Ladies and gentlemen, good day, and welcome to Honasa Consumer Q3 FY 26 earnings conference call, hosted by JM Financial Institutional 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 this conference is being recorded. I now hand the conference over to Mr. Rajat Gupta from JM Financial. Thank you, and over to you. Good evening, everybody. Welcome to the Q3 FY 26 earnings conference call of Honasa Consumer Limited. Today, on call, we have Mr. Varun Alagh, co-founder, chairman, and Chief Executive Officer. Ms. Ghazal Alagh, co-founder and Chief Innovation Officer. And Mr. Raman Preet Sohi, Chief Financial Officer. I now hand over the call to Mr. Varun for his opening remarks. Over to you, sir. Hi, thank you so much. And thanks, everyone, for joining me. Welcome to the Q3 FY 26 update for Honasa Consumer Limited. As is customary, we'll start by sharing a key trend that we have been witnessing in the beauty and personal care industry, which is a trend in men's skincare. We believe men's skincare is at an inflection driven by evolving consumer preferences. Men's grooming has been talked about for quite a long time, but we saw at least in the last decade, largely action on the shaving or beard care side. Last two years, we've specifically been noticing a strong you know, inclination towards skincare, which is specifically designed for men. We've seen this specifically in the search data that we track. Like, in a sunscreen category, consumers are specifically searching for sunscreen for men. In our face cleanser category, they're searching for face wash for men. And this for men call-out has been increasing multifold over the last 2-3 years. And we've also seen significant increase in male skincare influencers, almost six times in the last five years. All of this is happening because of rapid premiumization, awareness and evolving self-care mindset. This is make us feel that this is an interesting space which will get shaped and will grow really well. And this is also space where Honasa has made an acquisition that we will talk about during the course of the presentation, which is Reginald Men. But over to this quarter's financial snapshot. I'm delighted to share that, you know, we have delivered our highest-ever quarterly revenue. The company has grown by 21.7% in terms of revenue growth. This is also led by volume. Our UVG is at 30% growth. It's our highest-ever EBITDA, which has also sequentially grown. We've almost doubled our PAT, which is again our highest-ever PAT, and we continue to be negative on our working capital cycle. So the core engines that we have been talking about for the last three quarters, and the flywheel around making our core stronger, which is Mamaearth, that's back in to teens, YoY growth, and continuing strength of our young brands, which are now growing at 25%+ in terms of growth, and has led to us delivering, you know, competitive market-leading growth for us. Also in line with the scale as well as the effectiveness coming in our marketing. We've consistently seen improving EBITDA margin trajectory for the company, and which we have been talking about and have been able to deliver. If we sort of again call out, we had mentioned this in the last quarterly meeting as well, that there is a revenue recognition impact, and which has happened on account of Flipkart Group changing their revenue recognition norms. And because of which, there is a INR 28 crore impact that we are seeing. But if you also correct for basis, and then the growth continues to be at a 21% level, and like to like, like we said, it's 21.7. If you were to see hence reported numbers, and we have delivered INR 602 crore in terms of reported revenue. EBITDA is at 10.9%, the same INR 66 crore. This revenue recognition impact has not led to any back on bottom lines, and it's just a recognition impact that we see in our revenues. Double-clicking on the business, I think from a channel perspective, what is heartening to see now is that all the channels are actually doing quite well. E-commerce is at a 20%+ growth. Modern trade and GT now is also delivering 25%+ growth. These are off-take growth and secondary growth, which is a great sign of the brand traction. Our strategy of focusing on our focus categories has also clearly paid off. Our focus categories continue to grow ahead of the company as overall growth numbers at 25%+. These are the categories which are getting 90%+ of our investments, and we continue to focus on strengthening our share in these categories. Mamaearth, which is back to teens growth, it's been, it's taken some time, but focus on fundamentals and has really helped us deliver this. Started with superior market-leading formulations. We have consistently been talking about how we've been increasing and improving our formulations to deliver blind test winning formulations across our products. We've also worked a lot on our communications to make them more aspirational to the new Gen Z consumer. And we have focused our investment in the six focus categories that we have identified for Mamaearth. The combination of this is that we are now back to double-digit growth, right? And we are winning in our value share as well as share among handlers. And share among handlers actually has moved ahead of our value share, which means that now we have more catch-up job to do on our distribution front, right? And if we do that, that will give further growth in the offline ecosystem as well. And as we do that, we are also building other categories like moisturizers in offline. Our young brands, of course, continue to you know sustain their momentum. We planned with focus on hair color, Aqualogica, with moisturizers and this being new categories. Dr. Sheth's with premium serums, which we are shaping. Staze, which has now crossed INR 50 crore ARR, and continues to grow well. And, of course, you