Ladies and gentlemen, good day, and welcome to the Marico Limited Q1 FY25 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 this conference, please signal an operator by pressing star and 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 anybody else who is not an individual 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, to all those who have joined the call, and hope everyone is doing well. I would like to start with a narrative on the operating environment during the quarter gone by, after which I'll touch upon our performance and strategic objectives going forward. During the quarter, the sector witnessed continued to witness gradual improvement in demand trends, with rural growth ahead of urban. Pricing growth, however, turned flattish on a YOY basis, while both HPC and foods witnessed an uptick. The pickup in HPC has been more pronounced over the last six months. Premium segments continue to outpace mass segments, and alternate channels continue to gain salience vis-a-vis general trade. We expect volume trends to sustain the improving trajectory, aided by stable retail inflation, a healthy progressing monsoon season, and the government's budgetary allocation towards boosting the rural economy. That being said, elevated food inflation and spatial redistribution of rainfall will be key factors to be monitored. Moving on to our performance, the sequential uptick in domestic volume growth was led by steadying trends across the majority of our portfolios and partially reflected by the healthy trends in offtake growth across key portfolios. More than 90% of the business either gained or sustained market share and penetration on a MAT basis. However, the improving trajectory in the core portfolios would have been more discernible, if not for the impact of ongoing stock adjustments implemented to support GT distributor ROIs and conscious holdback of inputs in wholesale and B2B channels, in particular markets, to prioritize direct reach expansion through Project Setu. The latter initiative ensured ease of direct selling in of a range to the outlets instead of those retailers where we are expanding distribution, picking up stocks from wholesalers or B2B. Domestic revenue growth moved up in high single digits along expected lines, given the price hike in the coconut oil portfolio, which absorbed the residual base impact of price drops in Saffola oils. Pricing growth is likely to pick up through the year, with Saffola oil price drops moving into the base completely from Q2 and mild inflation expected in some commodities in H2, particularly copra, which will further aid domestic revenue growth through the course of the year. We launched phase one of Project Setu in six states, comprising a mix of stronghold and opportunity markets. The initial results have been very promising, with direct coverage expansion in urban and rural markets. These new outlets have responded well to the core and new portfolios. During the course of this year, we'll scale up phase one markets as well as expand into some more states. In addition to enhanced direct reach and weighted distribution, we expect Project Setu to drive market share gains across categories in urban and rural markets, as well as enhance assortment levels in urban stores, thereby enabling diversification and premiumization in the domestic business. Delving into the domestic business, we shall touch upon the key trends in each of our categories. Parachute Rigids witnessed strong 8% growth in volume offtakes during the quarter, which was reflective of the consistent market share and penetration gains witnessed by the brand. The reported volume growth, however, was impacted by the aforesaid stock adjustments in GT and in wholesale and B2B. The brand maintained its premiums and logged in 100 bps gain in market share during the quarter. Flanker brands, including Nihar Coconut Oil and Oil of Malabar, which compete with regional and some deep discounted national players, grew in mid-teens. Consequently, volume market share of the composite coconut oil portfolio, including flanker brands, reached its highest ever levels at circa 64% on a MAT basis. We expect a pickup in Parachute through the rest of the year in view of the visibly encouraging trends in market share, penetration, and offtakes. The pricing growth and account of actions taken so far will flow through entirely from Q2, and we could take possibly around a round of price hikes in case of any further rise in copra prices during the course of the next second half of the year. Gradual escalation in copra prices is positive for the brand, as it affords us the opportunity to strategically leverage the brand's pricing power and procurement system advantages, thereby gaining volume, traction, and market share. Saffola edible oils delivered mid-single-digit volume growth as stability prevailed in both input and consumer pricing. As the pricing base entirely catches up from Q2, revenue growth will track in line with volume growth. Offtakes for the brand has also remained healthy. Master brand advertising in Saffola, initiated last year, has been a positive step towards leveraging the equity of the master brand and