Ladies and gentlemen, good day and welcome to Marico Limited Q3 FY24 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 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 touch-tone 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, and 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. Good evening, everyone, to all those who have joined the call, and my best wishes to all of you for a happy and prosperous year ahead. I would like to begin by reflecting on the operating environment during the quarter, post which I'll give you a flavor of our performance and followed by our strategy and outlook going forward. During the quarter, the operating environment is largely in line with that of the preceding quarter with no discernible uptick in consumption. FMCG volume growth on a four-year CAGR basis remained in low single digits with rural mass and HPC categories tracking lower than urban premium and food categories. So far, while the pace of recovery in consumption has not been on anticipated lines, we remain optimistic of a gradual uptick in consumption trends over the course of the next calendar year in light of improving macroeconomic indicators, continued government spending, lower inflation, and substantial cuts in consumer pricing implemented by large organized players in response to an accommodative and stable input cost environment. The prevailing consumption growth pattern, which appears to be more K-shaped, has also led to a continued divergence between how general trade and organized retail has fared, with the former contending with low business growth and rising costs resulting in profitability and liquidity challenges in the trade. Given the heft of traditional trade and its structural significance in a market like India and they employ a lot of people, we have taken concerted steps to alleviate the strain faced by our partners and revitalize the channel, which is very, very important to rejuvenation of the growth, and especially in the core. We expect these initiatives to have a gradual and positive impact on sentiment in the channel and in the quarters ahead, while the pressure on our pricing, which impacts realization, also subsides over the next couple of quarters. Coming to our performance, organic domestic volume growth stood at 2%, which was about 200 basis points lower due to a voluntary reduction in primaries to bring down inventory levels at the distributors and enhance their ROIs. Despite the impact of this move, the performance in the four-year CAGR and core portfolios conveyed signs of some improvement. Volume growth on a 4-year basis was 5%, and even sequential growth in secondaries improved as far as the core portfolio is concerned. More than three-fourths of our business continued to gain or hold market share and penetration levels. Delving further, volume growth in Parachute improved sequentially as loose-to-branded conversion appeared to regain some pace, with the brand running consumer-advantage pricing and copra prices exhibiting some upward bias. As a result, Parachute further strengthened its leadership position with a 40 basis points gain in market share on MAT basis. We expect the gradual upward trend in volume to sustain in the quarters ahead as we move into next year. So far, Edible Oil has an optically weak quarter with a mid-single-digit volume decline on a high base of teens growth. During the quarter, trade remained watchful and continued to operate at lower inventory levels of at least 4 days. The brand also exercised destocking in billing across channels as it did not want to operate below a margin threshold. Looking ahead, given that off-takes remained healthy during the quarter, we expect the brand to revert to growth from the next quarter. Value-added hair oils also improved sequentially, with mid and premium segments growing in mid- to high-single digits and driving mixed improvement in the portfolio. Growth continued to be impacted by extended weakness in demand and sustained competitive pressures in the bottom of pyramid segment. Moving to the performance of our new business, foods maintained its steady growth trajectory, should close the year with at least INR 750 crore, which would be about 4x of its scale four years ago. So far, our oats anchored the growth and maintained its position as the number one brand in the oats category. Honey and soya chunks continued to scale up well and should reach a scale of INR 100 crore each in the coming year. Both our acquisitions, True Elements and Plix, continue to meet our expectations. Premium Personal Care sustained its double-digit growth momentum with a digital-first portfolio surpassing INR 400 crore in exit run rate in Q3. The healthy scale-up of foods and Premium Personal Care keeps us on course to clock 20% of our domestic revenues from these portfolios in aggregate this year. We are also actively working on steering brands that are gaining scale towards profitability. For instance, Beardo will be EBITDA positive this year, and similarly, Just Herbs and True Elements should be close to breaking even in the coming year. Our international business was resilient amidst transient macroeconomic challenges. Bangladesh exhibited some momentary weakness at persistent inflation and uncertain business conditions leading into the recently held general elections. While the core portfolio had a soft quarter, new portfolio shampoo and baby care fared better. Now the elections have been concluded. We expect business performance to normalize, and we should revert to delivering healthy growth in quarter four itself, and the January trends are encouraging. Southeast Asia also had a modest quarter marked by sluggishness in the HPC category in Vietnam. We expect to hold strong given the strength of our portfolio. The MENA business continued to grow impressively as both Middle East and Egypt business flourished. South Africa and our new country development on export business also registered solid growth. We had embarked on a journey to strengthen and diversify international business. While the journey is still underway, we have developed fundamentally strong businesses in each of the regions through our focus on getting the right portfolio GTM, cost structure, and leadership right. The year has been characterized by a persistently challenging operating environment, but we drew positivity from the improving growth trajectory in our core portfolios, although the growth has been slight, as well as the degree of success achieved in our diversification journey both in domestic and international business. We have also initiated corrective measures to reignite growth in the GT channel, which will be the most critical aspect to get better not only growth but also diversification of our portfolio in chemists, cosmetics, and food, and rural expansion. We are determined to get GT back on track, which we believe will be