Good day, and welcome to the Honasa Consumer Limited Q1 FY 2025 earnings conference call, hosted by Kotak Securities Limited. As a reminder, all participant clients 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. I now hand the conference over to Mr. Jaykumar Doshi from Kotak Securities Limited. Thank you, and over to you, sir. On behalf of Kotak Institutional Equities, I welcome you all to the Q1 FY 2025 earnings conference call of Honasa Consumer. We have with us Mr. Varun Alagh, Co-founder, Chairman, and CEO; Ms. Ghazal Alagh, Co-founder and Chief Innovation Officer; Mr. Raman Preet Sohi, Chief Financial Officer. I'll now hand over the call to Varun for opening remarks. Over to you, Varun. Thank you. Hey, thank you. Thank you so much, Jay. Hi, and welcome to everyone for our quarterly call for Q1 FY 2025. We're happy to communicate that our plans are shaping up well and visible in our results. But before we actually double-click on the results, we have, you know, a new segment that we wanna talk about, and it's actually just crystal gazing in the future of I-B eauty. And you know, because we continue to study markets like, you know, China, Korea, U.S., and it gives us a lot of excitement in terms of how Indian market is going to shape and looking at how the markets have shaped in other areas. This is a segment where we want to, we want to share every quarter a learning around a new category or payoff, and in terms of how we expect that to shape over time. Because the more we know and are prepared for it, and I think the higher, you know, Honasa's ability to take on these opportunities and shape the beauty and personal care category's future. This time, of course, we wanna talk about a category that we are extremely bullish on, and the sun continues to shine on I-B eauty. Sun care, in our view, is expected to become an INR 5,000 crore category by 2028. It was almost three years ago, this was a category which no one would talk about, right? Non-existent CP. And the digital evolution that has happened, the amount of education that is happening from brands, from influencers, from dermatologists, and is now visible in the kind of search trends this category has seen, which is almost 65% CAGR over the last five years. And it's also visible in the kind of traction the category has seen in terms of growth. If you look at skincare in general, and as percentage of BPC for other markets, is far higher compared to India. And so I think there is a lot of growth that will happen in skincare overall in India. And in that space, the penetration of sunscreen is further lower than other markets. We are actually a tropical country. Our comparison is actually with countries which have very deep winters. Even in those countries, the penetration of this category is far higher. So India, of course, as a percentage of skincare, this country, category will have higher penetration than these in the longer- term. But I think we are very confident that sunscreen would actually be a INR 5,000 crore market, and we, across brands, are investing in that future to be a strong leader in this market over the next decade. Coming on to the performance in this quarter, Honasa continues to show strong growth momentum with the volume led growth, and we've delivered 19.3% YoY growth, and our product business has actually grown by 20.3%. Our gross margin continues to remain strong at 71.7, 63 basis points improvement YoY. We have improved on EBITDA by 200 basis points YoY. In terms of PAT, we have grown by 60% and this is the highest quarterly PAT and EBITDA numbers that we've delivered in the past. This growth is actually transaction-led, and hence, UVG is actually higher than the value growth. Our working capital continues to be negative 12 days. Like I said, we have demonstrated strong improvement in EBITDA, and that is led by improving gross margin profile and scale-led efficiencies across our P&L as we have seen. Our offt akes continue to grow strong, and on the back of consumer love for the brand. In the last quarter, we have gained 115 basis points in face wash shares, and we've also gained 50 basis points in shampoo shares. Based on the equity study that we have done on the brand, Mamaearth is now the third most desired face wash brand in the country. It has reached almost 200,000 outlets and not just the overall shares, where there is also a distribution expansion that is coming in, but even the share amongst handlers is actually going up both for face wash and shampoo. And in fact, if you look at the stock in trade and which is in retail, and our stock in trade compared to industry is low and actually gone down compared to last year. Which is an opportunity, that we see to further build up shares in the long- term. From a perspective of face washes, of course, we wanted to give you a glimpse last time we talked about sunscreen, but face wash is another very important category for Honasa, and, and this is a category which, sees premiumization, across the globe and in India, again, the category continues to see premiumization. If you look at, the, the numbers here, the masstige, brands and, portfolios actually gained 1500 basis points over the last three years, while mass portfolios have lost. And, and in this, again, we are playing with a house of brand strategy. Where for the consumers who are looking for natural DIY-based ingredients, we have a Mamaearth. For the consumers who are looking for actives, we have The Derma Co. For consumers who are looking for top hydration kind of face washes, we have Aqualogica. So, you know, in the overall segment, and we have different products suiting different need spaces, which allows us to capture a larger share of the market, and it allows us to sort of, you know, be more efficient in the way we play category. And that's how we intend to play different categories over building this, you know, winning company in the segment. Innovation, of course, continues to be a growth driver for our business. And we continue to look at consumer trends, and in terms of categories as individuals, and then keep coming up with the right kind of products for the consumers. We've done