20% like-for-like growth, with the underlying volume growth of 27%. With an EBITDA of 7%, and the highest ever operating profit of INR 30 crores. We've also generated INR 80 crores of free cash this quarter. FY 2024, in this, we have grown at about 31.5 like-for-like. EBITDA is about 7.1%. For the full year, we have generated INR 111 crores in cash. And from a UVG perspective, we have grown 41% with distribution ahead of our value growth. We have generated free cash of INR 224 crores this year. In this year, like we had mentioned in the past, we demonstrated a significant improvement over last year in terms of our bottom line. Last year, Q4, we had a negative EBITDA. From there, we have moved to a 7% EBITDA this quarter. Last year, for full year, we had a 1.5% EBITDA, to which we have moved to 7.1% for full year this year. And this is driven by a combination of efficiencies in A&P, OpEx usage, and other costs, which we continue to work on to make our business more efficient, by not compromising on building our brands and gaining share. Coming to the core business updates. I think let me start by talking about the projects which we have been executing and talking about in the last couple of quarters as well. We clearly realized that omni-channel distribution and offline distribution is going to be a critical part of how we build the company and capture the beauty and personal care market share. And in that regard, we started the journey of building this channel about four years back. When we started this, we were largely an online company, whereby we only had, you know, two locations for distribute our products to warehouse. And we did not have any offline presence, because of which we had to go in for a distribution infrastructure, where we had super stockists structured as bulk breakers. And then the super stockists appointed distributors. This quality was not as good as we would've liked them to be from an FMCG perspective. We've essentially taken this project to create a stronger direct distribution infrastructure with strong visibility and technology implementation. As a part of this, there are three pillars that we've been executing. One is transition from super stockists to direct distributors, especially in Top 50 Cities. Onboarding high-quality FMCG distributors with strong direct distribution reach. As well as implementing a customized version of DMS and SFA, which is a Distribution Management System and Sales Force Automation system, that we have built over the last one year along with our partners. Across all of these, we started this journey in Q3 of FY 2024. In Q4 FY 2024, we have expedited this journey, and made sure that the execution is up and live across the top 10 cities. Over the next three quarters, we will continue to execute this project. This has had a preliminary impact on our sort of group by about 200 basis points. We do expect some of that impact over the next few quarters. Given it is the right move from a long-term perspective, as well as our energies, within move, given super profitability, contribution across the distribution, we are actively transitioning. But the good thing is that for total consumption and optics perspective, our brands continue to do very well. Mamaearth, if you look at the Euromonitor, 2023 data, now, for the calendar year 2023, it has grown amongst the as the fastest brand amongst the top 15 FMCG brands in the country, where average top 15 FMCG brands have grown by 7%, while Mamaearth has grown at 21% according to the 2023 data. It is also visible in the AC Nielsen shares, that we capture. And according to Nielsen, we have gained 120 basis points in face wash category last year, and we have gained 40 basis points in shampoo category last year. And even halfway into the same stores where we are present, share amongst face wash has actually gone up, even faster. So 150 basis points increase in share amongst face wash, and 55 basis points increase in shampoo. So, with a gain in distribution as well. So Mamaearth continues to be loved by consumers and continues to drive those transactions in both categories across all markets. And of course, we have been also able to demonstrate our ability to build large-sized brands outside of Derma Co. has hit ARR of INR 500 crores last quarter while being profitable. And this is a net sales value ARR in terms of GMV, this will be close to INR 900. And this is just in four years. We launched the brand in March 2020. This is also a brand which is shaping a new proposition. It is an active proposition that we were able to recognize very early and launch the right categories with the right fit, which is being loved by consumers. It demonstrates our potential to build large-scale brands in newer, evolving, looking at the portfolio, clearly the house of brands that we have, we are very excited to see the opportunities and possibilities in those brands. Over the next 3-5 years, we do Derma Co. will enter INR 1,000 crore club, Aqualogica and Dr. Sheth's should enter INR 500 crore club, and BBlunt should enter INR 250 crore club. This whole house of brands strategy is also helping us dominate a few categories, and I would like to take an example of category like sunscreen. This is a category which is also growing very fast. But as Honasa, we have been able to use the power of House of Brands and to provide different kinds of differentiated propositions in this category. Whereby there's a mainstream natural proposition in Mamaearth, an acid-based Derma Co., hydrating lightweight proposition in Aqualogica, and a bio-active proposition in Dr. Sheth's. Combination of this has led to us being able to gain more than 20% market share in Honasa, across the e-commerce platforms that we are present in. Now we're going to use the same strategy to get into Modern Trade and offline channels in the market. This is evident in the ranks that you see on most of the channels like Amazon and Nykaa, where amongst the top five, three ranks are held by our brands. That's something which we are going to demonstrate in different categories over time as well. Our focus on R&D and innovation, of course, continues to be loved by consumers. This is at the heart of the organization, being able to understand the consumer needs, and using our understanding