know, the star in this portfolio continues to Derma Co., which is continuing to not only deliver strong growth, right, but has also achieved a double-digit EBITDA profile now in this quarter. And continues to drive innovation across categories, and we have entered the haircare with the peptides and tripeptides. Right now, our sunscreen formulations have become even better with new generation filters like, you know, Solaveil and Parsol. And consumer interest, of course, continues to be strong in our core categories, which is demonstrated with the searches and the share gain that we are seeing on the brand. So continued successful momentum on The Derma Co. Another area of focus in the last four quarters, of course, has been offline execution, where clearly our shift to direct distribution has started to pay off strongly, and our outlet reach has expanded, and our direct distribution contribution has expanded to almost 80% revenue contribution now. Our distributions are healthy, and our inventory holding days are now optimized at about 30 days, which is very healthy for a complex inventory system like ours. In modern trade also, we continue to build reach and outlet presence. This is on account of the offtakes that the brand sees, and the share gain that the brands are seeing. So all in all, offline is in healthy shape and ready to service the brands and growth trajectory in future as well. We continue to invest in product renovation and innovation. Again, we have got multiple new formulations, which have delivered blind test-winning, you know, performance with international leading brands in their, you know, core partitions. And, and we are very happy to see the performance that these products continue to deliver and what our R&D team continues to deliver. And, this is a continuous process, not a one-time activity, and it's a muscle that we have built, and we keep deploying these muscles to make our products even better for our consumers as we move forward. And I think, you know, from a future perspective and, what we talked about, we keep looking at white spaces, in the landscape, and keep building hypothesis around those white spaces. Sometimes we come across some brands which completely fit into those hypotheses. I think Reginald Men has been one of those brands which completely fit into our male skincare boom hypothesis, right? And the brand has done extremely well in the last two years of its existence and become the most searched men's sunscreen brand based on a multi-benefit proposition, which men like. They don't want to get into multi-regimen, but you know, products which can do multiple things in one. And also helps us enhance our presence in South India, since we've not only acquired a brand, but acquired a talent and a team which is out of Hyderabad, and continues to understand, which will help us strengthen our understanding of the region as well as find ways to strengthen our brands in that region. Us, being a North Indian company, you know, get that slight disadvantage in terms of the talent that we're able to get here. But now, having presence in Hyderabad, and we'll actually be able to hire and attract more talent, which can help us strengthen our presence in South India. And it also, of course, is additive to Honasa's portfolio, where we did not have any brand that was focusing on male skincare. So all in all, I'm pretty excited about this acquisition. And I think overall, you know, we've been focusing on refreshing our playbooks, right? Our flywheels, so to say. And we are feeling quite confident that now the principles that we have come up with and which start by focusing on identifying the right partition, building a product which is a Blind Test winner in that partition, right? Focusing then on investing sufficiently behind that hero product, right, through the right content and media, you know, mixes and providing it a distribution supercharge across both e-commerce, Quick Commerce, as well as offline landscape. And followed by, again, keeping an eye open for future growth engines where we can deploy the same cycle. It's giving us strong confidence that we'll be able to, you know, sustainably use this cycle to deliver market-leading growth and gain share across categories of our interest and as we move forward. Of course, we continue to build purposeful brands which not only grow, but also contribute to the society. Mamaearth has now planted over 1 million trees, and on its birthday this year, we ran anti-smog guns across NCR to help reduce Derma Co. continues to educate children through science classes and science labs that we set up. We have touched almost 40,000 students' lives. BBlunt continues to certify women in hair care and styling, over 15,000 in done. Aqualogica is providing fresh water to rural households by deploying, you know, plants where they can get access to fresh water. And Dr. Sheth, you know, is running health checkup camps, and now almost 45,000+ individuals touched by this. So, all in all, as our brands grow, and the contribution to community also grows, and that's what we would like to sign off, right? And we're more than happy to answer the questions that you have. Thank you. 