Ladies and gentlemen, good day and welcome to Marico Limited Q4 FY 20 23 earnings conference call. We have with us the senior management of Marico, represented by Mr. Saugata Gupta, MD and CEO, and Mr. Pawan Agrawal, CFO. As a reminder, all participant lines will be in the listen-only mode. 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. Before we get started, I would like to remind you that the Q&A session is only for institutional investors and analysts. Therefore, if there is anybody else who is not an institutional investor or analyst but would like to ask questions, please directly reach out to Marico's investor relations team. I now hand the conference over to Mr. Saugata Gupta for his opening comments. Thank you, and over to you, sir. Yeah. Hi, everyone, and good evening to all those who have joined the call, and hope all of you are doing fine. As FY 2023 has come to a close, I would like to reflect on the operating environment during the year and the quarter gone by, after which I shall touch upon our performance. FY 20 23 started with escalating geopolitical tensions in Ukraine, leading to steep inflation and interest rate hikes globally. In India, this led to climbing food and retail inflation, which adversely affected the overall consumption sentiment. However, over the course of the last six to nine months, there has been moderation in key commodity prices and retail inflation levels, which has most likely brought about a gradual recovery in FMCG consumption. Looking at FMCG volume trends in this period, we believe the prospects of a sustained recovery have strengthened. After five quarters of volume decline, the sector has posted volume growth. Urban consumption has been steady, while rural is also showing some convincing signs of having bottomed out. Foods continues to drive growth for the sector, while HPC has also entered positive territory after an extended slowdown. We believe that subject to a near normal monsoon prediction, the certainty of a moderating retail inflation and less volatility in food prices bodes well for a sustained reversal in the sector. Coming on how we fared in Q4, we are continuing to see a sequential uptick in domestic volume growth and robust growth in our international business. If you look at our performance from a medium-term lens, we have delivered a 6% domestic volume growth on a four-year CAGR basis, while sector volumes have grown between 2% and 3% correspondingly. Similar, even in our international business has delivered 11% constant currency growth on a four-year CAGR basis, and in the last nine, 10 quarters has been consistently delivering double-digit except one quarter with near 9%. In terms of profitability, our gross margins have expanded both YOY as well as sequentially with moderation in input prices and a more favorable portfolio mix in the domestic business. While we have passed on the benefits of lower input costs to the consumer, we have maintained A&P spends, which has grown on a 8% on a four-year CAGR basis, which we believe drive long-term growth and brand equity. Delving deeper into the India business, we shall touch upon the key trends in each of our categories and our strategy and outlook for the period ahead. Parachute had a strong quarter with a volume CAGR at 6%, driven by a pickup in loose to branded conversion and penetration gains. As we envisaged in the last quarter, we have started to see healthier trends in the branded coconut oil market after stability in copra and consumer prices were restored beginning December 2022. Parachute Rigids gained 70 bps in volume market share during the quarter. With copra prices likely to remain in a comfortable zone in the near term, we expect volume growth in FY 2024 to track in line with medium-term aspirations. The coconut oil market, branded coconut oil and category in Q4 turned back into positive, which is also a very good sign. Value-added hair oils delivered double-digit growth after subdued growth in the last five quarters. The category continues to be directionally in line with mass personal care categories. We expect a gradual uptick in growth over the course of the year ahead. In fact, towards mid-quarter, it started turning positive, even in March, we experienced positive category growth in Value Added Hair Oils. Value growth in the value portfolio was in mid-single digits on a four-year CAGR basis, lower than our medium-term aspiration owing to the extended slowdown in rural and also some of the other issues which happened in terms of commoditization. While mid and premium segments continue to do fare better with lower inflation and reduced proclivity of competition to commoditize the category, we expect the recovery in growth to be more broad-based. Saffola edible oil had a soft quarter, owing to a high volume base of in-home consumption last year. However, we continue to witness healthy offtakes during the quarter. The brand has well delivered high single-digit volume growth on a four-year CAGR basis, which is in line with our aspiration. With stability trends persisting in the global veg oil market, we expect it to brand to be steady in the coming year. The foods business has delivered a high teen growth during the quarter and ended the year close to the INR 600 crore revenue mark. The oats portfolio continues to anchor the growth and maintain its strong leadership position with a 43% share. While honey and soya chunks have been scaling up well, some of our newer categories, namely mayonnaise, peanut butter and munchies, have been beginning to get traction. We expect to cross INR 850 crore in top line in foods in FY 2024. This would be underpinned by expected YMC in urban consumption, while we maintain steadfast focus on market development, brand building, food GTM expansion and sustained innovation to extend our addressable market in the value-added packaged foods.Premium personal care has recovered smartly from the COVID lows with 40% growth this year. The portfolio closed just shy of the INR 350 crore revenue milestone, going forward, we aim to deliver a 20%+ growth consistently across the portfolio. As you know that premium personal care is a high margin portfolio. The digital-first portfolio has been scaling up well in line our internal targets. The current portfolio is poised to reach ARR of INR 200 crore, exit ARR of INR 200 crore on next year, this does not include any future acquisitions. Moving to the international business, we have delivered another stellar quarter with