instrumental in restoring the pace of volume growth in the core mass consumption categories. Better off-take trends and market share gains in our key portfolio also keep us in good stead. We believe that the improving trajectory in off-take growth across categories will be followed by a similar trend in secondary and primary growth in the quarters ahead, and we have already started seeing Parachute exhibiting this trend. Top-line growth continued to be dragged by erstwhile pricing interventions in the domestic portfolio and devaluation headwinds in certain international geographies, but we expect these to taper off further and revenue growth to turn positive in Q4. On the profitability front, we will be delivering record high operating margin this year led by gross margin, which expects to expand by 450-500 basis points and even after ramping up brand-building investments behind both core and new businesses. While we aim to maintain a resilient margin profile in the quarters ahead, our focus will be also to deliver sustainable volume-led growth and by reinforcing our strategic priorities. Last but not the least, we have always viewed our entire business operations through the lens of sustainability, and our Sustainability 2.0 framework has been progressing well along with each of our defined focus areas. We firmly believe the value of creating shared value for all will aid us in driving sustainable growth in the longer term. Our dedicated microsite captures all ESG-related information and successful projects and hope it will aid all stakeholders in gathering all the relevant updates on the progress we are making towards our sustainability goals. With that, I will now close my comments. Thank you for your patient listening. I am most happy to take all 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 the 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. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We'll take a first question from the line of Abneesh Roy from Nuvama Institutional Equities. Please go ahead. Yeah, thanks. My first question is on True Elements. So here you said that next year you are targeting break-even. Here, if I see the category is very attractive, and we are seeing many large companies also quite interested here, plus there are a few D2C brands. So my specific question is, what is the distribution scale-up here done till now, and where do you see distribution in the next three years? Because another listed company in a similar space took distribution 10X post-acquisition. And in terms of the differentiation in strategy, pre and post-acquisition, once you have taken over, are you changing the strategy in terms of the positioning or in terms of pricing, etc., anything meaningful versus pre-acquisition? Yes, I think as you know, packaged foods have significant opportunities, and especially True Elements operates in what I call healthy space. In breakfast, they are into seeds and snack and both breakfast and snacking space, and the opportunities are endless. Normally, what happens when and this has been seen even in Beardo is that once Marico takes over 100%, the trajectory of growth improves because we also continue to leverage our existing GT distribution, which we haven't done as far as True Elements is concerned, but we have plans to do that. I think once True Elements and Saffola have this unique ability to have a two-brand play where True Elements also plays in breakfast and snacking at a premium end, while Saffola continues to play at the masstige kind of an end. Therefore, I believe that the potential of True Elements is significant. Now, one of the other things we must keep in mind is that we have been extremely mindful of the fact that while our digital businesses make good gross margin, True Elements is foods that we have made effort to also ensure that there is gross margin improvement, that overall, our digital businesses, which are right now INR 400-INR 500, and we expect it to grow, that in the next two-three years, hit double-digit+ EBITDA in the overall digital businesses because that is very important because if there are growth drivers. So we are mindful of the growth and the profitability together, and I believe that there is enough GT potential. We have started in a small way with Beardo, and we expect to do that with all the brands in the future. Sure. Thanks. Two more small follow-ups on foods business. So one, Plix looks very attractive and very differentiated opportunity, very attractive packaging. So what are the initial learnings? What are the initial findings? And second is on Masala oats. Another listed company entered a few quarters back. They are trying a slightly different position, which is millets plus oats. Millets has become, in fact, quite normal by most FMCG companies. So I wanted to understand in Masala oats, how is the competitive intensity? And you have enjoyed an extremely good run there. Do you see some risk of market share loss next two- three years? Okay. So what was your first question? Sorry. Plix, Plix. Plix, yeah, yeah. So I think, see, Plix operates in the overall wellness space, and I think compared to some of the other brands, it's a very, very young, vibrant brand. Now, wellness, there are different opportunities. If you see at wellness, there are multiple vectors of wellness. There is, which is cardiovascular. There is diabetes. There is weight management. There is bone health. There is gut health. So therefore, Plix offers huge opportunities to operate as a full-spectrum wellness brand. The good thing about Plix is, I think, the innovation velocity, strong consumer insights, and their quality of digital marketing is extremely best-in-class. And if you look at Plix, I see an INR 200 crore+ opportunity even next year, the way the run rate is. And therefore, I believe and also compared to the other brands, including in this space, the bleed is extremely low. So I believe it's a very holistic business, and it can obviously grow along multiple vectors and set for itself as the wellness brand. So if you really look at it, we will have then a three-brand play where Plix plays on wellness. True Elements plays on overall both snacking and breakfast, but a little bit premium, and Saffola plays on masstige, and then Saffola also can get into some other categories, which is plant protein immunity, which are already present in. So therefore, it will be a comprehensive food play. Now, coming to Masala oats question, see, I think the penetration of the category is very low. So it's good that multiple players are investing to grow this category. Yes, you might lose share, but at the end of the day, I think what is most important is that Indians now have a choice of having far better healthier in-between meal snacking. We also have millets in some of our variants already, and we are very, very focused on ensuring that millets is a