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 telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We'll take our first question from the line of Abneesh Roy from Nuvama. Please go ahead. Thanks. My first question is, in sunscreens, we have seen the market leader become a bit more aggressive past few months. How has been the market share? And I'm asking about the real market share in your sense, not the official third-party market share data, because that may not give the true picture many times. What is the sense on how is the market share shaping up in sunscreens? Hi. So honestly, there is no other indicator of market share that we get for online. And the only place that we get is from Nielsen, which is offline. And honestly, we believe 60%-70% of the market lies in online. We did get a Euromonitor indication last year, which has declared that Derma Co. is now the number one sunscreen brand in the country, ahead of the legacy brands. And so that's one external piece of data, which is based on external interviews that we have. And otherwise, our brands continue to be strong. Our brands continue to be bestseller across sort of, you know, platforms. Our focus on using multiple brands to win in the sunscreen portfolio, where we have something in actives, in The Derma Co., in hydration, in Aqualogica, in naturals with Mamaearth, continues to be an area which is delivering well for us. So thanks. My last question is, it was a strong quarter for you, and even your core brand of Mamaearth has seen a good growth comeback. Your distribution expansion also has been quite decent. So my question is, how do you see coming quarters, this kind of a good uptrend will continue, or there was some kind of a one-off, any GST kind of a positive impact you saw overall in the quarter? So, we're feeling quite confident that our flywheel and our fundamentals have started to clearly deliver in terms of strong outcomes for the company, both in terms of top line and bottom line. And we are very confident that this trend of delivering strong growth and continuing to improve on our margin profile year-on-year is something that will continue. And we don't think it's a one-off GST impact. It's actually share gain that we have seen. We've also shared. So if it was not share gain driven, then one could have said all tides are, you know, everyone's rising because tides are rising. But we have seen strong share gains in our core categories, right? Which clearly points to the fact that we have done significantly better than other brands, which is why this has happened. And the playbook that we have built around media and content continues to become even better. So, I think we're feeling quite confident on being able to continue this trajectory. Thanks. That's all from my side. Thanks. Thank you. Thank you. Next question is from the line of Vivek Maheshwari from Jefferies. Please go ahead. ... Hi, good evening, Varun and team. A few questions. So first, continuing with the earlier one, so, you know, team's growth in case of Mamaearth, basically, you are saying this is something that we can, let's say, we can build for the next, let's say, for the next five quarters until FY 2027 ends? Vivek, that's going to be our plan. And we're feeling confident that we should be able to deliver the same. There is so much opportunity, like I said, in terms of just the gap between share among handlers and market share and hence the potential distribution gain that we can do. As well as the brand now strengthening, right? And multiple other categories available where we can gain share. And so I think we are feeling confident that we should be able to continue with this momentum and [audio distortion]. Got it. Interesting. You know, for the last few quarters, and more specifically this quarter, you have been, you know, highlighting and talking a lot about distribution, right? Now, Varun, historically, you know, there has been a curve that you have followed, and again, I'm just, you know, putting some, let's say, random numbers, so to speak. But let's say, if at INR 500 crore you started going online, and you thought that you will go online, do you think that milestone or that threshold comes down because your distribution network is far more robust, so therefore, you know, you don't necessarily have to wait for INR 500 crore, you can start early? And if so, what does that imply for the growth brands? Vivek, to be honest, I don't think that milestone has changed significantly. What I can qualify is that, it's not a brand size milestone, but more of a category into brand milestone, right? So, I mean, if you are in a category and you become sizable share within that category, even if you're not INR 500 crore, but let's say, if you're in sunscreen and you become INR 200 crore just in sunscreen online, then also you have right to go into offline. But the offline play for brands, right, in our mind is not just about distribution, it's also about pull. And only when you reach a certain scale in online, that you see that natural pull in offline, because of which you are able to then execute better off, right? I mean, now, Derma Co. was taken offline, actually our retail margins Derma Co. are lower than what the retail margins in Mamaearth are, because it has, it has gone offline when we have, already established Mamaearth. And Derma Co. pull was also established, right? So it allows you to build the brand more effectively, as well as, it allows you to build more confidence among retailers. So, in my mind, those benchmarks haven't changed. In fact, in future, those benchmarks might go up because the online market itself is expanding. And, what you can achieve in online in terms of benchmarks, every three to five years, that benchmark itself will keep increasing. Wow! That's interesting, Varun, because I thought, you know, the entire thing about traditional FMCG companies always was that, you know, there is a massive pull, let's say, for their hero brands and products, which is significant to the overall revenues, and then, you know, they will push, or the new brands will ride on the pull factor. So there is a pull, and then you have a push. I would have imagined with Mamaearth also, you know, having so much pull, you could have probably accelerated that migration or, you know, that duality, but you don't think that's going to be the case, because just purely because your distribution quality and scale has gone up. Yeah. Yeah, you can, we can. If we want, we can put it in stores, right? But