of the Indian weather, being able to craft the right kind of products, and which are loved by consumers. We continue to be on that top last quarter as well, and launched some very exciting launches, I believe, in the lip routine from Mamaearth, a new sunscreen SPF from Mamaearth, and a new technology in sunscreens, whereby long-lasting sunscreens, which has tick out [audio distortion]. A few of the things that we've launched last year. And then we have contributed about 18% to the FY 2024 revenue growth. We've also used this strength to get into newer categories and enhance the TAM that is available to the company. With Mamaearth, we have entered into personal wash with a differentiating product, which is Moisturizing Lotion Soap, a green one Made Safe certified formula, which is something that we are executing this summer. And also looking at the opportunity in color cosmetics space, we have entered into that area with a different brand called Staze. And this is focused at Gen Z, and again, providing innovative products. We have seen one lipstick which we've launched on the Staze, and it actually has three shades in one lipstick. This is actually a new to world innovation that we've brought to India, and knowing that Indian consumers seek value in products that they look at. We've also launched tubing mascara, which is another innovation that we've brought to the channel. To further strengthen our R&D in our product development expertise, we're glad to announce the acquisition of Cosmogenesis Labs. This acquisition brings in, you know, the expertise of Rohini Manoj, who has been the founder of this company for the last 25 years, and brings in very strong industry experience in hair formulation. She and her team have built more than 5,000 formulations in the region of hair category over the last few decades. Yes. And as part of the transaction, we are also acquiring, apart from the formulation expertise, the R&D labs, as well as our level manufacturing facility. This is something that further strengthens our ability to innovate and bring the right kind of products to the consumer. Rohini Manoj will be joining us as VP of R&D, reporting to Gaurav. This change will actually be effective in the next few weeks. And of course, while the business has been good, we've also been sharing a lot of goodness. And we have released our impact assessment report, whereby all the brands and the impact that their purpose programs have had has been measured. For example, for Mamaearth, over 600,000 trees have been planted across 3,800 acres of land which have been green. These are all fruit trees which we plant alongside farmers, so these will generate 12,000 tons of fruit over the next decade, and about INR 20 crore in income for these farmers. Of course, 500,000 tons of oxygen to the environment will be related because of this. Our Derma School and the Young Scientist Program, whereby we have done multiple workshops in schools across Bengaluru and Chennai, more than 20,000 students have been engaged. Recently we've understood that their knowledge has been improved by quite a bit. In Aqualogica, it is a younger brand, but we're deploying fresh water plants across the regions. We have now deployed it across 500,000 households who access this, saving 400 hours daily for women who have to travel hours to get access to fresh clean drinking water. Under BBlunt Shine Academy, we've now certified over 10,000 women in salon and styling courses across 8 different states. This is something very close to our heart, and as our brands grow and our impact also grows. With this, I would just come to the close of our presentation. Thank you so much for listening. We would love to answer the questions that you have. Thank you very much. We will now begin the Q&A session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the questioning queue, you may press star and two. Our agents are requested to use hands free when asking a question. Ladies and gentlemen, we will wait for a moment for the question queue assembly. The first question is from the line of Dhiraj Mistry from Antique Stock Broking. Please go ahead. Hi, and very congratulations on good set of numbers and improvement in profitability. So my first question is on distribution expansion, which you are, distribution expansion strategy, what you have implemented. What kind of impact we are seeing in the short term, and what are the likely benefits? Like, what kind of margin accretive it can be over the long term, let's say, from two to three years period? Hi, thank you for asking the question. So firstly, I think in the short term, the impact that we have seen is in our primary sales, which is what I talked about. For example, last quarter, about 200 basis points in primary sales is impacted over the next three quarters. We believe 50-100 basis points every quarter will be the impact on this, because the transition involved reducing inventory, which is there in the system, given super stockist is carrying a high level of inventory compared to the rest. From a long-term perspective, it is of course beneficial from three ways. One, like I actually said, the super stockist network charges about 5% incrementally in distribution. It's currently at about 50% level that we end this quarter. And our objective will be to take it down to 30% level over the next, and hence, that's a financial benefit. But more importantly, the benefit is in increasing direct distribution and quality of execution in the market. Any store which is covered well by our direct distributor, their frequency of visits and also performance is sure even better, share gain compared to what is captured by indirect distribution. And that's the business benefit that we are expecting to see over time because of going direct and building these distribution. Okay, perfect. And, as per your current sales, just the GTs would be contributing what percentage of your sales? About 2/3s of the GT is contributed by [audio distortion]. Got it. And, yeah, second question is, what will be the contribution of offline channel and online channel during the current year, full year? Yeah. So, at an overall level, offline contribution is about 25%, and online, of course, is the balance. 