success. Therefore, even in oats, as you know, there is a variant which has millets in some of our Masala oats that also. Therefore, I think it's not about the positioning. I think it's okay to have multiple players expanding this category because there is no reason why this category shouldn't have double-digit penetration in the next couple of years. Sure. Thanks. My last question will be on the traditional kirana channel. Growth has been very challenging across most companies here, and you did speak of the stress here. You also spoke that you are taking a lot of proactive steps here to get a gradual recovery. My specific question is, India's largest consumer company, they are moving towards an alternate structure where more of variable component and less of fixed component. So what are your thoughts on that? And if you could give some more color as to what exactly you are doing because there the shelf space issue remains. The regional players issue also remains. So the intrinsic issues, how do they change? Because the competition with the online, the quick commerce, that also remains. So are the problems changing, or will it be more of the market share gains which will help you? Okay. So I will give you a more overall holistic view about this. I don't want to comment about anybody's margin profile and all the plans. See, if you look at it, and there is something slightly unique to Marico. We have, in our organized trade and urban, we have a far more skew on Saffola and foods, while coconut oil and hair oil dominates our urban mass and rural. We also don't sell sachets. So therefore, our gross margin and our profitability of the mix which we sell in GT mass and rural is far higher. Number two, what has happened is that the entry barriers to organized trade have reduced. Therefore, you can buy perhaps volume share, or you can buy this one by spending. There continues to be a significant entry barrier for creating distribution infrastructure, and therefore, a rural distribution or a strong urban distribution is a source of competitive advantage. Having said that, obviously, when you are a challenger brand, it's easier to get market share in, say, OT compared to GT because GT, you have to make that systemic effort. For example, if you look at honey, for example, as a category, we have far more share in e-com or modern trade compared to GT. But having said that, I think one of the things we have realized is that there needs to be some kind of a systemic effort to drive two things: in the urban, a far better quality of distribution in food, chemistry, and cosmetics that drives our diversification because that diversification is driven at a higher gross margin. And the second thing is our rural distribution. Now, for that to happen, these are costs. Now, what are the things which and the other which is the other issue that has happened is that in the absence of revenue growth in that channel, especially in urban, till last year, because of Saffola inflation, obviously, there was revenue growth. During COVID, there was revenue growth because modern trade was not working at full potential, and also the smaller players were not there. And therefore, large organized players, including us, had a significant growth in GT, which is now got absent. So I think this problem has started, got accentuated from Q3 in the last year. Now, there are four or five levers. One is stock. One is credit because ultimately, we want them to give more credit in the market. We want higher STRs in the because we have lost STRs in this one. Now, margin is something we have to take a call how we give the best possible margin for ROI. So I think we are looking at all the levers. The easiest one to do is a stock reduction or a stock—it's not a correction, but a reduction because that we can make up by better nimble-footed supply chain. So we are doing a whole host of initiatives which we'll do one by one. We are doing it in a resource-neutral way that there are wastages in the system, and there are investments we want it to be done. So we'll do it in a phased manner such that the ROI of the partners improves. We can invest behind growth in distribution, direct distribution, not only in rural but in urban in these channels. We get back the STRs gradually because we have lost STRs, and we ensure that we facilitate higher credit to retail, which they can do, at the same time improve the ROI. Now, this is going to be done in a phased manner over the next couple of quarters, but we believe that will lead to core growth, and that will also lead to better diversification of our portfolio in GT because a lot of our diversification of portfolio today has happened much more OT-led. Sure. Thanks. That's all from my side. Thank you. Thank you. We have a next question from the line of Avi Mehta from Macquarie. Please go ahead. Hi, sir. I just wanted to follow up on the GT comment. Are you looking at these changes in supply chain, margin changing the level of inventory? Is that the thought that keeps in the channel, or is it more because you talked about nimble supply chain? So we'd love to understand what do you mean by these. And could you just clarify or give us some examples of what are the changes that are being done to kind of drive growth? So again, I am just giving you in a structured way. I'm not getting into specifics. But if you look at it, ultimately, I give my distributors a certain margin. They have certain costs. I give them a certain credit. They give certain credit in the market, and they hold some inventory. Without getting into permanent hit to the P&L, what are the things we can do in terms of our efficiency to first drive ROI of the distributors? I think that's the philosophy which we are following. So that they make ROI, we ensure we have resourced our distribution expansion, and we also ensure they can pass on better credit to trade so that the trade STRs go up. See, the margin is something is a one-way street, okay? So that's the last resort we will leap to. And even in margins, we can look at things like high-margin brands, which are the diversification, this one. But there is no need. Similarly, if you look at wholesale distributors, they don't need. So I think margin is something which we'll tackle later, but there are enough other ways to manage it. For example, I am prepared to keep on reducing inventory such that because inventory is a cost of carrying that inventory doesn't drive offtake. We have to ensure all our investments towards driving offtake. Sir, just a follow-up. Could you kind of help us understand how this inventory has changed, say, four years back, what the channel inventory was? What is it now? And probably five years ahead, how should we look at that? Just to get a sense on because it seems you're targeting more channel inventory, trying to modify that. So no, I think channel inventory is the only one step. The