innovation across that. The new products have contributed to 9% of the revenue from operations in Q1 FY 2025. We have also done a first to India, you know, innovation by collaborating with an international, you know, doctor, cosmetologist, right, Dr. Vanita Rattan. And in collaboration with her, we've actually launched a prestige priced range, which is actually priced at 2x of the Derma Co average pricing, and based on power of peptides and retinol. This is a range which allows us to enter a different price segment, and it allows us to experiment and understand how to play that segment right, and so that over medium and long term, that's also a price segment that we can open up for our brands and the company. It was, you know, launched with a lot of excitement and fanfare and early days, but we're seeing good traction on the range. Another good news, of course, is BBLUNT, which is our fifth brand, has entered the INR 100 crore ARR club. This is a brand which we acquired two years ago, and in two years we've been able to grow the brand 4x. We have applied the core of our repeatable playbooks to this brand to get where we have gotten. Starting with the right formulation and innovations, and moving on to the marketing and distribution playbooks that we have built, which has led to the brand pull, increasing significantly visible in the brand's Google searches, which have gone up 6x over the last two years. And the different kind of exciting ranges that we've launched in the brand, which the consumers are loving. And we continue to focus on the brand, and we are very confident that this will also make the benchmarks that we've set with other brands in the future. While that brand has done exceptionally well, and, but not all bets pay off equally, and, one of our brand bets, Ayuga, which was based on Ayurveda, and, has not scaled in line with our expectations. We were measuring, it through different form of PMF indicators, which we have not seen moving in the right direction. And hence we have taken a decision, to sunset the brand, and, which we have done, you know, last quarter and this quarter, we're just, you know, managing the transition. So, we will, we will of course, look at, other, possible consumer opportunities, and, which are more exciting, and, and focus our energies there, because this allows us for more bandwidth. Our modern trade business continues to do exceptionally well, and this is a business that we've been focusing on for the last two years, and it is clearly visible in the results. Right, Mamaearth is the fourth largest face wash brand in modern trade already. We have started executing our house of brand strategy in select stores to see how that, you know, shows up. And we are also leading in certain categories. So we are trying to own the Sun Care category in modern trade, and as a category leader and trying to co-create the category with our customers. This is a place where we're very confident, and as a channel with our relationships and the amount of collaboration that we are doing with our customers is going to lead to strong positive results in the future. Project Neev, we talked about transition in the GT distribution infrastructure last time. It's a very important part of our long-term GTM mix. Our ability to take our brands into general trade, and is dependent upon the quality of infrastructure that we have in GT. And hence we had initiated Project Neev. We wanted to last time that we talked about it, we did get some you know inputs that we should talk about it with a little more details. So this time we have put down a phased approach in which we are executing it. The first step was, of course, focusing on direct distributors, right? We had a model in which Super Stockists were the main channel through which we were servicing. We wanted to move in the top 50 cities to direct distributors, and we've been executing that, and it's almost, you know, 70%-80% done. We have been able to reduce our Super Stockist reliance from 70% to now 50%. But of course, this is work in progress and will continue to happen. Second enabled sales through future-ready DMS. Right. Again, great news on this front. Our DMS implementation is going on very well, and 90% of the secondary sales for the entire last quarter are all completely coming in from DMS. And in fact, it's also helping distributors process claims and schemes much quicker than, you know, in the prior system, there was more manual. And we have done a NielsenIQ survey for our distributors, and that's a practice that we want to do over the next three quarters as Project Neev is getting executed. And but 72% of our distributors agree that DMS has eased the scheme management and claims process. And there are still 69% of the folks are happy with the progress that we are making on Project Neev in making, you know, life easy. And so this is a phase in which we are almost 85%-90% there. And the third phase, of course, was supply chain capability enhancement. We have been a more online company, and hence our supply chain has been driven from one city, which is largely North for the entire country. And this was a step in which if we have to go direct to our distributors in top 50 cities, we need to have much more robust regional supply chain network. So that's a process which has been on. We had kicked this off in the last quarter. We partnered with Delhivery for a large warehouse transition that we are doing, and which will be followed up by regional warehouses as well. It's also live in East. So this is something which we are already working on, and this is work in progress as a phase. And once this phase is done, there'll be the next phase, which is right-sizing the channel inventory. And because of the type of distribution system we have had, we have ended up carrying relatively higher inventory in the system compared to other, and which does, you know, take investment from our distribution system into our inventory rather than in market and in market resources. So I think our objective will be to bring this down, so that we can move on to the next phase, which is basically norm-based ordering system. So that our distribution system