25%? I'm sorry. Okay, so 1/3, so 1/3 would be offline and 1/3 would be online. Got you. Got you. And that is, same for the full year as well? Yes. Yes, this is right. Okay. And how do you see that the margin trajectory in terms of, so we find is definitely one of the lever which we can always play for the margin expansion. How do we see that the A&P spend when we are focusing much more aggressive growth Derma Co. and all, as a percentage of sales, what, when you would like to start playing lever of reducing A&P spend for margin improvement? We've already been doing that actively over the last three years. And so, for example, in the case of Mamaearth, it is significantly lower compared to what it was for the other brands. For this year, The Derma Co., it has come down as the brand has scaled. And every year, our objective will be to get better efficiencies while continuing to grow and build the other brands. Got it. Got it. Okay, I will come back in a few minutes if any question. Thank you. Next question is from the line of Vivek Maheshwari from Jefferies. Please go ahead. Hi, Varun and team. A few questions. First is, Varun, what is the outlook on FY 2025, actually both on growth and margins? So as we have also mentioned in the past, our objective will be to continue to grow at 20%+ CAGR over the next three years. And that's the that's the growth that we would want to get it up by FY 2025 as well, and that's the plan that we have in place. And from a margin perspective, our objectives will be to improve compared to last year, at least by about 150 basis points, is what we are aiming in FY 2025 in terms of improvement over FY. Got it. And, you know, in that context, you know, we are hearing a lot about, so I think DTC competition, DTC cost competition was always there, but we are hearing even the traditional companies are focusing quite a bit on, on the online side of things. Have you seen competitive activity ticking up quite a bit in the, in the last 3, 4 months? And, how does that, you know, impact both, you know, from a growth and margins standpoint, in the, at least in the near term? So we actually had talked about this last time as well, that we have seen incumbents being more competitive, more competition from incumbents on the online space. And so it is largely in the form of significantly higher discounting that we have been looking in. And this is a category where the consumer, beyond a certain level, chooses brands that they love. And you know, you cannot do too much beyond a certain level, which is price. And because of which, we feel confident that even in face of the competition, we will be able to deliver growth this year as well. Interesting. The other question is on space. So look, you are entering into new categories, and this one is along with the brand. Do you think category-wise, I'm guessing that, you know, you will keep, you know, you will keep exploring more, white spaces. But from a brand standpoint, do you think the architecture is in place, that, you know, whichever category that you want to get into, you have the architecture? Or you still think that there are white spaces and you may have to have, you know, a couple of more brands. How do you think about that? ... Vivek, I think the way we are thinking about this is the market in, you know, Indian consumer is evolving very quickly. In the past, we used to talk about that something, you know, that happens in U.S. or other countries, it takes about five years for it to sort of come to India. And hence, you know, the category evolution in India is slower. Now this digital evolution and the Indian consumer is becoming very connected. And they're also looking at what's happening outside the world. They're getting educated far more quickly and compared to what used to be the scenario in the past, that category education used to take a lot of time. Now, with influencers and digital availability, category education has also become quick, and trends are getting captured very quickly. Derma Co. is a great example of that. That, you know, nothing existed, and now there is so much action happening in that actual space brand. So I think as a company, we would want to keep a very close watch on our consumers, and we would want to clearly see what kind of trends are emerging and what kind of needs are emerging, and how they are looking at different categories or spaces. And if there is an opportunity to disrupt, and that disruption cannot be done by one of our existing brands because of the because of the sharpness or architecture required to do it, and then we would surely get newer brands to cater to that. And because we have proven our ability to create value by building newer brands. Okay, got it. Got it. And if I may, you know, couple of more. One is on the acquisition, you know, this R&D capability, CosmoGenesis. Can you just elaborate? You know, you mentioned, but the comment was a bit brief. Can you just elaborate, Varun, what is, you know, from a capability standpoint, what is the outcome that you are looking at, with this acquisition? Vivek, as we have mentioned, innovation is critical to the company. You know, one of the things that we are finding is the fact that we are actually crafting for Indian consumers, for Indian weather. We were seeking to further strengthen our product development experience, and we currently have a team of over 50 members in our innovation R&D function. But we wanted to further strengthen our expertise in crafting for India, you know, domain by bringing in a team who has been developing combinations for Indian consumers and Indian brands, for some time. So I think the expectation is to further improve and work on the products that we have to increase the acceptance and love amongst consumers, to further enhance our understanding of how we craft for India even better and across our newer brands. And as well as the purpose would be to further increase the pace and quality at which the company is innovating. Okay, got it. And the last one, Varun, is this direct distribution, you know, changeovers, that you have quantified its impact on the top line. Does it also have any impact on the, actually, EBITDA level? No significant impact, Vivek. We have taken some increased provisions for inventory based on the return stock, you know, that comes in in