each market playing its part despite the macroeconomic situation and currency headwinds in some of the markets, which is reflective of the robust business models of our international franchises. Bangladesh has been resilient as ever amidst external challenges, which is testament to our portfolio strength, distribution power and consumer belief in our brands in the market, and of course, our quality of leadership. The newer portfolios of shampoo and baby care are gaining heft along the core portfolios. The Vietnam business further strengthened with both HPC and food delivering healthy growth. The re-integration of recently acquired brands in female personal care, Purité and Ôliv has been completed. MENA delivered double-digit constant currency growth as a market that presents a sizable opportunity in terms of the addressable market share and top-line pool. South Africa and NCD business also continued on its strong growth journey. Looking ahead, I would like to draw your attention to slide 14 of our earnings presentation. Firstly, domestic volume has stayed well ahead of the sector and is poised to maintain an improving trend in FY 2024 in line with the sector. Revenue growth will inch up as the year progresses, as pricing comes into the base in the latter half of FY 2024. We expect steady growth in our core categories of coconut oil, Saffola edible oil and VAHO, with inflation volatility subsiding and price stability prevailing. Secondly, we have taken visible leaps in the diversification journey and the evolution of portfolio in the India business, which we began a few years ago, resulting in a healthy pace of growth. This is reflected in the share of revenues from newer portfolios comprising of foods, premium personal care and digital first, which has seen a shift from 11% in FY 2022 to about 15% in FY 20 23, and is likely to move to 20% of our domestic business in FY 2024, which means we have added an incremental top line of about INR 750 crores to these portfolios in a couple of years' time. With some of the foods and digital-first business have attained a certain scale, we'll continue to drive accelerated growth as indicated earlier, and focus significantly on improving the profitability in tandem. Once the shift of profitability is achieved, we'll reallocate some of the resources to the core to drive market share while fortifying the long-term margin profile of the overall business. We have a track record of success in both as far as foods is concerned. With the funding winter setting in and more sanity in the ecosystem, we'll be able to improve profitability and leverage far more synergies while moving our digital-first brands into their next leg of growth. On M&A front, we shall be constantly scouting for businesses which have a right to win in their respective categories and are synergistic to the overall Marico strategy. We will make sharp choices and refrain from venturing into fragmented and commoditized categories even if they give scale. Thirdly, in the international business, we believe we are present in a relatively unique mix of markets. Our portfolio diversification efforts further insulate us from any concentration risk and ensure consistency in performance. You are aware that in FY 20 20 we had a concentration risk of our business from Bangladesh and within Bangladesh, a concentration risk of PCNO. Therefore, we have had significant diversification in our portfolio and reduced this concentration risk to a large extent. We have proven that despite black swan events, we have a robust and profitable business model which enable us to avoid yo-yos and surprises in our international business. Last but not the least, we have maintained an uptrend in gross margins over the last two years, and we expect an uptick of another 200 bps to 250 bps Y-o-Y in FY 2024, keeping all factors constant, giving the cooling off in commodity inflation and portfolio mix normalizing favorably. As we have emphasized in the past, A&P investment will continue to be a key thrust for our growth, as we believe that long-term brand building certainly is a much better choice over short-term profitability gains. Our focus on cost savings will continue and will be deployed to drive incremental growth. Owing to the above, we expect operating margins to move up by more than 100 basis points year-on-year basis in FY 2024. We believe that we are moving in the right direction along the four strategic areas of diversification, distribution, digital and diversity, and we are confident of delivering improvement across all the three parameters of volume, revenue and earnings growth in FY 2024. We continue to make visible progress in our ESG program in each of our focus areas. Creating shared value for all remains the ingrained purpose of our business and will allow us to drive superior long-term performance. We are committed to achieving net zero emissions in our domestic operations by 2030 and global operations by 2040. Our ESG and other initiatives continue to get recognized in the various awards we have won in the last one year. With that, I will now close my comments. Thank you for your patient listening. We'll now take your questions. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone 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. The first question is on the line of Avi Mehta from Macquarie. Please go ahead. Hello, am I audible? Yeah. Yeah. Hi, good. Sir, I just wanted to kind of clarify on the margin expansion comment. You know, with the input cost, you know, more or less stable now, would it be fair to see the gross margin expansion more front-ended and the flow-through will probably be dependent over time? How do you see this during the year kind of panning out? If you could give us some sense. We believe that gross margin expansion should happen right from quarter one itself. Although, given the kind of environment that we're operating in, while currently the commodity table has been stable, we would rather say that should take it more from a full year perspective, that at least gross margins would expand by 200 to 250 basis points. Given the new product agenda that we have, we would of course want to invest it back into some of the products. From the operating margin perspective, we are saying at least we should expand by 100 basis points. Fair point, sir. Thank you. Just to add, I think other than commodity gains- as I said, that now that our food and digital business has gone to scale, there will be a significant