enabling far more efficient brand-building investments. Value-added hair oils have been sluggish amid competitive headwinds in the bottom of pyramid segments. Volume declined in low single digits, partly impacted by the aforesaid GT distributor stock adjustment and limiting wholesale and B2B in Setu launch markets. In fact, secondary sales and offtake grew in low single digits. While competitive intensity remained high, we have gained 50 basis points volume share and 60 basis points value share in Q1. Brands such as Aloe and Jasmine, which play in the mid and premium segment, grew well ahead of the category. We'll expand our participation in this segment of the category. Getting value-added hair oils back to healthy growth is a key priority for us, and we expect to make some headway this year through concerted action initiated at the bottom of pyramid segment of the portfolio, and a gradual improving rural consumption sentiment in mass BPC categories and set to aid volume growth. Foods had a robust quarter and registered 37% growth, with core oats portfolio growing at 20%+. We kept up the innovation velocity with the launch of Saffola Muesli with a differentiated flavor pop format, aiming to leverage the brand's equity in the breakfast segment. The Plix plant-based nutrition portfolio and True Elements have also scaled up well. We expect to surpass our internal expectation, which we had set at the start of the year. We're able to expect a structural shift in our foods gross margin last year and expect proper profitability to inch up as we scale over the medium term. Premium personal care sustained its healthy growth trajectory, led by the digital-first brands. We expect the digital-first brands to exit FY 2025 at an INR 550-600 crore run rate this year and striving to achieve double-digit EBITDA margin by FY 2027. Beardo will hit double-digit EBITDA margin this year. Just Herbs is tracking well ahead of the INR 1 billion ARR mark, while the traction in Plix personal care portfolio has been encouraging. Both Plix and Just Herbs have been scaling with minimal cash burn. We believe Beardo and Plix have the potential to scale up to INR 500 crore ARR in each in three to four years' time, given the expanse and growing TAM of their portfolios. The collaboration with Kaya has enabled us to advance our play in science-backed personal care. We are currently working towards a smooth transition and now have exclusive rights to scale up Kaya's range of efficacy-based personal care products outside of its clinics. We believe this is an INR 100 crore opportunity, revenue opportunity over the next four years. And we'll add another growth lever to our digital-first business, thereby further accelerating the portfolio diversification agenda of the India business. As you know, Kaya is a known brand, and also it has high gross margins. Our portfolio diversification objective has led to a marked shift in our revenue construct and reduction in the commodity linkage of margin and revenue growth. We will sustain the aggression to drive 20%-25%+ CAGR in these portfolios and expect the composite share of foods and premium personal care portfolio to cross 25% by FY 2027, accompanied by a visible improvement in their profitability. Moving to international business, we have maintained a double-digit consistent current, constant currency growth trajectory. The Bangladesh business has held firm in a challenging environment on the back of its broad-based portfolio and robust fundamentals. However, we remain watchful of the current on-ground situation. In Vietnam, we witnessed some signs of a recovery in HPC demand and expect gradual improvement ahead. Myanmar has been under geopolitical turmoil, and the business may remain subdued this year. We continue to ramp up in MENA through the expansion of the hair oils portfolio in Egypt and the Gulf region, and witness healthy traction in the haircare and healthcare portfolios in South Africa. The export business has scaled to $25 million and continued its healthy run. The broad-basing of the business has not only strengthened the growth perspective of the business, but has also added margin upside potential in the medium term and also consistently reducing the concentration risk in Bangladesh business over the last three to four years. To sum up, we continue to gun for a double-digit consolidated revenue growth this year by driving outperformance vis-a-vis category and market share gains in the domestic core portfolios, accelerated growth in the foods and the premium care portfolio, and healthy momentum in international business, which will be supplemented by a favorable pricing cycle in key domestic portfolios. While key commodities are exhibiting mild upward bias, we are confident that we'll be able to maneuver margins through pricing, driving a more favorable mix and ongoing cost optimization initiatives to hold operating margin at FY 2024 levels this year. 