case of conditions. But the impact is, you know, less than INR 50. In fact, just to add there, Vivek, you know, like Varun mentioned earlier, as we move more towards direct distribution, we'll unlock some bit of from the topics margin. So it will balance for you. So we don't see any incremental impact to our targets or incremental margin. Right. So Raman, my question was for this quarter. Does this have, any, you know, any, any one-off call, call-outs in this quarter from a margin standpoint? Sorry. So for the current quarter, I think we would have expected maybe more leverage to be gained, given that we've had some impact on the primary, like you mentioned earlier. So there was some leverage impact even as a percentage of sales. We had a lower primary as compared to what we could have delivered. Got it. Got it. Perfect. Thank you, on the rest. Thank you. The next question is from the line of Percy from IIFL. Please go ahead. Hi, Varun, Raman, and team. My first question is on Mamaearth. So if I do some back calculation, it seems that Mamaearth brand at the net sales level has probably grown in single digits this year, partially because of your primary reduction or any other reasons. Just wanted to know your sort of realistic estimates for growth on this brand next year and in FY 2026. Do you feel that it is a realistic target for us analysts and investors to sort of build in a double digit growth in the Mamaearth brand? And, if so, what are the pluses and minuses to the number versus what we have done this quarter? So, sorry, this year. So what will accelerate it from this year? What are the factors for the acceleration, and if there are any sort of decelerating factors which were not there this year and will come through next year? If you can enumerate that, also, the pluses and minuses. Hi, thanks for asking that. So, you're correct. It has been on the branding impact, it has been there, and it is all on Mamaearth, because that's the brand which is distributed in GT, right? Over the last two quarters. From a last year perspective and the UVG growth we talked about, you know, last year's was likely during double-digit growth, right? From a last full year perspective, the brand is at a mid-teen UVG growth right now in FY 2024. And FY 2025, 16, and our plan is to make sure that the brand grows in double digits in terms of value growth, and as the company grows is about double-digit growth. So, just help me understand, if the UVG growth is around 15, what is the reason that the value growth this year is probably a little shy of 10? So between UVG and value growth, and the one big driver is because of the transition between B2B and B2C channels. And in B2B, B2C channels, and the per unit revenue recognition is far higher, and while in B2B channels, because of the margin on top, and per unit revenue recognition is relatively lower. And hence, as the brand is moving towards B2B in the growth is coming from B2B marketplace. And there is more number of units which are required per to deliver the same, you know, amount of revenue growth. And so this is the reason the capacity will be high. Understood, but won't this headwind continue into next year as well, and, would you see a scenario where even next year you have a double-digit UVG, but then the value growth again falls short of ten? The other thing that you mentioned, for example, the impact of deceleration in primaries, right, which is there at the distribution piece. Almost 50% of that is done in the last two quarters. And over the next three quarters, the balance should come in. And once that is done, and then that deceleration impact should go away. And which gives us confidence that over the next few years, we should be able to do a double-digit value growth. Got it, got it. Another question I had was on margin. So you mentioned that you would be targeting somewhere maybe around 8.5%-9% for FY 2025. My question is, and sorry if I'm splitting hairs here, but do you think it will sort of gradually rA&P up over the four quarters? Or do you think that for all the four quarters, 8.5%-9% target would be roughly sort of there across all four quarters? Or do you, like, start off at 7% and end up at, like, 10%, and therefore, the average comes at somewhere around 8.5%-9%? I do agree on the splitting hairs there. No, so, you know, my view would be that, you know, we would be in a range, and we would add 50-50 basis points here and there. And, you know, in terms of what we sort of know, and there are quarters in our case, which are more seasonal quarters, and hence our media plans are slightly more on those quarters. And we like to also start strong because of summer season and before our holiday. But overall, through the year, and I believe the variance would be in that 50-70 basis points. Got it, got it. And last question, if The Derma Co. so how do you measure the relevant The Derma Co.? see, the overall skin care space is, like, really huge, right? But, that's not your relevant target. So maybe, the relevant market share would be that of all the brands which are active-based, brands, what is your market share there? So do you look at it that way? And if so, can you give us some idea how big you are relative to that, relevant market? And also that relevant market, which is active-based, sort of solutions, what is the industry growth of that, subsegment of skin care? So actually, we'll be able to give you a directional view on that, because there's no third party which measures, you know, these propositions and these brands. And given most of the growth at the proposition, right, almost in fact, 90% contribution of this proposition is actually lying online. There is no share, you know, which brand is well when it comes to it. But giving a directional view, our view is that this subcategory is already about, you know, INR 2,000 crore in the ARR. And of Derma Co. and Dr. Sheth's, between the two of them, we have about 33%-35% of share. Which largely lies in two more categories, like, that is face serums and this sunscreen. And now we are also seeing face washes and moisturizers grow very strongly in this proposition. So that will be another driver. I think overall, this proposition and has grown largely from zero to INR 2,000 crore between the year 2000 and 