is built on the basis of secondary sales and norm-based ordering and replenishment basis rather than push-based inventory system. And which will be followed by ROI-based partnerships. Currently, because of the current system, we've not been able to have a good quality ROI-based partnership system with our distributors. And this will be positive for the partners as well, and as well as us, because it'll allow us to get our partners to invest in distribution resources, sales resources, which is investment which we have been making directly as a company till now. So I think that's the overall project that we are running in Project Neev. We also have hired, you know, and taken the partnership, partnered with Bain & Company, for a stronger three-year roadmap of winning in offline. They have worked with many large FMCGs in the country on brand building and offline capabilities. So we also have taken them as a partner on this journey to help us craft the right kind of frameworks and right kind of strategies to win in offline over the next three years. So that's another focus area which continues to be executed. Our beauty with purpose continues to, you know, tread strong. All our programs, Plant Goodness, Young Scientist, Freshwater For All, are treading in line with our goals. And, we've launched a new, you know, purpose initiative for Dr. Sheth's. And, it's basically Healthy India, Healthy You, and, in partnership with Doctors For You. And, we are taking our clinic on wheels in rural areas and, to facilitate doctor consultations. And, the first state that we've started with is Bihar. And here again, the purpose is actually linked back to the consumer. So when a consumer places an order on Dr. Sheth's website, they'll actually be able to see, you know, a location to which their sort of, you know, transaction gets mapped to, where, a van is sort of, you know, heading in and spreading health. And, so that's something which we've just launched and we're proud of. And with that, I would close our side of the presentation, and would love to answer the questions that you have. Thank you. Thank you for listening and patience. Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchtone phone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question is from the line of Vismaya Agarwal from Citi. Please go ahead. Hi, Varun and team. First of all, thank you for the new segment on the presentation, the insights on the BPC category. I had a couple of questions. So first, you know, can you share some details on the growth rate for Mamaearth, some color on the primary sales for the brand, and, you know, maybe an update on the performance for the brand across different channels? I'm asking this in context of the distribution project that's ongoing, so, you know, just some clarity, please. Hey, Vismaya. Hope you're well. Vismaya, we've not been sharing brand-wise growth in the past as well, from competitive purposes. But I think like we shared in the Mamaearth slide, if you look at the Nielsen data, among the top 15 beauty and personal care brands, and Mamaearth continues to be the fastest growing brand in face wash and in shampoo. And even in modern trade, we have continued to gain share, and so clearly, competitive growth is strong, and it's growing, you know, well, from a competitive growth perspective. Got it, Varun. So what I meant was, you know, not exact numbers, but maybe from some qualitative comments around, say, is it on track to that double-digit aspiration that you've had for the full year? So not just the quarter performance, but more on the whole trend, the way this brand is trending. But I hear you on the market share bit. Yes, and just one more bit here on, you know, on the levels. I do see the inventory levels that you've shared for specific categories for Mamaearth. But on an overall basis, just want to get a sense that slide that you have on Project Neev, where you mentioned the 30-45 days inventory across the channel partners. So is that the current number, or is that what you want to target eventually, sort of initiative is complete? Sorry. Vismaya, so, I think the inventory numbers that we shared in Mamaearth for face wash and shampoo, they are retailer-level inventory numbers captured by AC Nielsen in number of days. And Project Neev, what we are talking about, is distributor inventory, and those are desired inventory levels that we want to get to, and, post we do the math. Got it, Varun. Thank you. You know, last one from my side is on the gross margins. Now, I see that it's expanded, you know, quite a bit, even on a YoY and on the sequential basis. So can you give some insights on the drivers here, you know, other than channel mix? Is there some seasonality at play here as well, you know, given what I see on the historical data, Q1 has simply been a higher gross margin. So, you know, any comments there, and also an outlook, if you can share with us for the year as to where this gross margin should settle for FY 2025? Yeah. Vismaya, hi, Raman this side. Yeah, so I think, the gross margin expansion is the two key levers. Of course, as we scale, we continue to get some, procurement efficiencies, so part of that is because of that. And secondly, you know, in terms of brand mix, given our younger brands are a higher gross margin profile, that's also helping bump up our, gross margin profile. So I think that these are the two key levers. And I think from a, let's say, go forward, you know, expectation, we expect around same levels between 70%-71% kind of the gross margin levels, is how we, expect in terms of, achieving the gross margin profile for the year. Got it, Raman. Anything on the seasonality here? Is Q1 generally a higher gross margin quarter? So, I think that if you look at YoY, yes, so Q1 has a higher proportion of skin and face wash, so there is slightly higher gross margin, like that. But from a perspective of YoY, and I think we'll continue to be at the gain that we have demonstrated in first quarter. I think that gain will sustain throughout the year. Got it. Perfect. Thank you, and all the best. Thank you. Thank you. Participants, if you wish to ask a question via the