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 seeing encouraging progress across each of the eight broad-based themes. We have detailed the same in our FY 2024 integrated annual report, which was released last month, and I hope it will make for good reading. We firmly believe in creating shared value for all, will aid us in driving sustainable all around and superior growth in the longer term. With that, I will now close my comments. Thank you for patiently listening, and we will now 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 1 on their touchtone telephone. If you wish to withdraw yourself from the question queue, you may press star and 2. Participants are requested to please use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Abneesh Roy from Nuvama. Please go ahead. Yeah, thanks for the opportunity. My first question is on the foods business. So very strong growth here. Wanted to understand if there is any one-off, this quarter, and between the two new businesses or True Elements and, Plix, would you expect FY 2025 higher growth in, in, Plix? And, in True Elements, if you could, specify in a very hyper-competitive and, lot of similar kind of, brands, how True Elements is now able to, differentiate and thereby, grow strongly? So firstly, just to give you a flavor, I think it's, as you know, last year we took a pause in our food business, primarily to get the margin correction and also to get the entire supply chain and the sales system, because as you know, our entire forecasting replenishment model and our supply chain was not geared to handling low shelf life products. At the same time, we had an 800 basis points correction in our margin. And also this year we are only focusing on a few things, investing behind only things like oats, honey, soya, and now of course, breakfast cereals and snacking, which we are actually planning to expand with the launch of an INR 10 snacking product, which is Crunchies. So if I look at it, the organic growth is still high teens, with oats doing 20%. Obviously, the growth in Plix and True Elements is slightly higher because of a lower base and Plix significantly driving multiple nutraceutical platforms. As far as True Elements differentiation is concerned, I think it starts with the brand name True and seed-free. It operates at a slightly higher RPI. It is slightly more, I would say, the business that comes from MT versus GT, compared to other food brands. And some of the new things which we are experimenting on, and as I realize, one thing is that if you have to scale in foods, one of the things you have to do is to ensure some price points to drive growth. At the same time, Indianize some of the flavors and offerings, which True Elements has started doing. Having said that, the other thing you must realize that digital brands enjoy is the, while they independently drive their destiny in terms of driving brand preference and sales, the significant expertise of procurement, supply chain, cost management, and manufacturing processes of Marico, which gives them a certain advantage in terms of cost structure and pricing. Sure, understood. My second question is on your international business. You have diversified away from Bangladesh, which is a good strategy in the current context. Another FMCG company said that past few weeks in Bangladesh has been quite challenging, which is understandable. My specific question is, how are your EBITDA margins in Bangladesh versus, say, the consolidated margins or say the standalone margins? And second is, how serious is the impact till now? Some color if you could give, either in terms of manufacturing or in terms of demand and distribution, how big is the impact till now? I understand these are daily consumption, so this will come back. But till now, how is the demand in Bangladesh? So I think, firstly, this strategy of reducing dependence on a single country, expanding the full potential of MENA and, South Africa or Southeast Asia, started four years ago, and nothing to do with the current context. And it is a gradual process which we have been doing. And within Bangladesh also, we have been reducing our dependence on coconut oil and driving and successfully, significant diversification of, you know, our portfolio into shampoo, baby, and all. See, the, I don't want to comment on the country. All I can tell you is that there have been significant black swan events in the past, across our countries, across our portfolio, whether it's COVID, whether it's, you know, Ukraine, post-Ukraine inflation. What happens in moments of you know, adversity, the strong get stronger and the weak gets weaker. So therefore, as I said, that we have a very strong business, strong fundamentals. We have been in that country for 20 years, so I don't... We have weathered different storms, so it's okay. I mean, I, this is all I can say at this stage. Sure, I'll follow up on that later. Last quick question on value-added hair oils. Other companies in that space are also facing the same issue, demand is low there. I wanted to understand when a rural recovery is there, and of course, it's in the initial phase. In this category, where is the customer going? Because in a lot of your other categories or maybe for other companies also, rural demand seems to be reviving and good benefit. But here, clearly all companies are facing similar issue. So why isn't the customer in the rural reviving