2024. And you know, the growth continues to be very strong for the proposition. Right, Varun. That's all from me. Thanks and have a good day. Thank you. Thank you. The next question is from the line of Nitin Gupta from Emkay Global. Please go ahead. Yeah, thanks a lot for the opportunity. Just wanted to check, like, would you be able to share revenue split across brands? So, I usually don't share the revenue split across brands. Okay. Okay, that's absolutely fine. Just wanted to check, my next question is with respect to the BPC category. We have a clear presence across most categories. So in terms of any new categories, like, how the company evolves, like, how you want to expand across categories. Will you be open to getting to categories like oral care, where we see healthy margin profiles or getting into home care category ahead? BPC is the core category that we have chosen to focus on from medium-term perspective. That's the category where we are building organizational strength, deep in terms of understanding the consumers and their skin care needs for the health, and as well as strengthening our R&D and marketing capabilities, as a company. Now, within that, we are still in some categories where we are not present, and we would evaluate them. But outside of that, categories like oral care is not something that we would look at. Even categories like personal care, at least in the short term, we are not looking at, but from medium term perspective, when we look at that category, we would look at it from an angle of beauty, which is finally your smile is what makes you beautiful. So if that sort of, that, that's how we would look at possibly the category in the longer, but not in the short term. Thank you. And the last question with respect to the baby products. So, like, so you have put out an ad yesterday. I just wanted to know, I mean, how is the premium for baby products? Baby product category continues to grow well for us, and continues to be a strong driver of 64 for Mamaearth as a brand. That's the brand in which baby care is present. All Mamaearth continues to be about 10. Can you repeat the last line? Mamaearth baby care continues to have a premium of about 10%. Okay. Okay. Thanks a lot. Thank you. Ladies and gentlemen, before we take the next question, a reminder to all participants, you may press star and one to ask a question. Ladies and gentlemen, you may press star and one to ask a question. The next question is from the line of Latika Chopra from JP Morgan. Please go ahead. Hi, Varun, Ghazal, and Raman. Thank you for the opportunity. My first question was on the margin expansion of 150 basis points, which you talked about thereby FY 2025. Could you walk us through, you know, the key levers for this? Probably, you know, how is it, margins would remain stable at 20%? In FY 2024, we saw employee costs were up, you know, just 3%-4%, you know, and A&P was up about 25%. So do you think employee costs will continue to grow very modestly even in FY 2025? And any additional thoughts on, you know, what kind of growth you anticipate in A&P given, you know, the new brand investments that you plan to do? That's the first question. Yeah, Latika, like we mentioned, the combination of all of these levers is what would help us get to that point, improvement. The slight improvements which we expect in gross margins as well, because given younger brands are growing faster, younger brands have actually got better gross margin profiles, and that will change as well as, you know, contributing towards getting here. The second lever, of course, is A&P. While we do continue to invest strongly in our brands, and as the brand scales, we have clearly seen that the percentage A&P on that brand sort of continues to come down. We are seeing that now in Mamaearth and in BBlunt. We expect to see that in other brands as well. And so that's the second unlock. And of course, the third unlock is the leverage, and where we expect to lead in terms of fixed and other costs to grow slower than the company is growing. I think a combination of those three things. Okay. Just a second, before just clarifying on, you know, your underlying volume growth definition, people are referring to market growth or you're referring to number of units growth? And we ref- Yeah. Sorry. Sorry, complete the question. Sorry, Latika, please go on. No, no. So, other than I would just check where I asked you this, okay. So our, you know, UVG basically is volume growth on previous base with previous realization. So it sort of calculates constant run over based on previous years realization, which is the typical way of calculating ESG. And hence, the price taken on with store volume to report in value terms. Picture of mix- Picture of the mixture. All right. And, the last thing was, you know, any flavor on, you know, how the overall revenue mix is now trending, you know, in terms of sectors, in color cosmetics, you know, you talked about how sunscreen are going quite well, but any flavor on, you know, how the shampoos, you know, the overall revenue mix are trending since last month? Latika, skin continues to be the largest segment for the company. More than 60% of the volume and value for the company comes from skin market. It is also the fastest growing segment, followed by hair, followed by color, followed by baby, and followed by All right. Thank you. Thank you. Thank you. The next question is from the line of Chintan Sheth from Girik Capital. Please go ahead. Mr. Chintan Sheth, may I request that you unmute your line from your side, please? Mr. Chintan Sheth, may I request you to unmute your line. Your line has been unmuted. Hi, thank you for the opportunity. I'm unmuted? Yes, sir. Please go ahead. Yeah. Thank you. Congratulations and thank you for this set of numbers. A couple of questions. One is on the Mamaearth growth. You mentioned the Euromonitor data, the category one growing at 11% for the Mamaearth brand. But almost for the full year, it looks like a single digit or 9%-10% growth. That you explained partially because of the distribution change or... But if we just look at the expectation-wise, whether the brand can grow at a, you know, high 20s, 20%, 18%-20% growth rate, or do you feel there is online softness also coming through the base