focus on improving their profitability. Okay, got it, sir. That should be an additional kicker, if at all, and that is what will kind of take time to flow through as well. That could be the icing on the cake, if I may say. Yeah. The second bit was on the, you know, sales growth front. I understand your comment on pricing headwinds, with, you know, Parachute stabilizing, and actually back on the growth path, Saffola optics improving, volume growth rate should normalize to the, to our kind of steady-state targets in the first half itself. It's just the pricing headwind. Is that understanding correct, sir? I think, the best way to assume, that's why I'm just saying that I am unwilling to, you know, give an idea of how will it pan from quarter to quarter, because it's, you know, there's a base effect, there could be volatility. All I can say is that we expect the volume growth. for next year, which is rather this year, is to be better than what it was last year. Therefore, on a full year basis, both on volume growth, revenue and margins will be definitely better than what we delivered in this year. Got it, sir. Got it. Perfect, sir. I'll come back if we get the other questions. Thank you very much, sir. Sure. Thank you. The next question is from the line of Vivek Maheshwari from Jefferies. Please go ahead. Hi, good evening, Saugata. Good evening, Pawan. A few questions. First, on VAHO, if I look at, you know, the base for the next few quarters also remains low. Does that mean that, you know, the base tailwind will help and the numbers for VAHO, at least in the foreseeable future for the next three quarters or so, will be like in double digits? I think the way to look at it, as I said, let's not go from quarter to quarter because I think the best way to see is that I think it is a improving trend. As I said, there are two factors. One, I think VAHO, as you know, has a significant rural contribution, and given the fact there was a stress in the rural consumption and the fact that there was two things. One was significant food and retail inflation and commoditization by competition. I think all the factors have become more favorable. All I can say is that the VAHO, again, the number which was there, which will improve. Number two, I believe that the other change that will happen in the Value Added Hair Oil market is that as a result of this, also that, last year, the slightly premium brands, you know, which are, you know, a slightly higher 1.3 to 2 RPI, our brands and that sector was not performing well. I think that will start performing well, and there'll be a little more broad-based growth. As a result, I think not only we'll be witnessing value growth, and I believe we'll also continue to gain value share. Just to, as I said, just to reinforce that, while in coconut oil we saw some growth, category growth coming back, given the fact that the pricing got right, the inflation was in control. In value-added hair oils also, towards the second half of the quarter, if I go on month basis and definitely by March, the category came back into growth. Okay. One follow-up, you know, if I look at between Third and Fourth Quarter, last year or year before that also, the base was reasonably the same, or there is no big disparity. There is a big uptick in growth. Would you attribute most of this to, you know, the industry trend or there were some self-help measures which also helped you know, to have this kind of growth? No, no. We have grown ahead of industry, obviously, as I said that, for a quarter basis, there was still a slight decline. I mean, it's less than, I think it's minus 1%? Point seven. Point seven. It's a slight decline. I think what has happened is, as I said, that two things have happened that I think relative competitive commoditization, you know, intensity in the commoditized part of the category has changed. Number two, obviously some of our initiatives to gain value share have started kicking off. I think also we see the rural consumption situation bottoming out. It's a combination of external and internal, I would say. Okay, got it. second, Saugata, likewise, can you also comment on Saffola? I mean, you have mentioned in your opening remarks, can you just talk about your outlook as we head into the next year? I mean, this quarter was obviously there have been, you know, multiple pressures, how do you think this portfolio shapes up in FY 2024? I tell you first, talking of this quarter, obviously the last year had first an Omicron base in January, where it was the peak of the Omicron and therefore there was, you know, higher in-home consumption. When the Ukraine thing happened, in anticipation of higher prices, I think in March there was far more retail pickup of stock, so it might not. That That growth which was there on the base was not necessarily off-take base, but also people stocking more in anticipation there will be significant inflation. Again, on Saffola, we give a yearly position that if the things are stable and not volatile, we should be able to give a growth which is commensurate with our, you know, medium-term aspiration of, you know, mid, kind of a mid-to-high single-digit growth kind of a thing is possible. Okay. Two industry-level questions, if I may. One is, you know, your press release talks about the GT declined a low single digit. If you take, of course, you have spoken about e-commerce and modern trade. If you take a medium-term view, do you think that is how the GT channel will shape up? Do you think GT will you know, will be an important one and will continue to grow if you take a five, seven years view? I think even in the five, seven years, GT will be an important channel. The reason there is a compression in GT is a combination of both things. One is that obviously, if you look at last, compared to two years back, modern trade has, you know, done a smart recovery. In our case, as you see, a lot of innovation which we have done is digital and foods are very, very urban-centric and with a skew in modern trade and e-com. GT has a significant portion of rural which underwent some consumption stress. I think slowly, I would say GT will start recovering for the sector. Now, you know, overall, GT obviously has performed, if I look at the FMCG sector because of the rural bias, a slightly lower performance compared to MT and e-com. All I can say that it is going through a transformation and there is no substitute for direct rural distribution, which will continue to be a source of