here also? And do you think he will come back once the rural demand picks the pace further? Okay, let me just give you a color to this. I don't see that in any way the category is behaving differently from other mass HPC categories. The thing that has happened in this category is perhaps because of certain competitive actions, the all the action has happened in the bottom of pyramid, where because of pricing and what I call BTL-driven growth, the average value growth of the category has come down, okay? So in terms of sheer consumption in ML, it's not come down, other than because of the, in the case of the small packs, which are the price point packs of 10 and 20, there has been significant shrinkflation. Now, this anniversarization of this inflation will happen somewhere during the year. So if I look at... Even if today's, you know, today's our volume growth, if I adjust with the one which is a Setu-led and other stock correction, it's still in the positive territory. And if I compare to the other HPC categories, it is still, you know, low single digits. So I... So you have to look at offtake growth, our offtake growth is around still 3%, you know? So I am not very concerned. I believe with the, the way this. And the second thing, specifically what we are doing is, instead of, you know, going down the rat hole of, you know, just competing on below the line spends and pricing at the bottom of pyramid, we are focusing on our investments to drive, you know, now that the demand situation is improving, especially in rural. So we are seeing some green shoots in brands like Aloe and Jasmine. We need to participate slightly more stronger in, you know, you know, things like hair fall... And therefore, we believe that that part of the business, while it's not that high, if it starts growing at a higher level, the overall value growth of—and we are chasing value growth in hair oils, and we are chasing value share in hair oils. We have seen the first turnaround where we have started gaining value share in hair oils. So I believe towards the back of the year, back half of the year, we should see positive, you know, growth in both, you know, value and also the value share gain, which we continue to have. And one follow-up on that, the BTL being higher, is it due to any specific reason that it has picked up by those competitors? And those would be all regional players essentially, right? Bunch of regional players. No, I'm talking of national players who have gone into zero ATL and, you know, high BTL-driven strategy, which is not necessarily the best strategy long term. Understood. That's all from my side. Thank you, though. Thank you, Abneesh. Thank you. The next question comes from the line of Percy with IIFL. Please go ahead. Hi, Saugata. Good evening. My question is on the foods business. So while Saffola Oats is doing very well, we had launched a few other brands also. Can you give us some idea on how they are progressing, the honey, the noodles, the soya chunks, et cetera? Where you see greatest potential, where you see that there is a little bit of a struggle. And in terms of further categories within foods, would you want to enter in the near term, or do you think you would want to consolidate the current categories that you have entered first? Okay. Firstly, I think our endeavor is to grow food, and as I said, to diversify—I mean—a part of the business at 20%-25% profitably, because we don't want to do it for higher growth at the expense of profit. So 20%-25% is the first destination, which includes, obviously, brands like Plix and True Elements, and we are exceeding that outcome, okay? And I think this is a great development. Secondly, I think, if you look at—if I take all food into account, you know, organically, it's still in high teens%. Now, coming to individual products, let me just give you a flavor without getting into too much detail, is that, you know, the category, honey category, last season has not been the best, and it's just not us, but, you know, some of the bigger players, I'm sure, has experienced the same thing. Now, coming to soya, again, soya is doing well, and I think honey and soya are the ones which have scaled up. The only thing we are particularly mindful of soya is that, you know, the in terms of margin, it is not the higher margin compared to others, and therefore, we are not aggressively growing soya until we get a, what I call a innovation kind of a solve, just like we have done in oats. Because had we just, sold plain oats, that would not have made significant margin. Masala oats obviously makes better margin than plain oats. So we are searching for a solve there. Having said that, I think we are going to aggressively participate in breakfast. You will see some more launches in this space also of, you know, masala oats space. And the other thing which we are now doing is the first time we are prototyping a little bit of snacking in GT, as we had done only in tea and e-com and quick commerce. The other interesting thing is that we believe that our food journey has a significant upside potential in quick commerce. As you know, quick commerce as a channel is growing significantly, and