reason I shared about channel inventory, we have done it. As we do some more initiatives over the next two quarters, at the end of the quarterly I mean, in the quarterly call or the quarterly note, I will share with you what are the initiatives. Right now, we are not in a position to share the initiatives. Now, coming to inventory, I think, see, what happens is if GT was, say, 100, the revenue, okay? And as you know, in some of the urban there's a deflation, plus there's a volume decline. If that has become 90, obviously, for that revenue and the fact that STR has also gone down in trade, the holding has gone up. So therefore, we have to start ensuring those holding keeps on coming down. So I think that's the framework which we are doing that now, as I said, that this is the first initiative. There are other initiatives which we will intend to do, which will also for example, we may be running certain trade schemes which are inefficient in the market, okay? We can be running certain promotions which are or retailer programs which are inefficient in the market. So we are looking at the entire gamut of trade spend, which are huge, that investment, and looking at the resource allocation so that all the resource allocation is done towards viability of our distributors, profitability of the margins in the trade so that they deliver better service. They are in a position to expand distribution because distribution means more feet on street. They can give more credit, and that all leads to more offtake and better range selling and better assortment. Got it, sir. Got it. Fair enough. So my second question was on the comment on resilient EBITDA margin, especially as if we look at FY25. With our portfolio composition now changing, would you see this move to 21% levels or that we are talking about by 2024 as a new normalized level? How should we look at that, sir? So I think two of a couple of things, and I will also ask then, Pawan, to give you elaborate on this. See, the thing is that one of the good things is that the diversified part of the business has now a blended gross margin which is almost higher than the current portfolio, which is the first thing. So between foods and digital, our gross margin is higher than our core portfolio, which we have achieved this year. The second thing which we are doing is that with far better efficiencies of spend and as you know now, we are a house of brands, four or five digital businesses with all the driving efficiencies of scale. We are in a position to get double-digit EBITDA over the next two years in this business. And we are also target to target foods in the two- three years. So that part of the business, I think, is in good hands. Now, obviously, it is also a factor of inflation, deflation. But having said that, I think this is something our effort next year also will deliver effort will be there to deliver double-digit profit growth. In the case of international, obviously, there have been some issues in terms of currency deflation. Now, we hope, given that the Bangladesh elections are over, sometime during the second of the year, we anniversarize that currency depreciation. And also, as you know, that we are doing fairly well now in the Middle East, North Africa, and some of the other markets which have potential for improvement of operating margin expansion. So given all that, I think our endeavor will be to actually continue to deliver double-digit bottom-line growth next year. Pawan, you'd like to act? So I think, Saugata, you've covered comprehensively. It's very difficult to give a margin guidance in this state because we do not know as to how the inflation or deflation will play out for our key commodities like copra and edible oils. But having said that, what we are committed for is to deliver at least low-teens profit growth next year. And the drivers, Saugata spoke about, drivers would be, first of all, in terms of we definitely expect the revenue growth to be in double digits if there's inflation in the portfolio. Number two, he spoke about significant improvement in operating margin of the digital and foods business. Number three, there are a couple of international markets where there is definitely a possibility of improvement of operating margin. And number four, I think there will also be some benefits of A&P amortization. So far, we have not driven Saffola master brand strategy. So far, we've been spending in different buckets under Saffola. We believe next year, we should start that journey. With the levers of all of this and lastly, maybe also, if our premiumization also plays out well, that also improves our gross margin. With a mix of all this, we believe that at least we would be targeting low-teens profit growth, if not more. Perfect, sir. No, this is very, very helpful. Thanks a lot for this. And this is exactly what I was trying to better understand. Thank you very much, sir. Thank you. Thank you. We have a next question from the line of Arnab Mitra from Goldman Sachs. Please go ahead. Hi. My question was, as we look into next. Mr. Mitra, I'm sorry. Can you use your handset mode, please? Yeah. And on my handset, is it better now? Yes. Please go ahead. Yeah. My first question was on, as we look into next year, do we see when do we see the price decline in Saffola and Parachute anniversaries? And do we see any pockets of price increase that we can see? Because we are seeing certain categories in personal care where price hikes have started happening, so there is no commodity pressure. So could you just help us understand these two aspects on pricing? So I think I'll give you based on our current whatever the outlook is. In terms of the revenue, the price, you will see a slight revenue uptake in quarter four itself. Now, quarter three, we had earlier committed, but what happened was that since in Parachute, we had to take some tactical pricing interventions to get volumes back on track. And in fact, if I look at offtake and secondary volumes, Parachute growth has been robust in this quarter. Now, coming to next year, I think if you look at history of Marico, the sweet spot for us is actually, especially in Parachute, is a scenario that follows as follows: low food inflation, copra inflation. We have position gains, and we deliver high volume growth and profitability is protected. We see that scenario likely to happen in the second half of next year. As far as Saffola is concerned, obviously, I think if you look at the price around pre-Ukraine, the price of Saffola Gold, that's a bellwether brand. It was around INR 150 a liter. It went to INR 230. It is currently around INR 160. So most of the reductions are done, I think. Any pockets of price increase in hair oil and other segments that you see? If there is copra inflation next year, Parachute, who will take price increases? Sure. Understood. My second question was on the food business. You've