webcast, please click on the Ask a Question link under the video player. The next question is from the line of Chintan Sheth from Girik Capital. Please go ahead. Thank you for the opportunity. Hope I'm audible. Yes, sir, you're loud and clear. Please. Yes, Chintan, we can hear you. Yeah. Thanks, thanks, for taking this question. And I think, great set of numbers, the numbers are progressing well. Couple of questions on the distribution side. I understand you are not, you know, comfortable sharing brand-wise, but if you can share, some bit on how the offline, online mix has changed, this quarter versus last year, that would be helpful, just to track how we are, you know, progressing on the offline side. Secondly, on with this Project Neev, what are we trying to protect? What are the outputs we have internally, you know, benchmarked, for this Project Neev, which say right now it's close to 65/35. Where are we looking at as an offline mix as a percentage post the Project Neev gets concluded? Thirdly, on the Ayuga side, any write-offs we should expect, or it's already in the numbers. That is on Ayuga side. These are the three. Thanks. Thanks, Chintan. So on the first question, the contribution of online, offline remains largely in the same zone as last year, right? Because there is, while there is offline growth in, but our younger brands, which are growing, are only present in online, right? So because of which, online is actually also growing faster. And hence that contribution is largely, you know, held in compared to last few quarters. And, the. Remains the same, or it's a quarterly you're comparing, offline, online? Yeah. I mean, from a quarterly comparison, you will see then online might be a few basis points increased, because like I said, the you know, younger brands which are only online, their growth you know leads to the online channel expansion. And while the offline growth is largely only driven by Mamaearth. So that's what that is. I think the second question was in regards to the outcome of Project Neev. I think the outcome of Project Neev is more long-term in that sense, that the right offline GTM ecosystem will be needed for us to drive not just Mamaearth, but also, for example, Derma Co, Aqualogica, Dr. Sheth's, because all of these brands in the long- term will be executed in the physical you know retail, right? We need to have a very healthy distribution system where the partners are earning healthy ROIs, and their ability to invest in the growth of these brands is high. So I think it's an investment in the decade-long growth that we want to see across the channels. And hence there is no short-term sort of, you know, contribution change that we would see because of that. What we would want to measure, like we're saying, I mean, reducing inventory levels will allow us to get our partners to invest more in in-market or in manpower interventions to increase direct distribution. I think that, and like we mentioned, we are running a NielsenIQ-led survey among distributors. I think for the next three or four quarters, as this project continues, and we will continue to run that to understand how the perception of the company amongst distributors and is improving. Because recently we came across you know media articles related to certain inventory getting... not getting replaced by the company. That was a complaint for a few associations, so distributor associations. So that it will be taken care of through Project Neev, that's what our target is. Yeah, Chintan, some of those complaints we have talked about, and we've given our answers. Some of those are not, you know, don't have merit. And, you know, we've had policies, we've been sort of, you know, actively taking care of any having expiries, et cetera. But, yes, we have talked about this in the past, that our overall inventory level in the distribution system are higher relative to other FMCGs. But finally, the partners that we are now seeking are the FMCG kind of distributors. So, Project Neev aims to help us, you know, get a better business partnership with these distributors and also, of course, take care of all of these concerns, which might be up. Right. And on Aqualogica, that's data and technical. Say, Ayuga. Aqualogica is doing. Sorry. Ayuga. Ayuga, as you mentioned, yes, so we don't see any write-off risks. We have some inventory which we need to manage, which we have already provisioned. Okay. Okay, got it. Very nice. Thank you. Thank you. Thank you. The next question is from the line of Manish Poddar from Invesco Asset Management. Please go ahead. Hi, two questions. So, one is, if you can highlight, actually, because of this, you know, distribution sector change, what is the sort of impact on sales? Yeah, hi. So, I think like we mentioned, the phase where we are there to take the inventory correction, we haven't reached there, right? We will first, you know, strengthening our supply chain, so that even with the relatively lower inventory levels, we are able to run the system without delivery issues towards retail. And I think that was our past focus. But over this quarter or next, we will be taking that decision where in that quarter we will have short-term impact in sales. But otherwise, in the long- term, this won't have any impact. It actually will be very positive impact on the long- term. Okay. And, how much. So we were initially implementing in the top, top, top locations. Where are we now in that journey? So just, you know, this side has a lot of moving parts. I'm just trying to understand that if I had to. Yeah. Monitor one or two variables, I'm just trying to understand how much of the network? Are we, are we there? And, you know, you, you're saying it will take another two quarters for this, this year to implement. So, you know, where are we right now in terms of that? So like I mentioned, the first two phases, we are almost 80% there, right? So, for example, phase one, which is about transitioning in top 50 cities to direct distribution model, we are done with almost 35, 36 cities. 