competitive advantage for FMCG players, and it will have a significant, what I call entry barrier for some of the players. You know, for a lot of B2C players, you know, they have obviously a, you know, advantage and capability of digital marketing. I think, when they get scale, they move into GT. They have to face organized players. That is where organized players have a significant competitive advantage. In India it will be an and growth. Maybe the GT model will keep on changing in terms of consolidation and the way we do business, there's a transformation happening. Let me tell you, the neighborhood kirana is very, very critical. They are here to stay. They are smarter than a lot of other people, and they're smarter than what we think. Therefore, I think, even if I look at a 2030 kind of a scenario, GT will still be the majority in India. Got it. Last question on the industry, you know, Nielsen FMCG volume growth, what you have put out there. HPC turning, you know, let's say flat to positive is a good thing. You know, at the same time, foods is also accelerating. Is it a simple case of, Saugata, lower penetration in case of foods and therefore structural story is far better? There is some cyclicality between the two because, you know, the per caps and penetrations of foods has always been lower. In the last decade also, there have been periods where HPC has done better than foods, and there have been periods where it has been vice versa. What do you think is happening between the two here? Let me tell you something. There are two things. One is foods has a far more urban skew and also a little bit of top-down, modern trade e-com skew. There is a significant, what I call conversion from unbranded to branded growth in packaged foods because penetration is low. I think, there are also some trends in terms of health, in terms of wellness, and also the fact that healthy snacking. I think, COVID aided a lot of in-home consumption and gave a lot of, you know, fillip to the foods category. HPC has two issues going. One is the rural skew is far more, and rural is where... HPC is far more secular across income classes and therefore whenever there is high food inflation and consumption stress, HPC gets more impacted than foods. The second thing is some of the HPC categories obviously, there is, you know, what I call higher penetration. As a result of this high penetration, a significant growth happens two factors. One, absolute population increase. Number two is premiumization. Therefore, whenever there is high inflation, obviously the premiumization journey undergoes a shift to downgradation, and what we have seen. Number three, I think the input cost pressures which has happened in HPC because of crude and other things, has led to a lot of people managing, as you know, price points in HPC through shrink, shrinkflation. What happens is that the rural consumer, especially who are at the bottom of pyramid, they fix outlets. Therefore, when you think that you have managed MLH and you will manage transaction, people actually adjust consumption. I think it's a combination of all this, and I believe that slowly HPC will come out of it. Having said that, the long term, perhaps the headroom or the runway for foods is slightly more than HPC. Got it. Thank you very much. I also want to thank you for, you know, incorporating some of the data points on slide 14, very useful. You know, couple of data points are really useful from FY 2022 perspective. Thank you and all the best. Thank you. The next question is from the line of Percy Panthaki from IIFL Securities. Please go ahead. Hi, Saugata. Just again, wanted to do a deeper dive into the VAHO segment here. I was looking at the four-year CAGRs here. Bajaj Consumer is close to flat. Dabur is a 1%, four-year CAGR. You are at a 4%, four-year CAGR in VAHO? Is there at all any kind of sort of pipeline or any kind of one-off that we need to be aware of? If not, basically, what has driven this? I mean, within VAHO, was one or two brands suppressed, which has come back to full strength or what exactly is the story behind these numbers? I think, as I said, that you have to look at two things. One is if you look at we have been consistently gaining value share quarter after quarter. Number two, as I said, that actually the value over a four-year period, I think there have been instances, especially at least out of two and a half to three years, and in the four years there have been COVID base also. I think, this number two instance there has been, I think till December or even November, there has been a significant competitive intensity at the bottom of pyramid, where bottom of pyramid growths have happened. The reason this value growth has also happened, as I said, is that we believe due to a combination of that less focus or less intensity in the bottom of pyramid. Number two is because of lower inflation, leading to, I think, the some of the mid-pyramid and the higher and the top of pyramid brands have started growing in the categories. Okay? There our participation is far higher. Our focus has been higher because we have been focusing on value share, and that is the reason the value share has started growing. As I said, in Marico, normally there is no adjustment that happens between primary and secondary. Normally, we keep broadly, you know, we constant. just to summarize, what you're saying is that out of this differential between, let's say, other players at zero to one and you at four, that 300 bps differential on four-year CAGR, mind you, it's a CAGR, so that's like a 12% or, yeah, 12% point to point kind of a differential that is mainly mix only. It seems rather difficult to believe that, Saugata. No, no, it's not a mix. This is a combination of, as I said, it's a combination of we have a broader participation strategy, okay? Because if you see we also have had innovations in this space because as you know, there is aloe. We have just launched onion oil. We are now participating in mustard. It's a combination of core growing, some of the new things growing, and the fact that we participate across price points. We have had a broad-based growth. If you look at it could be in certain players, all the growth have either happened in price point packs or the bottom of pyramid and a decline in packs which are of higher packs or higher RPI brands. It's a combination of all of that. Okay. If you have to assure me, I mean, there is, I mean, as I said, the four-year primary will be equal to four-year