got 18% growth in this quarter. This includes, I presume, inorganic components that got added to the business. Could you help us understand what could be the organic growth? Has it slowed down for some reason? What could kind of be the reasons why we think it could accelerate next year? So I think I alluded to last time is that one of the things we are doing in our foods right is getting our supply chain and getting our gross margin right. So there has been a slight slowdown, but if you look at trends, we should be in a position to get back into 20%+ growth from this quarter onward. Got it. And my last question, Saugata, was basically, if you look at on Pawan's comment that next year, because commodity prices are difficult to call out, you still look to deliver a double-digit earnings growth. Given that margins, it's unlikely that you'll see margins further go up from where they are. So the burden of growth essentially comes on top. Given the current environment, does it not look very difficult that we could see a double-digit revenue growth next year? Because as you rightly mentioned, pricing, you would probably anniversarize at some stage, but you would have to literally deliver very high single-digit volume growth to get to double-digit kind of earnings growth. So is there any difference in how I'm thinking versus what could be the template for next year? If you look at copra cycle, typically, it follows 18-24-month cycle. So logically, we should have inflation in copra. So we definitely expect once the seasonal months are over, it should definitely have an upward bias. So therefore, there'll be a time where we have to take certain price increase. So if you're able to deliver around 6%-7%, 5%-7% volume growth, I believe that the balance will be made up through pricing as well as some part of the portfolio, which will have better premiums. For example, let's say Hair Oil does better or the digital business contribution increases. So that delta will be sort of filled up from that part of the portfolio. And also, edible, as you said earlier, that it has bottomed out. We have gone back to almost pre-COVID level prices. So we do not expect any further deflation in edible oil. As in, when if you face any inflation, of course, there could be some price increase. So as we move into quarter four, we definitely expect Parachute to move into positive revenue growth. Come quarter one, the entire anniversarization of edible oil will be over. And then, depending on if there's an inflation in edible oil, that will also sort of move into positive trajectory. As far as valued hair oil is concerned, we might take certain price increase depending on how the crude oil prices move. And typically, we see that we can always take 2%-3% price increase in the portfolio without much of an impact on the volume. So with all this, we believe that if you're able to deliver a certain level of volume growth, it can definitely move into double-digit revenue growth. Okay. Thanks so much, Pawan. Very, very helpful. That's it from my side. All the best. Thanks. Thank you. We have a next question from the line of Vivek M from Jefferies. Please go ahead. Hi. Good evening. A follow-up to the earlier question on food, Saugata, if we do the math, I mean, it looks like that adjusting for Plix, the base portfolio actually provided didn't grow. Is that a fair, is that a correct calculation? No, no. So around the food, the core has been a mid-single-digit growth. True Elements have anyway anniversaried. So basically, it is just the Plix part of it, the food part of Plix. So as I said, that it is that 18%, I believe that from this quarter onwards, we'll be back into 20%-plus because of the fact that what we did was we slowed down some of the things because of our ability to manage freshness and also our ability to get the gross margins right. So also, there has been no innovation. If you look at the other thing that has happened is that this year, winter has set in late. But anyway, honey has not given significant growth. If you look at everything, I think because last year was a big honey season. So if you look at all that, I think it has a mid-single-digit. But as for trends in Q4 is concerned and whatever steps we have taken, I think we should go back into 20%+ and even next year into 20%+ kind of a growth. March quarter, Saugata, when you say 20%, that is 20%-plus clicks or including clicks, you're talking about 20%? Including. So that would still be very underwhelming, right? Because let's say Plix does about what? About INR 35 crore-INR 40 crore per quarter, right? And let's say last year's base on food business was about INR 600 crore. So I mean, even if you don't do anything, I mean, the Plix business itself is giving you, based on our calculation, about 18%-20% kind of growth unless we are getting the seasonality EBITDA wrong. So Vivek, what Saugata is mentioning is the base case that we should definitely grow at 20%+ in quarter four, and we will be targeting more than 20% in FY25. Having said that, our efforts will be to. That's what we're planning, Pawan, right? Yeah, largely because for the first three to four months, if you exclude, we acquired Plix somewhere in the month of July. June, July. So Plix as an anniversarization will happen from July. Having said that, even in quarter four, what we are planning is high to mid-high to low double-digit in terms of organic foods as well. Okay. Okay. And the other thing is, Saugata, you have had mentioned in the past about and I understand businesses are dynamic, and there are a lot of things which go right and wrong. But let's say INR 850 crores when you were looking at for FY24 and INR 1,000 crores for FY25, it looks like it's going to be more like INR 750 crores FY24. What would you say that what did not go right? Is it the macro that you would say did not go as per the plan, or is it your base case built in maybe one more acquisition? When you're ending with, let's say, INR 100 crores shorter, where is the gap in your view? So I think, firstly, we must appreciate that our diversification journey has been reasonably good. If you look at what was there in 2020 versus this, and food has grown 4x. Now, if I had to see one, two things where perhaps that contributed to the INR 100 crore, one is that we didn't want to grow at any profitability, okay? Unfortunately, compared to I mean, so we were clearly conscious that we must not grow at any cost. We must get the fundamentals right on supply chain, stock freshness, and other things. The second thing is, obviously, which you can see is that the urban growth rate, which was very, very strong during COVID time and this one, has been a little now tapering out. You can see also some of the food categories and the food company, FMCGs, that the growth was not at that level that was there, say, one or two years ago. It's a combination of