15 more cities are left, right? In terms of removing SS and moving to a direct distribution partner. And the second phase, again, from a DMS perspective, our rollout has been fairly healthy, 90% of the delivery sales are getting captured there. And supply chain phase, I think we are, we are about 60%, 70% there. And last quarter is when a lot of the work has happened, and as we speak, it's happening at a strong pace. And the rest three phases, which is inventory correction and norms et cetera, is yet to be done. So, so sorry. So if you've implemented this in so many locations, why, without a sales loss? Yeah, because we've not taken the inventory correction till now. And when we will do the inventory, we will. Because if we would have done that without having the right supply chain levers, right? For example, without opening the East regional center, and if we would have done the inventory correction in the Calcutta segment, and then, you know, our fill rates to retail would have dropped significantly. And because our supply chain wasn't ready to supply the distributor or regional offices, right? Now that we have opened the East regional center delivery, we are in ready state to actually make that transition, right? So which is why it's not visible in now. And we will take that over this quarter or next. Got it. Just, one last one. So in terms of Sorry to interrupt. We are losing your audio in between, so if you can repeat your question. Yeah. Yeah. Is it better? Yes, sir. Please go ahead. Yeah, yeah. So, Varun, just in terms of new product contribution to sales, that's at 9%. And, so just wanting to understand, let's say, I think the somewhere at quarter four was about 18%. So, just trying to understand why the reduction, let's say? And, there is, I guess there's no mention on Staze. So if you can highlight, you know, how it is progressing? That's it. Thank you. Sure. I think firstly, you know, that number was from a, like, you know, innovations which had lasted for the whole year. And even that number, if you look at from a perspective of contribution to growth, and 50% of the growth contribution was coming from innovations. And, I think even now, 50% of the growth contribution continues to be from innovations. And, on Staze, I think, you know, the progress has been healthy. It's a very young brand. It was only launched in February, so which is why we're not sort of sharing, you know, major. The progress is healthy and but only once it hits a certain milestone, which we want to talk about, and is when we will share it with you. But the early results and progress, we are very happy. Sorry, if I can get just one clarity. So when you say 9%, and there's an asterisk which says January to June, so during these two quarters, new products contributed 9% to the sales? No, only the products which were launched after January of 2024. They contributed 9% in the AMJ quarter. That's what we mean. Okay. And the same number was 18% last full year, when you, b ecause there's an asterisk there. Which was for the products which were launched in January 2023 to December 2023, contributed 18% to the Q4 contribution. So 12 months of launched products with, you know, in, in the next 3 months. Okay, fine. Fine. Thank you so much, and all the best. Thank you. Thank you. The next question is from the line of Mehul Desai from JM Financial. Please go ahead. Hi, good evening. Thanks for taking my question. I have two questions. One is, obviously, if you can give some flavor on, profitability, trends in TDC, how is it shaping up? I think we had once spoken about that brand breaking even, with now gaining scale. Is, is it more into positive trajectory? And second, on the A&P spends, I think for the full year, the A&P spends were close to 34-odd%. First quarter, we have started at 36-odd%. So, is there a seasonality that first quarter is high on A&P spends? And how do you see A&P spend as a percentage to sales for the full year? Thank you for asking those questions. On the first question, yes, TDC continues to scale in a healthy manner, both on top line front and and even from a bottom line perspective, has become better than what it was last year. So it's in the positive even in this quarter. On your second question, yes, we do have seasonality in terms of how we do our brand marketing spends. So we have higher brand marketing and A&P spends that we do in H1 compared to H2, because of sunscreen, face wash, being our two core categories, and this is the recruitment period for these two categories and hence across brands, and there is stronger brand investments that we do actually. Do you see some efficiencies coming on A&P spends in FY 2025 or you think the competitive intensity is high enough that you might not see efficiencies in A&P, but you will extract more efficiencies on stock costs and other expenditures? Actually, the observation is correct. Competitive intensity has been fairly high, and our focus has been to gain shares. We would try and ensure that we continue to invest in the brand to gain competitive growth. Of course, our H2 A&Ps will be, like I said, better than H1 A&Ps. But overall, the focus has been to find efficiencies elsewhere and remain strongly competitive on the brand investment. Got it. Thank you, Varun. That's, that's all from my side. Thank you. The next question is from the line of Nitin from MK. Please go ahead. Yeah, thanks for the opportunity. So, like, just wanted to get a sense on research and development strategy ahead. So last quarter, we had acquired Cosmogenesis Labs, where Manoj also joined us. So anything you can want to highlight how we are planning to go ahead with the R&D strategy ahead? Thank you for asking that question. In fact, you know, like we talked about GTM as a foundational lever, we are very, very clear that R&D is a strong foundational lever for long-term growth of our business and winning in the beauty and personal care in India. And hence there is continued, you know, focus and investment that we will keep doing on R&D side. Cosmogenesis was one of those initiatives that we took last quarter, that in fact, the completion of that integration is really happening in this quarter. And post which we will, you know, start focusing on how do we leverage on all the intellectual learnings that they