that doesn't really help, right? Just today's consumer is got multiple sort of choices in every category. I mean, 10-15 years ago also, that phenomena wasn't as, you know, diverse, and they largely know what they want to buy. So just because the brand is available in stores doesn't give the brand a right to, you know, win in offline. In our view, brands will win when they have created traction and pull, and that takes its own journey. If you've not been able to establish it in online, then ideally, one shouldn't extend it on offline, because you will just create high SDRs for the brand. In general, your retailers and distributors' capital will get stuck in wrong kind of inventory, which is not moving, which will not allow you to put the right kind of inventory which can move faster. So we are being very choosy, and we are taking care of the fact that there should be high velocity SKUs which should be put in the GT. Even Derma Co., it's only, you know, set of 20 SKUs that we've taken into offline, which are the highest velocity SKUs. So I think that's our philosophy. We'll continue to execute like that. Got it. And last question, which has, you know, two parts, both from a top line and margin perspective. You know, and I, I'm sure you will say that market has always been competitive, but, you know, Varun, when we talk to the traditional legacy FMCG companies, I think there is a renewed focus and impetus to drive growth in online because e-commerce and, you know, whatever is happening on the landscape. So two parts. One is: How do you think about the entire competitive intensity from your growth perspective as well as from a margin standpoint? Because, you know, a lot of companies are happy to spend much more to drive growth. So can you just, you know, talk about both these aspects? ... Happy to address that, Vik. I mean, honestly, this focus change and aggression has been there for now 6+ quarters, I think, where it was clearly recognized and a lot of folks restructured and clearly announced their focus to build this, and also have used multiple levers, including deep discounting, et cetera, in these channels to, you know, drive sales. And in spite of that, we have seen our trajectories only improving. You know, as we also build the organization, I think our DNA, the fact that we are digital-first, right, our understanding of Gen Z content and news, and the way the organization is tuned towards that, and will always provide an edge in terms of us being able to be faster in terms of winning in that environment. And we are feeling confident that if we could you know ride the aggression which has been there in the last one year, and even if it goes up, I don't think anything is going to stop our plans or performance. We'll continue to find ways to ensure that we are ahead of the curve. Super. Thank you. Wishing you and your team all the very best. Thank you. Thank you. Next question is from the line of Percy from IIFL. Please go ahead. Hi, Varun and team. Congrats on a great set of numbers. I just wanted to sort of zoom in into the margin delivery. So, the margin has come at the cost of some cut in the ad spend, and even other expenditure is on the lower side. Just wanted to understand, is there any quarterly phasing issue, or whatever reductions that we have seen are sort of structural in nature and likely to continue? Hi, Percy. So I think I've always called out that there are three key buckets from which the company will see EBITDA expansion happening both in short and in long term. So those buckets are ANP leverage, those buckets are you know, payroll leverage and other OpEx leverage. You know, and the combination and contribution from these three might vary in different years but these are the three key buckets that we know and our leverage will come from. And even this quarter, if you look at just the ANP part, actually, value ANP sequentially has gone up. And hence it's not a reduction. We will continue to be strong and continue to be fully funding our brand and marketing plans, but we've become more effective. The same plans focused on certain core categories consistently and focused on sharper media and messaging, and are now delivering much better outcomes, right? Because of this, the percentage is going down. Of course, there are quarter-to-quarter phasing pieces also, which continue to sort of exist, but I wouldn't honestly worry them, because if there is phasing in one, in the other buckets, you can see that sort of, you know, benefit that can come in. But all in all, I think that trajectory of ANP in value actually increasing every year, but still, you know, giving us leverage benefits in percentage, right, is something that we are confident will keep happening every year. As well as the combination of payroll and other OpEx, sometimes, because of others and sometimes because of people, will continue to give us that benefit, year on year. Is how we see that trend. How do we look at margins going forward? Like in FY 27 on a full year basis, should we like look at 100 basis points YoY expansion every year for next two years? Is that like a fair expectation for us to have? Yes, Percy, that's a fair expectation, right. That's the plan that we have talked about in the past as well, that every year our goal will be to improve the margin profile by 100 basis points. Got it. Second question is on the newer brands. So we know Derma Co. is doing very well. Can you give some information on Aqualogica? Is that doing equally well? Are the growth rates similar, lower, higher, et cetera? And also related question is that now that we have the ME portfolio back on track on growth, what could be the Derma Co. or Aqualogica? Like, we have now three brands which probably constitute 90%-95% of our sales, and while there is still scope for growth Derma Co. and Aqualogica, we obviously