food as an impulse category is a natural play there. We haven't played that much in quick commerce in foods, but now we are going to play aggressively as far as quick commerce is concerned. As you know, quick commerce in this country, the next two to three years, it's going to be on a very, very good traction. So overall, all I can say is that we are fairly confident of maintaining that 25% food while sustainably improving profitability. And this will come both from organic and inorganic and digital brands, a mix of the what I call the mothership brands. Understood. Just another question on your growth construct. So if I basically look at your personal care digital brands, put together, plus foods, all this put together is approximately 20% of your domestic top line. And if this portfolio grows at about 20%, you should get about 4% kind of growth, which would be largely volume-led from this itself, right? So, I mean, how do we look at growth going ahead? So is it fair to say that, let's say, you would be targeting for India 7%-8% volume growth, out of which half of it would come from this 20% portfolio, which is growing very fast, and remaining half of it would come from the 80%, which is more mature. If this understanding is correct, then, this quarter, what really happened for us to fall short of that number? I think two things we have to see. I, I don't think it's 4%, but anyway, I think two things. One is if you take the correction, which we have done in the stock correction, and, I'm not even talking of the Setu correction, because that's a secondary term. The primary stock correction distributor, you can add 2% to the overall. Now, this is 80% of 2%, means it's likely 2.5%, 3%. So if you add that growth, any case, this growth would have been around, you know, 6, 6.5%, 6%. So... And, that number is not four, that would have been a three. But having said that, going forward, we expect volume growth to definitely improve over the next corresponding quarters. And also just to add, Percy, for example, Plix, we are not including in the volume growth because it is not in the base yet. So to that extent, Plix contribution has not gone into the volume growth. Now, it comes into the base from next quarter, then of course, we'll add the Plix volume growth. ... Got it, got it. And last question on margins. We are already at 23%+, this quarter. Are we sort of now maxed out in terms of margins at a consolidated level, or do you see more growth drivers? Because do you fear at some point the margins sort of become too attractive for competition or something like that? I mean, how are you thinking about this whole piece? So in a moat which we have, we never do super normal profit to ensure—we certainly ensure that, that, there is no disruption model in place. Having said that, I think you are right. This year, I don't think, we will have any further margin expansion. Having said that, there are structural ways to improve margin long term, because food and digital, as we talked about in the next three years, digital will get into a double digit, you know, EBITDA. Food is consistently, and in fact, we have a proven model in the case of Oats, where Oats delivers an EBITDA, which is fairly decent. So, and also the fact that some of the other international businesses with scale, like Middle East and Southeast Asia, et cetera, they'll be inching up of the margin in the future. But this year, I think we should be able to maintain margins. You know, that's, that's the best case scenario, given the fact that we already peaked last year and the fact that there is some mild inflation in this one. I think the focus is to ensure that how do we get into a double-digit revenue growth and aggressively drive the diversification agenda, which will also require some AMP. Just to clarify, Percy, when we say hold margins, we are saying hold margins as compared to FY 2024. Of course, Q1, FY 2025 has delivered higher margins because we had some position gains on, some strategic position gain that we had in, you know, copra and some edible oil. So going ahead for this year, gross margins might moderate a bit because we expect certain inflation in some of the key commodities. But we are definitely committed to hold the gross margins as, at the levels of FY 2024, and similarly, at operating margin level, we would hold operating margin FY 2024. Okay, okay. That's it from me. Thanks, and all the best. Thank you. The next question is from the line of Vivek Maheshwari from Jefferies. Please go ahead. Hi, good evening, everyone. Hi. A few questions. First, Saugata and Pawan on VAHO. Again, you know, there are different reasons in different years. But, you know, generally speaking, that portfolio has, you know, and you have tried your best, you have explained in the past as well. But... And the bigger thing is you are also gaining market share, right? What is wrong with this category? Is there a possibility this is more like a structural issue, consumers, you know, not using hair oil? I just don't know. And in at the value level, is there some market share loss? So at an overall level, you are gaining, but in case of market at the value level, is there