have. But aside from that, also, there is more activity that we continue to do on R&D in terms of even learning and partnering with global active vendors, figuring out what new you know innovations are happening across the globe, right? And how we can also study the dermatology you know science of skin to understand what can be done further from a crafting for India perspective. So I think a lot of focus on that front, and you will see that as a continued conversation pillar from our side over you know many quarters to come. And because we generally believe that's one fundamental lever that we'll continue to strengthen. Thank you. So, like, this question was more also from the perspective of recently HUL is also talking about the strategizing and launching some of the patented international offerings in India. So just wanted to get more sense on this. Like, do you see this will, will have any implication to us, or you see this as a positive for the overall market development perspective? So I think I can speak on our behalf, and I can tell you that, you know, Honasa will continue to be the edgiest, right, and the most innovative company in beauty and personal care, in the next five years to come. And I don't think anybody will be able to beat us when it comes to consumer innovation. And it's our course, right, and we will continue to get stronger in that. Sure. And do you think there is any merit in terms of patenting products, like some of your, competition in active ingredients, have sort of started patenting the products, while we have not yet patented anything? So do you think patenting, has any role to play in the, beauty and skin care segment? This is an area of which we have been deliberating on. In terms of technology or ingredient, you know, patenting. As of now, we have not actively been pursuing this, but with the enhanced R&D strength that we are accumulating now, and this is also an area that we'll further deliberate on. Sure, sure. Thank you. Thanks for giving me the opportunity. Thank you. Thank you. Thank you. The next question is from the line of Jitendra Arora from ICICI Prudential Life Insurance Company. Please go ahead. Mr. Arora, your line is unmuted. Please proceed with your question. As there is no response from the line of current participant, we'll move on to the next question. The next question is from the line of Percy from IIFL. Please go ahead. Hi, Varun and team. My question is on the guidance that you had given. Hello, am I audible? Yes, sir, you are. Hello. Yes, please go ahead. Yeah, yeah. My question is on the guidance you had given last quarter, in terms of 20%+ growth and 150 basis points margin expansion for the full year. Are we still maintaining that guidance? So, Percy, I think, you know, from there can be Q1 where we execute the Project Neev Phase IV, and where we might be off that guidance. And, but outside of that, all 3 quarters we are maintaining the same guidance. Okay. Could you quantify this quarter, what is the impact of the pipeline correction on the total company level sales? Like I mentioned, Percy, we have not executed the pipeline correction in the last quarter, so our supply chain readiness was not up to the level where we could take that chance. Now that we are building our supply chain readiness, we will be taking that correction going forward. We haven't taken that in the past. Understood. And lastly, I don't know you, I know you don't give separate numbers for this, but any kind of rough range you can give on Mamaearth's brand growth? I mean, our target was to bring the growth to a double digit. So are we at that level this quarter or, I mean, are we at mid-single, high single? Where are we roughly? Percy, we talked about this in the Mamaearth side as well. From a perspective of Optix, the brand is amongst the fastest growing in top 15 VC brands in both face wash and shampoo, which are the top two categories for the brand bases in recent Optix data. And as well as in modern trade, we are gaining share. And so overall, from a consumer level health perspective, the brand is comparatively growing, and that's the objective we continue to gauge. Okay. I'm sorry if this is a repetition because I joined late, but if basically at the consumer level, there is good growth, and this quarter we have not taken any pipeline correction, then at a company net sales or primary sales level also, we should be seeing the same amount of growth. Is that understanding right or am I missing something? No, Percy, from a company perspective, again, I think 20% growth in product business is something which is significantly better than what the industry at large is delivering. So I think, you know, that is reflective of our you know, brand visibility we have to have consumer group. Sure. Got you, got you. Thank you very much. All the best. Thank you. Thank you. you. Thank you. The next question is from the line of Jitendra Arora from ICICI Prudential Life Insurance Company. Please go ahead. Mr. Arora, your line is unmuted. Please proceed with your question, and if your line is unmuted from your side, muted from your side, you can unmute it from your side and ask your question. As there is no response from the line of current participant, we'll move on to our next question. Next question is from the line of Dhiraj Mistry from Antique. Please go ahead. Yeah. Hi, sir. Congratulations on good set of number. Sorry for dwelling on this, like, but, what, o n an annualized basis for FY 2024, if this, Project Neev, what could the, be the impact of this on a annualized basis? Not from the quarter perspective, but from the annualized basis. Around 150 basis points from a top line perspective. So when you talk about. Yeah, so when you talk about 20% revenue growth for the full year basis, does that incorporate this 150 basis points of impact, or this is excluding that? This is excluding. Okay. Oh, okay. Our secondary growth will continue to be at a 20%. But. 20%. With that impact on the growth. Yeah. Okay. And, sir, last quarter you mentioned that you would be launching INR 99 and INR 49 pack, not in the sachet for, you were not interested in sachet format. Where are we