have to build ahead of time. So what can be the fourth pillar apart from these three brands, where you can see some initial signs of success or which you think can sort of become big or drive growth over the next two, three years, where you have confidence? ... Firstly, on the first part of the question, I think we always talk about our young brands together. So, the young brands have delivered 25%+ growth, right? And we continue to be very bullish on the future of our younger brands. And, from a perspective of what could be the next rising star, honestly, it's a race to be the next rising star. I mean, Reginald can itself be a INR 500 crore brand in the next 4-5 years that we have acquired. Dr. Sheth has a very strong sort of right to win, like the tailwinds in actives as well. And, BBlunt in professional haircare can become, you know, a sizable opportunity, Staze. It is a young brand, and what is playing in the color cosmetics business, which itself is a very large category, and could also be a shining star. So I think, in our view, right, there is a, there is a race to become the next INR 500 crore, and we would like to see that happen. Very clear. Just if I can just ask one follow-up on, while I- Sorry, you're sounding muffled. Yeah. Am I better now? Is it better now? Yeah. So, Varun, while I can understand, you don't want to give the numbers separately for Derma Co., et cetera, and I'm not asking for that. Just want some kind of reassurance that Aqualogica is also performing sort of well and is in line with whatever targets that you had put in, or is it sort of falling short of them? Well, it's on plan. Okay, okay. Got it. That's all from me. Thanks, and all the best. Thank you. Next question is from the line of Vidisha Sheth from Ambit Capital. Please go ahead. Yes. Hi. A couple of questions have been answered. Just one more in case of Mamaearth. So we've spoken on product superiority and sharpened investments, driving back growth from mid-teen. But to understand the impact from these interventions, is it also possible to share any further color on as to how has the cohort retention or repeat rates or, say, productivity at distributor level changed, what—for whichever channel available? Yeah, I think, you know, when you see this kind of growth which is happening across channels, and it's not just happening in primaries, but in off takes, in modern trade, in A.C. Nielsen captured share, in secondaries, in general trade, across e-commerce. It just points to the overall consumer franchise, becoming stronger for the brand, right? I don't think, we are at this time and scale, we are looking at, you know, numbers like repeat rate or cohort, et cetera, because that becomes too small. At young PMF level, it makes sense to sort of do that, right? Overall, brand love, affinity, consumer feedback, data, NPS, everything is moving in the positive direction. Our [audio distortion] on the brands is also moving in the positive direction. All of that is put together, making us feel confident that the actions that we have taken and which we continue to apply on the brand are in the right direction. Sure. The second bit was in continuation with to the earlier participant's question on the other brands. So do you think that there are further interventions in terms of either innovation or brand repositioning, which are required for upcoming brands like Aqualogica, Dr. Sheth's or VBrand? So honestly, you know, every three to four years, we look at our brands, right? And we relook at the positioning from the future TG perspective. We've done that on Mamaearth twice now in terms of packaging and communication relaunch. And we have done that Derma Co. once already in its life of six years. And similarly, Aqualogica, actually, you know, we've already done a lot of work, right, to make it more appealing to Gen Z in general, and there is a new refresh which is coming up in the summer season. Similarly, Dr. Sheth's will also see that journey. I mean, honestly, that's a continuous exercise that we will do on our brands to make them more relevant and exciting to the new generation. So I think, you know, we would see continuous action across brand shares. Sure. Got it. Thanks a lot. That's all for now. Thank you. Before we take the next question, I would like to remind participants to ask a question, please press star and one on your phone. Next question is from the line of Nihal Mahesh Jham from HSBC. Please go ahead. Uh, yes. Nihal? Hi, Varun. Hi, am I audible? Yes. Can you speak a bit louder, please? Hello. Yes, Nihal, please go ahead. Nihal, we can't hear you. I'll just come back. There is an issue with my line. We can hear you now. Please go ahead. Sorry for that. Hi, Varun. My first question was just again asking on the margin bit. I do understand you mentioned about three levers of optimization, and on the advertising bit, it is absolutely clear in terms of the focus playbook that you've been mentioning. Just if you could just dive down on the other expenses, but just for an understanding perspective, that what are the initiatives you are taking? And also on the gross margin side, I'm not sure if I've adjusted for, you know, the reporting change of last year, but I do see that this quarter there has been a bit of a contraction. If Raman could just highlight that, what is maybe the reason why the gross margins have adjusted, and what are the initiatives you're taking on the X of advertising side to keep margins improving? Yeah. So actually, if you look at like, on a like, like-for-like basis, our gross margin is, year-on-year, flat. And I think this is in line with our, gross margin guidance, that, you know, we will continue to sort of look at 70%-77%+ range. And of course, there are other factors in gross margin, which is category mix, seasonal category mix, brand mixes, and of course, you