secondary. Yeah, that point I got. I'm not doubting you on that. I'm just trying to find out the underlying drivers, like, is it Nihar Shanti Amla which has grown ahead or is it these new Aloe Vera variants, et cetera, which have driven the growth? Okay, look, Percy, listen, we have five big brands, okay? We have Shanti, we have Jasmine, we have Hair & Care, we have Nihar Perfumed Coconut Oil, and we have Aloe. Okay? If you look at it, these brands operate between 0.7 to 1.6 in RPI. It could be, as I said, I'm reinforcing so that you will get a better color to it. If I grow all across these brands from a 0.7 to 1.6 RPI versus somebody only growing at a lower RPI and declining in higher RPI, this difference happens, no? Right. Right. I got the point that you're gaining market share and you are doing better at the premium end versus others. If you can just share as to what are the inputs you have put into the business and what you are doing differently versus competition, that you are succeeding where others are not? No, I don't... I mean, I think it's about... I mean, I can't get into details. We have a plan, we have to execute it well. I don't think we are still happy what we are doing. We have to do better. Okay. Second question, Saugata, is on foods. Just correct me if I heard you wrongly, but I think you said that this year you are ending just shy of 600 crore, right? Around 600, yes. Okay. You are targeting INR 850 next year. That's like a 40% to 45% kind of value growth, which I think is higher than the kind of value growth you have done this year. This year was a year of general price inflation. Next year, in fact, on a YOY basis, the price inflation might not be much, so you don't get the kicker from that, and you have to deliver most of that 40%, 45% through volume. Just wanted to understand what makes you confident of accelerating the volume growth to such a high level. Okay. First of all, let's put a perspective. We ended FY 20 20 at INR 170 crore. We have reached INR 600 crore in three years. I think it's a significant amount, and I think it is equal to a size of some of the small companies and, in fact, larger than some of the so-called, you know, some of the companies which we have in food. Okay? There has been if I look at the launches which are there, all the launches happened in quarter three and quarter four, and a lot of them have not got scaled up. Number two, we started the food GTM, which is again from quarter three, where we are expanding into actually 10,000 to 12,000 outlets with a separate sales force. It's a combination of that. I think whether we re-reach INR 840 or INR 850 or INR 860, I think the question will be that we would have added INR 700 crores, and you never know, there could be some inorganic also. Sure. Sure. Got it, Saugata. That's all from me. Thanks and all the best. Thank you. The next question is from the line of Kunal Vora from BNP Paribas. Please go ahead. Yeah, thanks for the opportunity. I wanted to understand about MT and E-com contribution is now almost gone up to 30%. You mentioned that GT will now recover. How do we see this mix going forward? MT and E-com will continue to increase or there would be some reversal? How do you see the higher contribution of MT and E-com in the medium to longer term, considering that there is a higher level of concentration and bargaining power of the buyers? I think it has also happened because of the kind of new launches we have done. If you look at foods, for example, we have a significant skew towards MT and E-com. It is only now where we are expanding the GT. We hadn't, because as you know that our GT was not aligned to a lot of, you know, food outlets. Number two is, if I look at it, also some of the especially the e-com growth was led by the tailwind. We believe because of our acquisition of some of the digital brands, our digital marketing and E-com capability is perhaps leading edge in the industry. This year, MT also recovered. Also some of the brands like Saffola and all have a natural this one. I would say two things. One, I think we need to do a better job in GT. I believe, GT obviously has opportunities, and I think GT, As I said, the GT has suffered last year also because of two things. One is, the rural consumption. Number two is obviously in urban what is happening is that because of the growth in e-com and, you know, modern trade, the GT distribution system is under stress and it's undergoing some transformation. I would think that that's why I said that I think we need to perhaps get GT back into growth, and I'm extremely confident that this year we will be growing in GT. Are you seeing a higher level of consolidation on the other side in MT and e-commerce and, any impact on margins from that? I think, one thing as I said that, we have to continuously innovate, and you have to be a number one and number two player. Number two is I think, obviously the cost of sale in e-com and modern trade could be higher, and therefore we have to continuously premiumize the portfolio. Thirdly, I talked about a significant focus on improving the profitability or the, you know, in terms of COGS, in COGS terms and other things in food as well as digital. That will neutralize this increase in cost of sale which you are talking about. Okay, fine. Second and last question, if you can talk about the macro situation in Bangladesh. Couple of quarters back, there were certain problems, currency was depreciating. Also, along with that, how is the mix of business changing, coconut, non-coconut, and How do you see the growth rate going forward? I think, whenever there is disruption, History has shown the strong gets stronger and the weak gets weaker. In Bangladesh, our relative strength is significant. I believe we are the top two, top three FMCG players in Bangladesh. On On a relative sense, we are far more stronger in Bangladesh than there. I think just not brands, or distribution or equity, I think we have extremely strong leadership. One of the things we have done in the last five years, six years in the international business is a methodical way where we have now a playbook, which we are now replicating across Vietnam and Middle East, the Bangladesh playbook. Coming to Bangladesh macro situation, I think there is a combination of inflation which has moderated a bit because as you know, crude prices and overall vegetable prices and wheat prices across the world have moderated compared to what it was peak when the Ukraine issue