in that strategy? Because if we want to scale up, in a General Trade channel, we need some lower point, lower price point products. Where are we in that part of journey? So, on face washes, and we now have a INR 99 face wash in Vitamin C, and face wash, and we have also launched Ubtan 50 ml pack at INR 1.5 for long size. And similarly, in onion shampoo, we have launched a 100 ml pack, and these are all those launches which have happened last quarter. And now, we are looking to scale them through our direct distribution. We'll continue to look at more opportunities across categories where some of our hero SKUs can come in lower prices. And over the years, we've figured out how, you know, further lower brought down prices can also be provided to customers. Okay. Sir, can you give some qualitative statement that what would be the percentage contribution in this quarter? Although it's, like, very new, but can you help us understand with that? No, no, not material enough as we speak. And, you know, it is, it's too early, and such packs require deep GT distribution build-up, and only when that distribution build-up becomes strong, can then you have, like, a material contribution coming in from these packs. So I think it'll take us three to four quarters to scale up the GT distribution for these packs. And, but yes, I think next year in quarter, we should see delta GT share gain coming from these packs which we- Got it. Got it. Just to clarify on this, like, this price point products are not available in online channels. It's purely for GT channels. Yes, right. This is purely from our GT perspective. Okay. And, just last question from my end. Can you share online and offline contribution for Mamaearth brand, particularly that whether the offline channel contribution has increased for Mamaearth brand? Not from the company level, but only for the Mamaearth brand. That's it from my side. Thank you. It continues to be 50/50, and for both channels. Got it. Thank you very much, sir. Thank you. Thank you. The next question is from the line of Jaykumar Doshi from Kotak Securities. Please go ahead. Hi. Thanks for the opportunity, and congratulations on good set of numbers. The first question is just clarification. I know you called out that, you know, the impact of, right sizing of channel inventory could be 150 basis points on a full year level, which would probably mean about INR 30 crore or so of, you know, on net sales. Will it have a disproportionate impact on profitability, or you seem to be broadly comfortable of, on delivering your 150 basis points margin expansion of guidance for the full year level? Jay, the, like we said, the quarter that we take that adjustment, it will have impact on profitability in that quarter. And for the rest of the three quarters, we are confident of delivering that 150 basis points plus margin improvement. So the full year will be a combination of that. But what it allows us to do is then, you know, from a next year perspective, a healthy distribution system will allow us to further exact efficiencies, and making the longer- term and medium-term picture more healthy. Understood. When you mention channel inventory correction, does it essentially mean that, you know, the level of channel inventory will go down, so basically that quarter will see a gap between primary sales and secondary sales? Or will there be some, you know, stock returns which would lead to provisions or write-offs, as well, and. So, Jay, it is a combination of the two. And, in certain cases where there is a closure of a party that has happened, or if there was, you know, a tail assortment lying with a distributor, right, we would do RTV. And, in which case, like you rightly said, there is provisions and, et cetera, that will also come into play. And, and in other cases, there will be a primary, secondary gap, in which the secondary spends would still happen, as per, the plan, right? But because the primary won't be there, so and, that'll lead to, you know, the margin. So I think that's how we are seeing it. Understood. This is something you'll do in one quarter. It won't drag, in the subsequent quarters, right? It will be sorted out in. Yes. Okay. Very good. That's the plan, right? Because that is why we wanted to be ready with the supply chain, and execute it in one quarter and then not sort of extend beyond, right? We are very confident that post-execution in other quarters, we will actually be, you know, in line or better, in terms of our performance. Sure. One more question. You know, a couple of quarters back, you had called out that, you know, on the marketplaces front, you're doing quite well on platforms such as Purplle. You know, does that sort of, you know, growth trajectory or, you know, strength that you are witnessing in tier two, tier three markets, continue, or there's some moderation or competitive intensity, there as well? Yeah. So no, it continues. I think Flipkart, Meesho, Purplle, and all of these three marketplaces, which are tier two and beyond focused, and are actually growing quite well and faster than our overall e-commerce. Sure. Thank you. Thank you, and best wishes. Thank you. Thank you. The next question is from the line of Latika Chopra from JP Morgan. Please go ahead. Hi. Thank you for the opportunity. Apologies if this is a repetitive question. I wanted to check, you know, what is the salience of. Broadly, Sun Care, for you in overall revenue pool. And I believe Q1 seasonally could have been higher, right? We dealt with a very hot summer. So, hi, Latika. So salience to the portfolio would be 20-odd% in that range. And yes, summer is a healthier quarter for sun care, but at least our last year's trend line tells us that the seasonality is not massive. And in fact, the usage of sun care continues into the further quarters as well. And you know, India, apart from north, actually doesn't even see major winters. And so even in the other quarters, the salience is strong, it is not like it drops significantly. And in any which ways, both Q2 and Q3 see second summer phenomena, and towards you know, September, October. And so that, of course, helps. And then, you know, in