know, so that's one piece on the gross margin side. I think on to other question on other expenses, I think, largely other expenses are broken in two parts. One is large part of it is our supply chain distribution expenses, and then there are, of course, typical fixed overheads, admin, and infrastructure-related expenses, right? So when we say our other expenses as a percentage are improving, there are two levers there. One, of course, given the scale of the business sequentially and year-on-year has increased. I think that's leading to leverage in our fixed overheads. And of course, as we become larger, you know, and also as certain channels like B2B offline channels become larger, our you know, supply chain mix is also improving. That's also leading to better other expense as a percentage. So I think those are the two large levers. And as we, as Varun mentioned, as we continue to sort of scale, I think we continue to drive some efficiencies across some, of some of these levers. Got that. And this improvement of 100 basis points that you are targeting, most of it will be driven by the optimization and advertising spend. Is that the better way to think about it, or just other comments around it? Well, actually, it's a mix, right? I mean, some years it might be skewed towards NP, and other year it might be skewed towards OpEx. But the combination of that, you know, should help us achieve the goals that we have set for ourselves. Got that. Varun, my last question was that over the course of the last few months, with the two acquisitions that you've done, potentially we are now having a business which has eight brands. I know there is a big skew of how much Mamaearth Derma Co. contribute. But just as an organization, somewhere, you know, the thought would also come in that how do you then give the focus to each of these brands so that they all scale up? There is obviously a discussion happening about how the brands X of Mamaearth and Derma also scaling up. But how do then we keep our focus to see to it that, you know, all these brands get the right element of growth? Given the fact that even Mamaearth, at this point in time, is in the midst of a transition where you, you're more or less done with the offline strategy, but still there is an effort that is required to get that in place. So how are we sort of aligning to get the focus right, given we now have such a wide portfolio of brands already in place? No, I think we would want to keep our goal, you know, in front of us and, you know, make sure that we construct and structure the organization to achieve that goal, rather than, you know, keeping our current situation in place and set our goals accordingly. So I think that's our thinking. In line with that, if we want to make sure we reach our long-term goals of becoming the largest and the most loved D2C consumer FMCG in India, and we will need to make sure every category, every proposition, and we have a brand that's actually a market leader, right? And to get to that, whatever organization structure and will help us serve that, is what we will build. And which is where there is separate ownership of each brand, right, of each channel, you know, which exists within the company, where someone is losing their sleep over their own, you know, part and partitions. And that's what we would like to sort of, you know, focus on, because our long-term goals are pretty hefty, and we wouldn't want to shortchange them based on where we are. That was it, thank you. Thank you. Next question is from the line of Prateek from Bandhan AMC. Please go ahead. Yeah, I have three questions. One is, just on Mamaearth, could you confirm that, the 10% growth is also coming from, let's say, the same distributors also growing? And it's the penetration-led growth is an addition to that. Is that a fair understanding? Yes. Actually, I mean, 90%+ of the growth is from all current distributors only. It is not because of new distributor appointment. And it is all on, on the back of the top 100 cities where we have our distributors increase, especially in GT. And then, of course, in modern trade, it is on account of the same large customers like Reliance, DMart, Apollo, which continue to exist, right, and we are gaining share within those customers. And same is with e-commerce. It's not in new channels, the same customers which have existed. It's all repeats, right, Varun? That's a fair understanding, right?... most of it, 90% of it is repeat. Repeats in the sense that, you know, I wouldn't say, like, I mean, we are, of course, getting new consumers to buy us, you know- I meant, yeah. Yeah, yeah. Yeah, okay. The second question was, look, on a sequential basis, the employee cost, although you talked about employee cost being a leverage item, on a sequential basis and maybe short term, employee cost has risen very sharply. Any one-offs to call out for, or that's the steady state on it? Yeah, hi, I'm Raman Sohi. So I think, you know, it's higher sequentially, primarily because then you actually had to do a ESOP provisioning. It's basically, you know, there is a large leadership ESOP pool, you know, and there's certain milestones aligned, and we've had to prep on a milestone this year, and the allocation of that is actually done in H2 rather than H1, given the visibility of a certain milestone internally. So, that's why it's showing on the higher side. It'll be similar, broadly similar in H2, and then, of course, after that, it'll move back to the normal levels. So the entire delta is coming from ESOP cost, is it? A lot of- About close to 100- No, entire delta. I would say some part of it is because of the ESOP cost, some part of it, again, because of the better-than-planned performance and of the variable enhanced variable also that we see happening, right, because people have done better. And we could see the visibility