that. Having said that, see, at the end of the day, it's always good to have an aspiration or a dream. We are not way off, I think, from something completely new. INR 750 by INR 850 is not a very, very big miss. It is a miss. Would have loved to do INR 850, but INR 750 is not bad at all. If I understand, I understand. I'll add Vivek over here. So as Saugata said, it was an aspirational target that we had taken in FY20 without sight in terms of which categories we'll get in, etc. So largely, if we have made the business more than 4X, I think it's a good achievement. Now, standing here, what we are looking at is that in the next three years, we should be trying to achieve 2X of the scale where we are at this point in time. So if we are at INR 750 crores, we should be targeting about INR 1,400 crores-INR 1,500 crores, let's say we talk about FY27. So again, we are taking aspirational targets. But yes, it's not a significant miss because we are more than 4X as to where we were in FY20. The other thing I want to add is what we have finally been able to achieve in FY2024 exit is a gross margin which is significantly better than Saffola edible oil. Therefore, overall, Saffola brand, we have actually been able to significantly up the overall blended margin. Got it. So the reason why I asked you this was you don't think it's because of rising competition? So we are seeing, let's say, Tata Consumer, Nestlé, ITC, all of these companies also now getting into some of your zone. So you don't think it's because of competition? Yeah. As I said, that in low-penetrated categories, I think more people investing actually grow the category. And as you know that there is a significant movement into healthy snacking and healthy in-between meals, and as you are aware of the strength of the Saffola brand. So I think, as I said, that is not the issue. The issue is that, as I said, that we could have grown. We could have grown. The only category where we participate, where there has been no growth in the category and actually the category has not been doing well post-COVID, is honey. Otherwise, all the other categories, in fact, if you look at honey, Chyawanprash, of course, Chyawanprash, we don't have a presence. Those are the categories which are not doing well. And especially, there has been delayed winter and all that. As far as oats is concerned, we are getting growth. I think we have just entered snacking. Once we get the GTM and our overall supply chain and capability right, I think we've taken a pause this year in terms of getting all this right. I think we will get back into 20%+ growth. Now, that is a baseline case I'm giving. We may be aspiring more, but I think a 20%+ baseline growth is something underrated next year. Got it. Very good to know that. One more on PPC. When we look at PPC this quarter, Saugata and Pawan, the presentation mentions about INR 300 crore quarter three run rate. Last year, when I look at the same time, same slide, it says INR 300 crores YTD ARR. If I assume that exit was higher than YTD average, it doesn't look like that PPC has also grown. What am I missing over there? So there are two parts of the portfolio which haven't grown. Serums has been growing as a category, and it's been doing well. In male grooming, the INR 10 gel pack, as you know, anyway, there is a stress in rural. So that has got impacted. The other part of the PPC is body lotion. Now, this time, there has been a very late winter and a short winter, and some of the sale has obviously reduced, and some have flown into Q4. Got it. Okay. Okay. And lastly, on hair oil, this BOP, shampoo, how much of this, again, do you think or do you consider this sluggishness because of macro factors versus competition because your opening remarks did mention competition as well? So because as in when the cycle turns, things get better, do you think this portfolio comes back, or do you think you would still be worried about competition over there? So I think there are two ways of looking at it. I think if you look at it, there is obviously a sluggishness in demand. As you know, whenever there is significant inflation and there is stress in demand, smaller players get into it. And also, there is competitive intensity when organized players are focusing on that. Now, there are two ways of looking at it. I put all my resources and defend that versus a smarter way, which we are trying to do, is growing the mid and the premium where I have much lower market share. That makes far low gross margin, higher margin. That is my intent to do because if A throws money, me throwing more money and actually selling at a low gross margin to get some market share is not something which is sustainable and not a smart thing to do over the long term. Got it. Got it. Thank you, and wish you all the best. Thank you. We have a next question from the line of Akshen from Fidelity. Please go ahead. Mr. Akshen, can you please unmute your line? Hello. Yeah, Mr. Akshen? Please go ahead. Yeah. Hi. Am I audible? Yes. Yeah. Hi. So congratulations on a good margin show. Most of my questions have been answered. Just wanted to understand two things from the team. One was around the edible oil business. We've seen quite a lot of volatility in the last two- three years given the kind of channel corrections that you would have taken, competitive pricing, etc. When you look at this business, I'm not saying in the immediate term, but next four, six, eight quarters out, how are you thinking about growth trajectory in that business? That's question one. Question two is you seem to be confident that the changes that you made in the distribution end will help growth. If you could just sort of help us understand what were the difference between primary, secondary so that we can at least better gauge if there is a gap that can be caught up in the coming quarters? Those two questions, and I had a follow-up, but I'll wait for answers for this one. So I think if I look at Saffola and let me tell you, Saffola works the best when there is stability, which is and in the last three years, there has been extreme volatility, very high inflation followed by a high deflation. Now, in a high inflation, what happens is the absolute price of Saffola becomes unmanageable, and therefore, people don't upgrade or they downgrade. When there's high deflation, which we have seen in the last couple of quarters, what happens is that the trade wants to destock because they don't want higher-priced stocks, and they get stuck. We also want to be very careful and not push because when my consumption cost, therefore, is high. And those taxes, if I sell and create higher STR, I'm stuck with those and make low because I have to may have to pass on what I call below-the-line spends to basically flush out those stocks. So therefore, I see the way I look at Saffola long-term is this. In the next three, four years, in the Saffola