general, the adoption of the category is happening in a manner and where consumers are not just linking it to heat and but just pure sun exposure, right? Which is why, you know, markets which are very cold, be it European markets or American markets, have a deep penetration of this category. And so as that education is expanding, the salience of the category is also fairly well set. That is clear. Thank you. The second bit was on, you know, channel salience. I remember, you know, in FY 2024, the offline revenue salience was, roughly 35%, and, 65% was online. I just wanted to understand, you know, how is quick commerce as a channel, you know, evolving for you? You know, any color or any flavor on what could be the salience of this channel in your overall revenue mix today? Thank you. So Latika, I think quick commerce as a channel continues to do well for us, and in the e-commerce mix, and you know, it is actually the fastest growing sub-segment for us. And even in last quarter, I would say the channel would have grown more than 3 times, and than any other e-commerce vertical that we have. And so very strong growth, and this is, w e're still scratching the surface because most of the sales is coming from top 10 cities right now. And so as the channel expands to the next 50, next 100, and you know, we have very strong shares in those categories in these channels, so we're very positive on these channels. All right. But possible to share any flavor of what percentage of online revenues will now be on, coming from quick commerce or? It's more than 10% already, and since it's growing much faster, we'll continue to grow strong. Okay, right. So that's 10% of online revenues, right? Or overall revenues? Yeah. Online, offline. Oh, okay. Great. Thank you. Thank you so much. Thank you. The next question is from the line of Ankush Agrawal from Surge Capital. Please go ahead. Yeah. Hi, thank you for taking this question. So, the primary question is on the expense. So, in Q4, the guidance that we gave, we stated that, we'll see at least 150 basis points of margin expansion, of which two-thirds will come from, expense leverage. But I think, in one of your replies to early participant, you, kind of stated that you want to keep, expense at a similar level and want to see margin expansion coming from the other operating cost side. So wanted to understand, has there been a change, in the strategy for this year? No, I think, you know, as mentioned earlier, this year, we've seen significant competitiveness from other folk, which have two impacts. Of course, it leads to higher CPMs and inflation in media costs, and as well as, you know, to protect your share gain plans, and one needs to invest more aggressively. So, currently, we have been, you know, given brand building is something that we are, that's our given priority, and we've been investing strongly in that. It's also, you know, the quarter had summer, sunscreen and face wash, which are our core categories, where we spend from a year-long perspective as well. So that is also a part of it. If we can manage to deliver what we need to deliver without actually reducing our intensity on brand, that will actually be a great place to be, and. Okay. Of course, secondly, there is a lot of work that we have been doing on media mix analysis and coming up with a stronger understanding of parts of media which work harder for us, and which will allow us to sort of, you know, be more efficient on this as we move forward. Okay. Well, well, that was it. Thank you. Thank you. The next question is from the line of Mehul Desai from JM Financial. Please go ahead. Yeah, I just saw this, inventory correction, which is yet making. I just wanted to, we have not given any timeline. Do you expected this to be this year, or you will still, you know, before giving any timeline, you will still want to see a progress in first three steps of your Project Neev, and then you might give a guidance on that, you know, when you want to start this, right-sizing? No, Mihir, we, we are very clear we want to do it this year itself. And, Okay. You know, so yeah, it will happen this year. Yeah. Okay, got it. Thank you. Thank you. The next question is from the line of Jaykumar Doshi from Kotak Securities. Please go ahead, sir. Yeah, hi. Thanks for the opportunity again. As per my understanding, your summer portfolio is much stronger than the winter portfolio. So could you talk about your plans, or if any, you know, to strengthen your winter portfolio ahead of the season this year? So Jay, this has been an active area of work for us. You know, our R&D teams, our brand teams for the last three quarters have been working on moisturization as a category in we have. And how we can use the same house of brands power that we have, and to take share in moisturization. You know, this year in H2, you will see a lot of positive innovation and happening from our brands in that space, and which will help us strengthen our position. And so that, you know, as we move forward into, you know, later years, and we have a healthy mix of moisturization categories that we can execute strongly in H2 to drive strong share gain and growth. And so yes, we have strong focus there, and you will see function action from us. Sure. Thank you so much. Thank you. Participants, if you wish to register for questions, please press star and one on your touchtone phone. As there are no further questions, I now hand the conference over to the management for closing comments. Thank you so much for attending the call. Like I said, we are super excited to execute our agenda in capturing the BPC landscape of India. There are certain foundational capabilities like R&D, media mix modeling, GTM, and that we continue to strengthen and work on, because we know that these capabilities will decide our long-term success. We'll continue to take the right initiatives on these fronts, and then continue sharing how we are doing on those initiatives in quarters to come as well. Thank you so much for your patience and support. Thank you. On behalf of Kotak Securities, that concludes this conference. Thank you for joining us. You may now disconnect your lines.