of that only towards now, so we've taken that in [audio distortion]. Last question, if I see your focus brands, they've grown at 25%, whereas overall sales have been slightly lower, right? What's the share of non-focus categories, sorry, not brands, non-focus categories now as a percentage of sales? It's still at 25% for the company. So 75% is focus categories, and 25% is non-focus categories. So despite being non-focus, it looks like they're still maintaining pace with the overall growth, is it? That's why the share is not moving a lot. We, in the sense it has gone up from a contribution perspective. But yes, the non-focus categories are growing much slower relatively, and compared to the focus categories, right? We see that to be the phenomena. The contribution over the year has come down by 500 basis points for the non-focus categories, which is something that we expect every year to potentially. Got it. And in the next 2-3 years, does this become widely immaterial for the company, in the sense, is it a fair understanding that in the next three years, focus categories can kind of become like 90%-95% of the business? I mean, honestly, with the current pace of contribution increase, we expect it to get to about 85%-87% over the next three years. Okay. Thank you. Thank you. Even within focus categories, hero SKU contribution continues to increase, so which is also helping. Yeah, that's good. Thanks. Thanks, man. Thanks. Thank you. Thank you. Ladies and gentlemen, to ask a question, please press star and one on your phone. The next question is from the line of Sukrit D. Patil from Eyesight Fintrade. Please go ahead. Good evening to the team. I have two questions. My first question to Mr. Varun is, as Honasa continues to expand across categories and geo-geographies, what will be the key priorities under your long-term and short-term goals? How do you see the balance between scaling new brands, deepening distribution, and sustaining profitability evolving over the next few quarters? That's my first question. I'll ask my second question after this. Thank you. I think, you know, you've just elucidated on my business plan, right? Those are the three priorities that we continue to have, right, which is continue to make sure our core Mamaearth grows in double digits, continue to make sure our young brands deliver market-leading performance and build new categories, and which can be future engines of growth for them, and continue to make sure our distribution, be it online or offline, is you know, excellent and builds base for our brands to grow. I think we will need to balance all three together to make sure that you know, growth and profitability both fall in line for the company, and we're quite confident in our team's ability to do so. My second question to Mr. Sohi is, as the company plans forward, what financial guardrails will guide your decision on cost discipline, capital allocation, and margin protection? How will the particular set of guidance influence the long-term and short-term earning stability and create shareholder value? I want to understand your plan of action on this particular thing. Thank you. Yeah, sure. Thank you. So, I think, like Varun mentioned, I think the focus is to ensure that we continue to deliver a market-leading, growth. And given our gross margin profile that we have, as we continue to scale the business, improve our distribution metrics, and deliver that, I think every year, we will continue to unlock certain margins in the business, which you spoke about. I think our endeavor is to unlock at least nine basis points every year with a mix of both ANP and overheads. I think that will ensure that we continue to improve and deliver the right value to our stakeholders and deliver the right profit growth as we sort of move along in building this business model. Thank you, and best wishes. Thank you. Next question is from the line of Akshay Krishnan from ICICI Securities. Please go ahead. Hi, team. Good performance and great set of numbers. So I just wanted to understand on the competitive intensity. So over the last two, three years, we've been seeing that the science-led and the active-based positioning has becoming more of a mainstream, among the peers and the large FMCG peers. So as you scale deeper into an offline and become more an omni-channel, brand, how do you see the competitive game shifting on an agility-led disruption to scale and the distribution-led competition? So I just want to understand, how is your strategy evolving in this context? I'm so sorry, I did not understand the question completely. If you can [crosstalk]. I just want to understand, like, you've been... Now you're scaling more into the offline, and I just want to understand how is your competitive intensity shifting on the agility-led distribution to scale and the distribution-led competition. So what's your strategy on this context on this? So, I think firstly, our offline and online both continue to grow strongly and deliver 20% + growth for us. So it's not one or the other, but both are channels that we want to win in. In one case, which is online, we're strong. We need to continue to hold and gain shares in that. In another case, there is opportunity to just build distribution and be present in more outlets, which we are doubling down on. And hence we are largely looking at the opportunity and not the challenges as much. Because the opportunity seems to be so big that, you know, that's what energizes and excites us. Because since you, I just wanted to double-click on this, because you have this early mover advantage, and is it more towards on a margin or a volume profile? So that's why I just wanted to double-click on this. No, of course. You know, in general, as a system, our margins are better than the legacy competition, and our pool is better than you know, the