started. The devaluation has happened, but again, the devaluation we believe that it's, I think we have learned to manage the devaluation. The third thing is that obviously we have continued our diversification journey. Today, the dependence on, if you look at coconut oil, dependence Parachute coconut oil, say four, five years ago, it was 90, it has moved now to 60 or even it will move back below 60. We have done these three. Therefore we have continued to invest even if there's cost of inflation. Obviously, it's a tough situation, but I think, as far as the Bangladesh macros are concerned, I think we have learned to live with it, and I don't think it's deteriorating. I think whatever shock happened has happened, and I believe that there's a stable government and everything, the situation will be, I think. A Bangladesh economy and the way it is run, I think it's pretty, pretty good. Therefore, we believe that the Bangladesh story and the Bangladesh growth opportunity is very much intact. Okay. That's very helpful. Thanks, Saugata. Thank you. The next question is from the line of Sheela Rathi from Morgan Stanley. Please go ahead. Thanks for taking my questions. My question was partly answered, let me take it up again. With respect to the VAHO portfolio, Saugata, what I understand based on your comments is that the growth has been much better broad-based. We are kind of premiumizing the portfolio. Is it fair to believe that we are shifting away from rural towards more urban India? Second is, what kind of NPDs we have had in this portfolio on a percentage basis? Is the distribution for the NPDs as deep as our existing portfolio? Firstly, I don't think there is a shift from rural to urban. I think what I am trying to say again is that if you look at the VAHO growth in the last... I mean, at least till December, what happened, a significant portion of the VAHO growth was happening in price point packs at the INR 10, INR 20, and some of the brands like Mustard and some of the other, what I call, you know, price warrior brands in the space. Now that two things have changed. One is that the first shift that happened was that in November, December, a lot of competition at least was not taking price increases in spite of a huge input cost, but I guess because of other pressures, competition was forced to take price increases. That led to some, what I... What happened in this sec category is that a lot of players other than us, was that converted a lot of ATL to BTL, and they were spending on BTL. That has got reversed. We continue to spend more on ATL. We believe in the long-term ATL story, and that's why the growth in the other parts of the portfolio and the, other than the price point packs has increased. Coming to innovation, I think our biggest one which we have launched in the last four, five years is aloe vera, which has crossed 100 crores. We are just about taking onion oil to GT. We believe that our right to win versus a D2C brand, onion oil is a category which is now accepted. It is reasonably salient. Our right to win in terms of pricing, distribution, ability to execute in GT is far higher than a D2C player. We will also see some more launches. We have also now entered, we were earlier, you know, trying to compete in mustard or sarson in a very me-too product. We now have a differentiated product, and therefore you will see far more, and you will see far more, maybe one or two more innovation in value-added hair oil as we move down in this year. I would say the, it's a combination of that, and I don't think there is any urban bias. Having said that, I think we will also see a premiumized portfolio slowly, which will come into place, and our focus... I think we have a disproportionate share in modern trade. In e-com where, obviously there are players, which have far higher AOV than have premium offerings, which we need not play through our core franchise, but through some of our digital brands, for example. Understood. Just to follow up here, some broad number here, what will be the share of premium like portfolio now for us versus, say, four, five years ago? No, I don't want to get into numbers, please. Okay. My second and final question was, with respect to the food business, what would be the distribution reach for us, currently, and where do we aspire to take it, say, in the next, 12 months or 24 months? Food? You're talking of foods? Yes. Yeah. I think, obviously, in terms of, I think our availability in e-com and modern trade is almost nearly there. Okay? Not so much for some of the new things like snacks and all which we are launching. As far as GT is concerned, we believe that we are first focusing on. Now if I look at masala oats, I think it reaches 1.8 lakhs, no? 2 lakh outlets. That's where masala oats, which is the most distributed brand. What we are doing is we believe honey and soya are the ones which will first get mass distributed, and then we'll see snacks. Having said that, there will be a part of our portfolio which will not be an ATL-driven portfolio. We now have around 10,000 food GTM outlets, which are, a lot of them are open format, you know, standalone outlets, which we will focus on, and that number will slowly try to increase. You must realize that food has a lower shelf life, therefore, supply chain, replenishment, the way you sell foods in terms of frequency of billing is completely different from our core portfolio, and that's the capability we are trying to capture. We are going about in a slightly more, you know, careful manner so that we don't, you know, we don't want to scale up high and then, you know, fall flat in terms of, you know, not being able to manage shelf life and other things. Understood. Just one final point here is on the new product launches side, should we expect new product launches more on the personal care side or on the food side going in FY 2024? We would like to launch both. I think in the last three years, obviously, there has been much more this one on foods. You will see some definitely prototypes in the personal care side, definitely. I think we have a premiumization agenda. Our premium portfolio is doing well. I think most of them have gone back, they're higher than the pre-COVID levels and therefore you are going to see, I think compared to the last few years where it has been far more food, you will see a much more balanced kind of a picture as far as innovation agenda is concerned. Thank you. Thank you very much. Thank you. The next question is from