is also hitting, which is reflecting in the softer numbers for us? So Chintan, as we have talked about, I think from a next year perspective, we are looking at a mid-digit value growth for the brand. But at a company level, we plan to grow at much more value growth rather than the brand will grow. And of course, Mamaearth has a large base. Actually, it is like I mentioned, one of the top 15 DTC brands. And if you actually remove the soap brands from that, it is actually also top five DTC brands in the country, ahead of which I mentioned for a few years. And hence, this, the base actually, and this is how we're expecting the brand to grow over the next years, based on the confidence growth by actions in different sort of categories. Right. Okay. The second was on the execution, which already described. There was some concern, you know, that the way we were launching new products, the timeline and the speed at which we were launching new products. The timeline for doing a effective, what I would say, quality or quality-based testing, whether this helps us to kind of overcome that aspect for launching newer products? Because there is certain, you know, media concerns on the way we were launching new products at a quick succession. The issue was that, whether we are kind of, you know, overpassing certain quality checks or the regulatory checks. Not, not the regulatory checks per se, but certain quality aspects that it, it's not given a due required timeline for to complete that quality check. So- I would like to clarify. I absolutely do not. We are paranoid about quality in this company. We started as a DTC company to make products for our own needs, and we still continue to test everything on ourselves as well. Every launch in our company follows the full quality protocol and testing, which includes all kind of NABL lab testing. It includes dermatologist testing for sensitivity, and it includes our internal lab testings. In fact, we are one of the very few companies which even today does batch level, production batch level, external lab testing. So last year, we have done more than 20,000 tests on each of our batch that we have manufactured in the company. That is an area where we are already very, very strong, and we are very cautious of. There is a reason why consumers love our products. There is a reason why we've been able to scale, you know, these brands in such a competitive environment, and that is our focus on quality. And, this acquisition allows us more knowledge and more insight into commercial combinations, which the team has done. The ability to go into newer categories, which we might not have had earlier. As well as getting more and further improving our quality as an area has continued to remain in high priority area and will continue to be. Do we have a you know quantitative targets for this acquisition that this number of particular products which will likely or categories which are likely to you know get into the help of the already set up you know having been set up over the next couple of years? Overall, the acquisition is supposed to help us deliver our goals, and, you know, like I said, for us, and hence, there's no specific target. The innovation targets that we have in 2090, this acquisition is supposed to further ensure that those targets are get met, because of, because of the capabilities that we have. Sure. And last question on this, the Saudi distributor thing. We already read in the press note couple of days back. What will be the timeline or how soon [audio distortion]? Hi. So we have 30 days to sign the agreement. Given that, you know, the past 5 years, and we've not really set up the marriage, so going ahead, and even then, I think we're very confident of reversing this at the next quarter, okay. Sure. Okay. So next hearing will be, or next update will be in the current quarter? No, it will be filed within 30 days, and then the court will give a date after that. Okay. Okay, so it will... Great. All the very best to you. Thank you. Thank you. Thank you. The next question is from the line of Amit Purohit from Elara. Please go ahead. Yeah, thank you for the opportunity, sir. two questions. one, you highlighted your initiative on direct reach in top 10 cities. So, query I had is more on customer thought process. I mean, why would the consumers move from an online to an offline in these top 10 cities, which already have a good access in terms of internet and good commerce as well? Just your thoughts on that. That's the first question, if you could. So, our view is that consumers in all of India, of course, in top 10 cities as well, prefer to buy in their channels of choice. There are consumers, let's say in Delhi, who prefer to buy on Amazon or DTC, and then there are consumers who still prefer to take their shopping machine to a DMart or a Reliance store or to a GT store nearby. And, because, you know, of their high trust in that channels, and because of their wanting to discover and feel the products before they buy. And, overall, as we see today, still, almost 90% of the category sales continue to be in the offline channels. That consumer is now looking for our brands and hence, our role will be to provide the brands at the channel of choice where they want to buy. It's a mix of different consumers even in each city, and that we're trying to serve. These would be different types of consumer stuff than the existing cohort. Is that your assumption? Yeah. Okay. And second, to understand your clarification with respect to your comment on active risks, and you said that large ETs are dominantly online channels, right? Much of the market is online, when you say Derma and up to 60% of the market is these companies. Yeah. So, can that- They, uh- Yeah. So go ahead. Please complete the question. I'm sorry. Yes, and the thought process was, is that I wanted to know is that if that's the case, then which are the brands which you expect it to take it offline? Because now you will have a distribution base and a direct reach, and that would require a support to be much more viable. Would that kind of give you a sort of entry into some of the mass categories as well, and not just restricted to mass prestige and the other segment? So, firstly, yes, the market for these products from a