overall portfolio, if edible oil is 50% and food is 50%, with food delivering at least 10% higher gross margin, if not more, than Saffola, I think that's an ideal thing which we want to do. So therefore, even if it means mid-single-digit growth, that's a very, very satisfactory growth for me as far as Saffola edible oil is concerned. Having said that, it is very, very critical. Food needs to grow at 20%+. When I'm talking about one of the other things, you must realize that Plix is wellness, and Plix makes far more higher margin than normal food because wellness brands get to make higher margins. So having a far more higher growth trajectory in food and as Pawan alluded to, the 20% is the base case. If I can do more, the better. But having a 50/50 split between this and over the next three years is something which we must do. Now, coming to your next question on GT, I think, as I said, it will be a gradual process because I don't want to drive this expansion with higher cost but with a smarter resource reallocation. It will happen in phases. So one has to be patient about it. But what we are doing is a far more longer-term reset to ensure viability of GT. Under-indexation in GT and over-indexation in OT is not a right thing for long-term profitability, and we want to ensure that there is a balanced growth between the two channels. As I said, unlike other organizations, given that we don't sell sachet and we don't sell food and Saffola in rural, our rural GM is actually far better. Therefore, it makes all the more sense to continue to invest behind rural distribution. As you know, our rural market share is actually lower, especially in Parachute. Also, in some of the markets which are strong markets of ours, our value-added hair oil presence is not that great. We can always diversify. Bangladesh is a classic example where we had PCNO a contribution of 90%. Today, it is sub-60%, and we have been able to do an amazing journey in growth. There is no reason why in some of our Parachute-strong markets, we can't replicate that. Okay. Great. Last question from my side, Saugata. How are you currently thinking about capital allocation? Last two-three years, we've made a bunch of tuck-in acquisitions. Do we wait to assimilate these at this stage, or should we be thinking of M&A as a continuing strategy year-on? Firstly, I think we believe that the digital acquisitions have been immensely successful. We might not be the best in the world in creating digital brands, but Marico aims to be top-quartile in scaling up brands profitably. And let me tell you, we have not even done the synergies. We are just about starting the process of synergies within the digital brands and taking some of the digital brands to GT. So if there are opportunities, we will do it. Obviously, we have a certain appetite. We have a certain which could be compared to some others different. But I think we will look at it. Having said that, I think we always believe that M&A is not a substitute for organic growth. Our focus continues to remain that we must deliver organic growth, and M&A is a multiplier, not an escape button for not able to do organic growth. All right. Thank you. Thank you. Ladies and gentlemen, in order to ensure that the management is able to answer queries from all participants, please restrict your questions to two at a time. You may join back the queue for follow-up questions. We'll take the next question from the line of Harit Kapoor from Investec. Please go ahead. Hi. Good evening. I have two questions. One was on the ad one was on the ad spend side. On the standalone, you get an 11%-12% decline. Just wanted to understand, how do we read this? Is it a higher BTL in the core? Obviously, I understand that the advertising on the digital side is in the subs because it's a. Just wanted to get your sense on this decline in ad spend when we had so much of gross margin tailwind. Thanks. Harit, you're right. If you look at quarter three, of course, ad spend in India business, which is reflecting in the standalone, has gone down. There are three, four reasons for that. Number one, we have under-indexed spends in Saffola this quarter given the volatility in underlying commodity and cautious trade sentiment. And also, we ran a visible campaign in last quarter where we had spent quite a lot, and therefore, we had cut down the spends in Saffola in this quarter. Secondly, in BOP, in Parachute, we rationalized some of the ATL spends and plowed back towards consumer-beneficial pricing. So that also sort of reduced the A&P spends. Lastly, through the NRM project that we have done, we have rationalized some of the channel spends in alternate channels of MT and ECOM, which was getting sort of accounted for in A&P. Even if you look at while this quarter three, we have declined by about 8-9%, but if you look at YTD levels, the spend is about 6%-7% in terms of A&P. Got it. So Pawan, this is more of a one-quarter kind of a phenomenon in research and events. Is that the way to think about it? Yeah. Yeah. So if you go back I mean, if you talk about quarter four, you should definitely go back to growth of at least mid- to high-single-digit. The second question was on the GT changes. I just wanted to add one question. Over the next 2-3 quarters, as we implement this, will there be a material difference between primaries and secondaries, or it will be marginal? No. So I think right now, as I said, this one was 2%. We might do something more over the next one or two quarters. But ultimately, the growth will also start coming because what we are doing is we are ensuring the system is geared towards driving growth, driving distribution expansion. So I don't think it will be beyond one or two quarters. It will start delivering growth rather than doing further corrections or reductions. Got it. Those are my two questions. Thanks and all the best. Thank you. We have a next question from the line of Latika Chopra from JP Morgan. Please go ahead. Yeah. Hi. Thanks for the opportunity. What I could sense was relatively more confidence in low-teens earnings growth for FY25 coming through you. If you look at different permutation combinations on top-line growth, of course, you've talked about a gradual volume growth recovery over the next four, five quarters. We talked about this GT reset that you're kind of playing out. Do you have any kind of margin levers which probably could take up margins even beyond FY24 levels of 21%, which has given you confidence in low-teens earnings growth for FY25? So Latika had explained it's difficult to give a margin percentage guidance, and that's the reason why I took the conversation to more in terms of double-digit to low-teens profit growth. And for that, I've talked about the levers that I can see, which I talked about: the international couple of markets, the digital business, the premiumization. Plus, also, we have