some market share loss? I just want to understand what exactly is going wrong here. No, no. What we reported is a value share only. We don't track volume share in VAHO. So what happened- Sorry, Saugata. Sorry, Saugata. What I meant was at the value, as in at the, at the bottom end, have you lost shares, for example? No, no. So, okay. I think I'll tell you what has happened. Obviously, the bottom end is where we have lost share, because beyond the point, you know, it doesn't make sense to forgo profitability. And therefore, there's some share loss has happened at the bottom of the pyramid. I think what has happened. Let me just tell you the issue that has happened is post 2020, and there has been, and especially after 2022, Ukraine, this one, there has been a downgrading that has been happened because of two or three reasons. One, consumers downgraded from the premium part of the category to slightly this one. This was a combination of three things. One, I think, far more attractive pricing and heightened competitive activity at the bottom end. Second, that had happened is shrinkflation. So, so if you look at it, this perhaps is a category where a significant portion of our, you know, the sale, especially at the bottom of pyramid, is in 10 and 20. And in order to protect the 10 and 20 price, pricing, people, competitors and us, we have taken significant MLH drops. Now, one of the things we realized, and this is true in other HPC categories also, is that when you take an MLH drop or a grammage drop to maintain price point, there are a lot of people, especially in rural and in the urban bottom of pyramid, they buy a certain frequency with a given outlay. So therefore, they titrated the usage. This anniversarization of that is happening sometime during this quarter, as we speak, sometime in, you know, August, September. So we believe that in terms of both the volume for the consumption and given that we are seeing signs in the rural to edge up, I think this, the category will show higher growth. As far as we are concerned, however, I think what we have taken a stance is that, yes, we are okay to forgo some share at the bottom of pyramid, but we need to invest far more rather than following, you know, somebody, you know, some other players who have just knocked off ATL to drive this one, which is not good for long-term category growth. Because at the end of the day, I can be happy by saying my SOV is maintained, but, you know, the growth category will not grow if there is no investment in ATL. Therefore, we will start investing in ATL into converting that, you know, that money into volume growth. We are seeing some green shoots in other brands like Aloe and Jasmine. As I said, we need to aggressively grow. Therefore, going forward, at least the second half, we need to accelerate the value growth of that part of the portfolio, because we will lose at the bottom of the portfolio. Okay. Okay, got it. Okay, and the other question is, Saugata, I mean, if I recall correctly, in the, I don't know which year, but I think a decade back or so, you tried muesli at that time. I think Kaya distribution, also Marico did at some point of time. What do you think, you know, will be different this time compared to, let's say, the previous attempts? Okay. First, let me clarify that muesli. See, at the end of the day, you know, as you know, even in Olympic Games, some people failed in Tokyo, succeeded here. So therefore, you know, we might fail, but that doesn't mean we'll stop doing it. I think, first of all, we have got our food business model, including distribution, supply chain right. When we tried muesli some years ago, it was not. I don't think it was an issue on the product. I think we had a good product. This time we have a superior product. But we were not the best in class in doing food distribution, getting a business model. So therefore, we are far more confident of doing food right, right now, okay? And I am reasonably confident. Number two is, muesli as a category has grown leaps and bounds. Today, if you see, it is one of the highest growing muesli category. It has overtaken cornflakes as a category, so therefore, Saffola by participation and, also the fact that, we have a significant... I think our capability, operation capability, as far as oats is concerned, is much better today. Our chances of success will be better. And I think for want of failures, we don't give up because we are-- In fact, if you look at it, we have tried a lot in food and have finally succeeded in food, okay? Now, coming to Kaya. Kaya this time is different. Last time what happened was, we did a brand, sub-brand called Kaya Youth. Kaya continued to sell in other channels. This time it is a deal where Marico has exclusive rights to sell. Kaya will stop selling in any other channel. Kaya will only sell in their clinics. For all other channels, which is e-commerce, modern trade, D2C, and beauty GT, Marico has got exclusive right to sell. Earlier, it was two brands and we are competing, it didn't help. Number two, I think our digital capability compared to 2019 when we did Kaya, OT or Kaya Youth, was far, now today, far superior to do that. And I