direct to consumer perspective largely lies in online. And some of these products and categories have existed, but in the past as well, but largely within the pharma kind of channels recommended by doctors. So now it's becoming direct to the consumer, and that market largely lies in online. From my ability to take it offline, I think we're already with pharma present in the right kind of stores where some of these categories and brands will also go, especially pharma and modern trade. And we will ride on that distribution that we have already built to take these brands to those channels. Sure. Just to point on the viability of this category, so should be good enough for us to not... Or we would have a barrier of entry into a market or something? Yeah, no, we don't have that. Okay. Thank you. Thank you. The next question is on the line of Manoj Menon from ICICI Securities. Please go ahead, sir. Hi, team. First of all, congratulations and excellent execution. You know, congratulations to the team, you know, for the UGC metric in the previous quarter, which we already recalled in the conversation last time. It's an absolutely excellent metric to follow. Good luck on that. Actually, on the offline journey, you know, Varun, team, you know, look, you are a young company, extremely well in online and you started off even better in offline. You know, for example, when I think about the demand forecasting, right, you are pushing at a faster rate. You have done and executed largely, I would say, impeccably. So just help us through your last 12-18 months of your offline journey. You know, what are the learnings? What are the hits and misses? How do you see growth in place, you know, let's say, into the next, like, a few years? Thank you. Thanks for those. You're right. We did discuss for UGC metric, and we have worked on it. This is actually on your second point, I think. Firstly, the realization has been around how we are a very data-oriented company, where we like to take almost every decision based on a set of clear data. And hence, the realization was that if you want to execute well in offline, we need to have almost as much data as we collect online and to be able to make even more, you know, relevant decisions. And in that light, and the kind of partners that we need should be the ones who understand and the power of executing the tools that we provide, as well as in terms of the field team that we work with, and should also appreciate and execute versus that process. And I think that is one of the biggest learnings. And we've in the last year, and really from the right in legal perspective, bringing in the right leadership and then, you know, from that down, building the right kind of team which has this process and data range, is an action that we have taken. Second realization, like I talked about, has been how the fact that the more direct control you have over your distribution, and the lesser the layers exist between the company and retail, and the better is the quality of the store execution, which, of course, leads to better shares. That's something that we have implemented, you know, in the project that we talked about, and we continue to push on that in FY 25 as well. I think the third big learning for us has been, you know, working with modern trade accounts, and like DMart and Reliance continue to grow really well in the current scenario. And last year, we have actually been able to engage very deeply with our modern trade customers, and whereby now, we have relationships where you know, we collaboratively work on newer opportunities in terms of propositions, pack sizes, categories, which we think is going to allow us to take better shares in the modern trade environment as well. So I think those would be the key learnings that we have had, and we continue to learn, though I don't think the learning journey has stopped. In fact, as a team, every quarter, almost top 50 managers from the company go and meet distributors, do market visits together, and then we come back and do a debrief for the same to further enhance our learning. We continue to be on that journey. Sure. Thank you for your reply. These are very detailed. So I have two quick follows here. One, you know, just around 700,000, you know, let's say, outlets in GT currently in offline. Realistically, what's the TAM which you have for the current portfolio? I do understand that, you know, every end outlet cannot be the same in groups. From a [audio distortion] is, you know, what is your TAM in terms of the offline outlets, let's say, from the variables which you should be having today from this competition? So for two categories, Manoj, face wash and shampoo is where we capture this through Nielsen. And, where we know we are in about 50% value-weighted outlets in for shampoo and face wash. And, and hence, probably for those categories, we can say that we contribute to 50% of the category sales according to Nielsen. But even in general, you know, stores, and almost 150,000 out of 200,000 is indirect. And, we realize when you go from indirect to direct, you're able to make a significant impact on your actual portfolio improvement. So that's the second factor in, in, Yeah, clear. Very clear. Very, very clear. And lastly, Varun, a while back, you know, as you recall conversation about the opportunity for you from your lens, the low unit price pack opportunity, which I don't think you have really tried that yet. So where are you at this point in time, in terms of the opportunity or process of execution? Manoj, I must clarify that our LUP is largely actually category LUP. Yep. Because we just simply will not get into sachets as a company. Given we have aspirational brands, right? And we would like to, you know, maintain that aspiration. But we want to get into smaller packs, so that total price, like you rightly said, for our brands becomes lower. And in line with that, this year our objective will be to scale up our INR 99 price point packs in shampoo and face wash and take that kind of distribution higher. And probably next year, we'll look at an even lower price point of INR 49-50 levels in scale. Very clear. Thank you so much, and good luck. Thank you. Thank you. Thank you. The next question is from the line of Latika Chopra from JP