the line of Akshen Thakkar from Fidelity International. Please go ahead. Hi, Saugata. Congratulations on a good set of numbers. Just couple of questions. On Vaho, good to see, you know, value growth come back to double digits here. Just generally over the next two to three years, not asking for a guidance, just generally how are you thinking about that business in terms of growth aspirations over there? If you could share for next year, great, definitely over the next two to three years, what are your aspiration? What needs to happen for you to say it's a good job? That's question one. I had another question, I'll wait for this answer. I think, if rural comes back, I think our aspiration is to get into a double digits and hit double digits. I think there will be a little more broad-based play. I believe that also there is now far more sanity in the category in terms of people growing brand through ATL and equity. Therefore, I think our aspiration and I think there will be significant focus area will be to hit, double-digit growth in VAHO in the next three years. Okay, great. On edible oil, just, you know. Just wanted to add, please don't hold us from every quarter. I mean, we have to look at. No, no. That's why I said as a broad three years. As a broad three-year guidance. Yeah. It's too volatile. I completely appreciate that. Yeah, yeah. On the edible oil business then, you know, that's a little more tactical and near-term question. The raw material pricing has been very volatile. You know, how are you managing it right now? There have been times where we focused on volume share. There have been times where we focused on margins. Where are you on the pendulum right now? Chandri, you know, if I can peel the onion on your comments around value growth, is it more coming from edible oil or is it more coming from coconut oil where there is a pricing headwind? No, no. See, at the end of the day, and I think the approach to Saffola is very clear, that we will be continue to be competitive, pass on value to the consumer subject to a threshold level of margin. I think we will not definitely go for volume growth which are not sustainable. Now, we have had situations in the past during COVID times, but that was because it was a tactical opportunity. I think going forward, we're absolutely clear that we will maintain a threshold level of margin. As I said that both the Saffola and the food business, I think, margin expansion and for Saffola, it's protection of margin and in food margin expansion, this will be something our primary focus area. Okay, great. A last housekeeping question. Just on the employee cost side, there seems to be a large bump this quarter. Was there anything one-off that you'd like to call out or is this par for course? Actually, I think, for a fixed overhead line item, it is better to look at full year number. If we look at a full year number, it's growing at about 11%, which is a tad higher. There are two reasons for that. One is that some of the cost was not in the base for a couple of acquisitions that we did, which is True Elements and Beauty X in Vietnam. Second, there were some one-off reversals of management incentive in the base year due to some non-achievement of internal targets. If we exclude them, then the growth will be about 7% to 8%, which is largely in line with industry averages. Okay, great. Thank you so much, and all the best for the next year. Thank you. The next question is from the line of Tejas Shah from Spark Capital. Please go ahead. Hi. Thanks for the opportunity, and Saugata, congrats on the extension. A couple of questions from my side. First on debtor days. If you see there is an expansion of debtor days, and if I try to correlate with the commentary that you spoke about that modern trade and commerce have gained higher share, is this an outcome of that mix change? Then if that's the case, then how should we see this trajectory going forward? You are right, Tejas. Some part of the increase in debtor days is a function of our contribution increasing from alternate channels. If you compare with last year, same quarter, it's about 3% to 4% higher. That's structural, I would say. Apart from that, as you know, in our business, there was a deflation, right? The revenue growth was not very, very healthy, and therefore, distributor had also ROI pressures. Even in GT, we have sort of given some additional selective credits. That also has led to increase in debtor days. That's more temporary and when the deflation gets into base and we start growing revenues in the second half of the year, the credit extensions of course will come down and that will definitely... I believe that, going forward, you can expect there could be some reduction, from quarter to 1 month. In terms of private label strategy, we are seeing a lot of aggression from national chains now and modern trade. What's your read on it? Saugata briefly touched upon it that the focus would be to gain market share and be one of the top three in category, but it won't be possible across, especially with you pushing so many NPDs through GT and, sorry, MP and e-com. How do you think, how do you strategize for private label aggression from modern trade side? I think as I said that, you know, if you look at modern trade globally that where are you vulnerable to private label, there are two things. One, depending on the category. For example, there are certain categories which have a higher proclivity towards private label. The second thing is, I think, fortunately we are number one or number two in more than 90% of the portfolio. Usually the number three, number four guy gets squeezed. The number three mantra for this is that you shouldn't make super normal profits in a category. If you follow all this, I think you are less vulnerable, and you should continue to innovate. I think if you follow all this, you are, obviously there is always a threat, but you can manage that threat so that it's not has a significant impact. Sure. last one, if I may. Saugata, for last almost four or five years for industry, we have seen that rural growth has been volatile. it has, there is some bump up and then again we lose the momentum as an industry. what's your read? Because, if we step out of our sector and we see some of the other categories in consumption basket and otherwise, the rural distance is not as high as we are kind of registering in our sector. do you think the wallet share change is impacting us more than the consumption slowdown