an internal cost management cell that keeps on optimizing every year, and we typically call out about INR 100-150 crore every year. So with a mix of all this, we believe that kind of profit aspiration we should be able to meet. And as I said, we definitely expect anniversarization of Parachute in quarter four, Saffola in quarter one. And if we were to look at the Copra inflation cycle, we expect inflation to kick in once the seasonal months are over. That will lead to some price increase. If you're able to deliver medium-term growth levels in our core business, I think it can lead to double-digit revenue growth. Okay. All right. The second question was a comment that you made on food business, 20%-plus growth. Assuming Plix obviously is going to get into the pace, are we talking about next three years? You mentioned a number for FY27, if I heard correctly, of INR 1,400. That's the aspiration, I understand. But when you were setting that aspiration, is it organic-led, or you would assume there is going to be some inorganic addition to this particular food business when you're talking about that aspiration of 20%-plus growth? The way we look at it is we have set the what. We will now start doing the how. Obviously, any long-term strategic business plan has to be a combination of 90% logic, the last 10% ambition, and magic. We have to also, we can look at both what I call inorganic opportunities as well as organic entry into new categories. I think the biggest one we have to set it right is how can we succeed in snacking because snacking is the biggest market, and healthy snacking is a significant consumer trend. Plix also, I believe, given the huge trend in wellness, has the ability to really become a large brand. Therefore, it's a combination of that. Do I have complete numbers for it? No. But I think as long as we are 80% there, 90% there, we'll be happy because nobody realized in 2020 that in 2027, that we will have a INR 2,500 crore food-plus digital business. We never realized we will have it. But we just dreamt of it. We did it. We may have not done 100%. We have done 80%, but we are there. So I think broadly, I think we should be able to do it. I think what is most important is that do you have an operating model that drives repeatable growth? I think we are broadly getting it. I think in digital, we have got it mostly right. We have to get it right in food. Okay. Thanks, Saugata. And Pawan, all the best. Thank you. Thank you. We have a next question from the line of Mihir Shah from Nomura. Please go ahead. Hi. Thank you for taking my question. Since most of the long-term questions are already answered, I have a few near-term questions. One clarification, actually, on the primary stock correction in GT. It seems that there are more steps that you are implementing. Can this continue to impact sales growth for the next few quarters as well, or given the stock correction has really happened, it can lead to an improvement in volumes optically, at least in the near term, in the fourth and the first quarter? We have done the stock correction. We started in this quarter. Maybe at best, there could be an impact in one more quarter, and we do not see really beyond that. Got it. To answer the second part is that from quarter three onwards, you will get the positive impact of that because if you are doing in quarter three, quarter four, from next year, FY25 in quarter three, quarter four, you will get the positive impact. Okay. Got it. Thank you, Saugata, for that. I wanted to really talk on the how should one think about the Parachute and Hair & Care volumes in the near term given that they have a high base? Do you see enough of strength and demand improving from loose BOP that can help them to remain in the positive zone given they have a high base? So I think if I look at it for large brands, one of the interesting things you will notice is both upside and downside. First, offtake gets impacted, followed by secondaries, followed by primaries. That cycle, we are almost seeing a complete turn as far as Parachute is concerned where we have seen offtake improvements have happened. We are seeing secondary improvements happen, and now we are expecting primary. And as I said, that next year, hopefully, there'll be a sweet spot of Parachute, which is low food inflation, some copra inflation, and therefore, always Parachute gains in that kind of a scenario. As far as Saffola is concerned, however, there are two parts to the story. One is that in mid and premium, we have to still do a better job, but we are now getting growth. In the BOP part, we are not getting growth. The BOP part is not getting growth. It's a combination, as I said, of stressed consumption with smaller players participating and some of the intense competition that is happening. Now, that part, we are not clear about what will happen to that, but at least we are extremely focused on improving or accelerating our growth in the mid and the premium part of it. Understood. Got it. And a quick one on Saffola oils. I mean, given the sharp price cuts that we have seen, the GT correction, can one expect volumes growth to come back to double-digit growth in the near term, or there is still headwind from the lower-priced players that can continue to impact volumes for them? So I don't think we are aspiring for because the double-digit growth of Saffola will happen only at the cost of margins. We don't want to do that. We are far more focused on putting the resources behind food growth. And therefore, even if there is a mid-single-digit growth, we are okay with it. Got it. Thank you so much, Saugata and Pawan. Wishing you all the very best. 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. Over to you, sir. To conclude, we've delivered a competitive performance in a rather challenging operating environment. If we go by offtake growth, market share, and penetration trend, we believe we should see gradually improving growth trends in the quarters ahead. The international business has been quite resilient despite transitory challenges in some of our key markets. With some of these subsiding, we expect to revert to a familiar growth trajectory from the next quarter itself. Overall, while our top-line is subdued due to deflationary impact in India business and currency depreciation in international business, we would deliver record high operating margins and fairly healthy earnings growth this year. We've also made visible progress towards the strategic imperatives set out at the start of the year, especially in terms of portfolio diversification, and we would continue to invest behind the scenes. That is it from our side. If you have any further queries, please feel free to reach out to our IR team, and they'll be happy to address. Thank you, and have a good evening. Thank you, sir. On behalf of Marico Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.