Morgan. Please go ahead. Hi, thanks for the follow-up opportunity. Just, you know, quick questions. The first one was: possible to share ARR for, you know, Aqualogica and Dr. Sheth's, the brand called The Derma Co. in Q4? Sure. As and when the brands hit a newer interesting milestone, and we will keep coming and celebrating that with you. And last year just shows that both the brands were in the INR 150 crore-INR 180 crore kind of, yeah. And of course, they have grown from there on. But hopefully soon we'll come up with you know, as a new milestone. Okay. The second one was on other income in the quarter. This is about INR 19 crores. In the previous quarter, it was about INR 11 crores. Could you let us know, you know, what is the expected run rate on this number? This seems higher in this particular quarter. Latika, so, you know, this is largely the impact of IPO proceeds for the full quarter. We've obviously, you know, we've started utilizing it to a certain extent, but not completely. So, from a run rate perspective, give or take, you know, few controls that this is probably run rate. Okay. And last it was on, you know, your distribution channels. You said most of the businesses, you know, offline. Could you help us with, you know, how is General, Modern Trade, if possible, give some color on, you know, what's the cadence of that in your revenue mix today? And any, any thoughts on or any, anything you want to share on how you're participating in the Quick Commerce channel? Thank you. So Latika, from a modern trade perspective, within offline, our modern trade and institutional business would be about 40%, you know, and GT would be about 50%. Quick commerce is growing very fast. It's of course relative to some of the other, you know, e-commerce platforms which are somewhat larger. In terms of contribution, as of now, it has already entered our top five. And but in terms of growth, and Quick Commerce is growing much faster right now. Thank you. Is this channel, you know, you know, from a possibility perspective, you know, how does it stack up versus other commerce, you know, the mainstream e-commerce channel to you? So relative to mainstream e-commerce channels, it's more hard. Thank you. Thank you. The next question is from the line of Jay Doshi from Kotak Securities. ... Hi, Jay. Thanks for the opportunity. Then a follow-up on, you know, TDC, Aqualogica, and Dr. Sheth's. What will be the offline contribution for all these three brands put together today? I know it's insignificant, and, you know, currently, your reach for Mamaearth is about 188,000 outlets. What percentage of the outlets, you know, either on a weightage average basis or, you know, on an absolute numeric basis, do you think are essentially ready to onboard these brands? Thanks, Jay. So, you're right. Currently, between Ayuga, Aqualogica, and Dr. Sheth's, contribution will actually be in low single digits for offline. This is the year FY 25, where, we are The Derma Co., which is uses such a scale and is now seeing demand, into the offline space. And, our first port of call, will be a combination of modern trade and, chemist channel stores. And, we would actually, want to grow, you know, incrementally, you know, by first putting in the right set of stores, by seeing the traction there, then adding, you know, another set of stores. And, making sure that wherever we put the brand, the brand is correctly moving out. So I think plans are there, and we hope this year more Derma Co. and we are able to take the contribution of offline to high single digits. And then grow on from there. Sure. Secondly, how do you internally track, you know, the repeat rates? And is there a, you know, qualitative or a quantitative sort of cover you can take on some of your 3- 4 year-old ranges, such as Onion range, Ubtan, Vitamin C? How have these ranges performed, versus, you know, the Mamaearth brand, or, you know, in FY 2024 over the last two years? So are we seeing, far healthier growth in some of your core ranges and the slower that we've seen for, you know, sister brand than lastly because of the long tail, sort of, you know, lower repeat of things there. So how do you sort of internally assess this and if you can, you know, help us understand it better? Sure. So, Jay, given our... We are very expanding, especially for Mamaearth, the growth is now coming from offline and modern trade, where we expanding. In offline and retail and modern trade are, you know, channels where we are able to execute a few SKUs well and rather than execute a long tail. And hence our SKUs like face wash and Onion Shampoo and have actually grown in high double digits in value last year. And we continue to in vitamin, Vitamin C has grown in high double digits. These are all personal ranges and SKUs which are which are present in and are driven in the GT and modern trade ecosystem. We will continue to see strong growth on those. Understood. And the final one, you know, innovations contributed 18% to full year, you know, growth, in FY 2024, and overall growth was about 30% or... So how will this construct, you know, sort of be over the next one or two years when you're guiding 20%+ growth? How much of that increment, you know, growth do you expect to come from, you know, the innovations that you launched during the first quarter, and how much will be from your existing portfolio? Jay, firstly, one must also understand that, you know, in this same growth rate, a lot of the younger brands, which are included, right? And for younger brands, for example, if something is three-year-old or one-year-old, it's still in the stage of range building, right? It's still in the stage where a lot of generation drives that growth. So that is also included in this. But from a future perspective, and if you're looking at it when you still have, we will continue to look at least 50%, 40%-50% of that and it being driven by innovation. Sure. Thank you so much, and wish you the very best for FY 2025. Thank you so much. Thank you. Ladies and gentlemen, as there are no further questions, I now hand the conference call to management for closing comments. Thank you so much, everyone, for asking these questions and your best wishes. Thank you. On behalf of Kotak Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.