younger DTC brands. And I think that combination is helping us grow fast and gain share in offline, both general trade and modern trade. And we will continue to use that to our advantage to deliver competitive edge. Perfect. Perfect. And second thing is on the other brands. Now, with Mamaearth also The Derma Co. also scaling up strongly, the younger brands are growing up and with new initiatives like the prestige and oral beauty. Now, how are you internally prioritizing the capital and the management bandwidth to ensure that the focus doesn't get diluted across much, and you have the growth levers of the engine coming up? I think firstly, it's important to structure yourself right, right? Where there are clear accountabilities, and that's an area where we continue to work on. Every year we have new learnings around how can we structure better to give focus and impetus to our areas of growth. So management bandwidth actually goes firstly into the right organization design. Because if you can design right and put the right people into that design, then, you know, the design takes care of the outcome. And that is what we spend a lot of our management bandwidth on. Investment allocation is more based on the chessboard, right? I mean, there are years where there might be tailwinds in a certain category or a certain type of proposition or a brand, and that's where you would want to use those tailwinds and gain disproportionately. So that's the decision that you would take. So that depends more on some of those externalities, as well, and based on which we take active decisions on allocation. Okay. Okay, and, one final, if I can squeeze in. So, so now with Mamaearth, expanding deeper into the GT and also the chemist channel, how do you preserve the brand premium? So while you scale up, on a long-term perspective, do you intend to be a mass-penetrated brand or structurally move up on the value chain? So I just wanted to understand the unit economics into this. So, we've maintained and we continue to maintain, you know, brand premium versus mass brands, right? That brand premium is visible in the PTML of our pricing in the market. And, it is also visible in the fact that we do not participate in the FMCG-defined LUP spaces, right? Which is the less than INR 20 price point kind of spaces. Access into Mamaearth really starts from INR 100 onwards, which is why, there is that aspirationality maintained. It might limit the expansion opportunity that we'll have from a gross generate perspective, but, our long-term view is that, premiumization is going to be a mega trend in the country, and brands which are able to hold, aspiration, will be able to gain, much better share in the long term. Perfect, and good luck and all the best. Thank you, sir. Thank you. Thank you. Next question is from the line of Jay Prakash from Axela Advisory Services, LLP. Please go ahead. Hello. Congratulations on the good set of numbers. So I wanted to understand, in increasingly competitive categories like sunscreen, some brands rely on indirect or ecosystem-driven narratives rather than direct branded communication. How does the company ensure that any extended marketing ecosystem, agencies, affiliates, or influencers, operates within a defined compliance and reputational risk frameworks? I think there are clear guidelines, briefs, which are in line with the FT guidelines, that at least, you know, our company works on, whereby every brief that we issue has clear guidelines which are provided. Everyone who we work with is aware of those guidelines, and we haven't been flagged by the agency also in on any such violations. So, I think, you know, the content that VRL is doing must be in line with those guidelines, which is why we are both right, and we continue to absolutely follow them, yeah. Okay, okay. So there are oversight mechanisms within the company to monitor that, right? Absolutely. Just another question. Can you break down what percentage of sunscreen growth is organic versus repeat organic repeat versus influencer-driven first-time conversion? We don't track that. Okay. So, HUL is acquiring new age companies like Oziva and Minimalist. So does that pose a threat for the business going forward? On their business or our business? On your business, as those traditional business are modernizing very rapidly, and they have all the guns out there to play, right? No, I, honestly, we have always had, competitive threats, in the past as well. We've, we've, you know, were born in a, category where there were much large competitors than ours when we launched Mamaearth. And hence, competition is not new to us, right? But we have always also taken a stand that, it's, it doesn't sort of, you know, give you, any joy or delta by focusing on competition, right? The real value gets created when you focus on the consumer, and, and where the consumer is moving in terms of their preferences, be it product preferences, be it communication preferences, be it media preferences or distribution preferences. And, and I think for us, that's been a core focus area, and I think we will continue to focus on that. We'll rely on the fact that if we focus on that, consumers will reward us with choosing our brands. Okay. Thank you. Thank you. Ladies and gentlemen, to ask a question, please press star and one on your phone now. As there are no further questions from the participants, I now hand over the call to the management for closing comments. Over to you. Thank you. Thank you so much for asking these questions. And it's always refreshing to hear you, and we continue to, as a team, execute our strategies to the hilt. We are very confident that we will continue to delight you as we get into this year as well. So thank you so much. Thank you. On behalf of JM Financial Institutional Securities Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.