or consumer slowdown that we have been highlighting in the sector? It's a combination of two things. One, I would say that our, you know, our usage or consumption is equal across population and income strata for most of the categories. Okay? Secondly, most of the categories, especially in HPC, are well-penetrated. Thirdly, in a lot of categories, the opportunity exists for the consumer to downgrade, which may not be always. In the case of other things... The fourth thing is, in a lot of categories, discretionary, it's a question that brings you either a tad of joy or a, you know, sometimes what happens, it's a tad of luxury you want. While these are items of daily consumption, which you might say that I can easily downgrade. To give you an example, I think, as the you know, as the thing opened up post-COVID, a lot of things like eating out or traveling, all that has significantly increased, and some with a vengeance. After some time, that will settle down. I would think these are perhaps this one. If I look at it, you know, in a case of certain categories, you know, also there is a lot of unbranded. People might move from branded to unbranded also. Those opportunities don't exist when you buy a two-wheeler or buy a refrigerator or go for a QSR. I mean, you can downgrade, but there is a basic threshold thing there, no? Fair point. Fair Fair point. That's all from my side then also. Thank you. The next question is from the line of Ajay Thakur from Anand Rathi. Please go ahead. Hi, sir. Thanks for taking my question. Just wanted to understand in terms of the new competition, you know, coming in the Parachute space, the coconut oil space, how do we see them shaping up given that, you know, they are kind of, you know, playing more of the pricing game? I believe in certain aspect, you know, the category has some price sensitivity in that context. See, I think the best way to look at it, how we are performing on market share. I think, over the last three, four years, we haven't lost market share, so I think that's the best way to look at it. We also have flankers, you know. Okay. Do you believe that, you know, given the size that they are right now and the kind of, you know, growth they are witnessing, they can be kind of a threat going forward to us in terms of the market share? We will have to start, you know, spending more behind the brand to kind of, you know, protect? I will not be able to share what we want to do, but all I can say is that you have to see that we will protect our market share. Whatever may happen, we will protect it. Okay? Okay. Secondly, what I was also trying to understand in terms of the edible oil, given the fact that right now, if I were to put across Saffola, prices are kind of over-indexed versus some of the other blends, maybe something like sunflower oil or in the market. Can that be, you know, kind of having some implication in terms of the volume growth aspiration for the current year for us? As I said that I think we have to look at a long-term aspiration for driving a mid-single digit kind of, you know, volume growth to a high single digit. Number two, we'll keep a threshold on the profitability, and we will not grow at any cost. I think as prices come down, the, you know, the, what I call people's willingness to upgrade becomes higher because they don't look at percentage, but absolute rupees. Saffola is a very, very strong brand. Okay, thanks. Thanks for that. Thank you. The next question is from the line of Abhijeet Kundu from Antique Stock Broking. Please go ahead. A positive territory in terms of rural growth. You were saying that you also said in one of your comments that you are seeing bottoming out of, you know, rural slowdown and improvement from there. Any, you know, what do you call it, any instances or anything that makes you so confident that, I mean, there is a bottoming out of rural slowdown, any instances of that? Secondly, in terms of geographies, you know, coconut oil portfolio is more skewed towards South, East, West, and where the pain point anyways is not much. It's more in North and it's more in HSM. How are you and where The South and West, if you look at Nielsen, I don't think there is any such, you know, skew. Maybe some people have not done well there in HSM, you know, I don't know about that. All I can say is that what I mentioned about rural growth in VAHO is that if I look at the decline, they have started improving quarter-on-quarter, we believe that in quarter four, the drop was around only -0.7%. It was 3% to 4% decline, which was in Q3, it's improved. Even if you see January, February mark, it is improving. Therefore, as I said that these numbers tell me that things have bottomed out. If these numbers change, I can't help it, because I can't really, you know, it's very difficult to predict because ultimately it also depends on how monsoon pans out. As of now, that is the situation. I don't think there is this thing about, you know, this HSM or North is the problem and South and West doing well. I think the stress was reasonably everywhere. Okay. Understood. Understood. That's basically the numbers say that Nielsen numbers say that it's. It's a slight improvement. It's a improvement. It's a gradual improvement. I don't think it's like. I mean, as I said, that it's a gradual improvement. I think things should improve unless there's something happens on the monsoon, that's all. Okay. The aspiration is that you should grow during the year or two, in double digits in value added, yeah? Always want to have aspire go well, you know. Thanks. Thanks. Thanks Thanks for that. Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to the management for closing comments. To conclude, while FY 20 23 has been a year marked by a challenging operating environment, the improving trajectory of volume growth and profitability in the domestic business and the robust international business keeps us fairly optimistic of a better FY 2024 than FY 20 23 on both revenues and bottom line. The initial results of our diversification efforts in India and some of the overseas markets have been quite encouraging. We believe this sets the path for a sustainable and profitable growth in the medium and long term, and in turn creates incremental value for all our stakeholders. If you have any further queries, please feel free to reach out to our IR team, and they'll be happy to address the same. Thank you. Thank you. On behalf of Marico Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.