believe that, this, and therefore, given our digital marketing capability and other capability of our digital business, today we stand a far better chance. It's a much more cleaner arrangement this time. It's not a sub-brand or a prep line while Kaya continues to sell. It's an exclusive, this one. So all our existing relationships which Kaya had, is taken over by Marico in terms of the e-commerce sales and the modern trade. Kaya was actually virtually only e-commerce, but we are now going to get into modern trade and some of the beauty outlets over the next three to four months. So we'll start the process sometime in September. Got it, and just a couple of follow-ups on that. So on Kaya side, when you are going to take that over, so what will be the existing revenues that will straightaway come to you, Saugata? We don't want to get into that. Okay. Okay. All I can say is it's INR 100 crore potential in four years. Okay, got it. Got it. Just to give you another perspective, Kaya is a known brand. It has got existing consumers. Just Herbs is an INR 100 crore brand. If we can do Just Herbs an INR 100 crore brand, there's no reason why Kaya shouldn't be an INR 100 crore brand. Right. I mean, okay, the reason of asking, Saugata, this question was because the press release also says, four to five years, INR 100 crore, and I thought, you know, if it is selling existing, you know, by the existing team, you could have reached there fast, way faster than that, unless I am missing something. So currently the scale is quite minuscule, Vivek, and that's where our might will come in, and we will be able to grow the brand to INR 100 crore in the next four to five years. So currently, scale is not very large. See, in the, I mean, I mean, I think I would be able to give a far better. Let's start doing it another one or two years. Digital business, we have surpassed our own, you know, aspirations and our targets. I'm sure we should be able to do that in Kaya. It will. I'll be a happy man. Right, right. And yeah, I mean, point taken, you have done quite well on the digital side. Lastly, on the acquisition bit, you know, inorganic bit that you have mentioned, and you have also articulated, you know, your confidence on the food side, whether it's on the margin or, you know, or on the overall business. When you think about inorganic now, will it be more skewed towards foods then? Because you any which ways have done reasonable, you know, quite a bit on the PC side. I think at the end of the day, we look for opportunities which make strategic sense. I think as far as our digital is concerned, we looked at several adjacencies which make, you know, you know, what are market attractive, but we didn't organically have a right to win. I think Kaya was the last space which was vacant, which was what I call science-based skincare, which was vacant. We would have loved to otherwise acquire one of those brands which... And therefore, but anyway, now we have, we have the opportunity to sell Kaya. So food business, I think, needs scale. I think one of the learnings so far is that there are, I mean, hypothetically, there are two routes on food. You take a regional brand doing very well, scale it up nationally, or take a, you know, take an out, take a this one already a scaled business. I don't think digital or digital first, unless it's a nutraceuticals, but we already have Plix. I don't think a niche food brand makes sense to us, given our scale of our current food business. Sure. So, sorry. So on, so in conclusion, your point is you want to build scale further or you want to go after, you know, let's say, more, you know, let's say the thought process more around margins in case of foods or build scale? Sorry, I missed that part. No, I think organically, we have to continue to build scale. What I meant was that if you want to do inorganic, scale is opportunity rather than doing these founder-driven brands on food, because it doesn't provide scale. Got it. Got it. Thank you. Wish you all the best. Thank you. Thank you. The next question comes from the line of Harit Kapoor from Investec. Please go ahead. Yeah, good evening. I had two questions, I'll just lay it out. You know, one was on the exercise on Setu, as well as some destocking at the wholesaler level or some channel management. Just wanted to know, you know, how long does this take, where your offtakes and your primary start to kind of match each other? That's the first question. So I think I would say a couple of quarters, because Setu is a continuing project. Let me just give you a perspective on why we are doing this. See, normally when you do direct distribution, you get to sell range. Having said that, obviously through wholesale and B2B channels, the core brands, it could be Parachute in the South or Shanti Amla in the North, I mean, they anyway have indirect distribution. But if I have to get a portfolio and get critical mass, you know, it is very, very important that I ensure that when the direct distributor goes to them, the pricing is attractive and the retailers don't say that: "Okay, I'm getting it in wholesale or, you know, B2B at a far cheaper price." So this process will take a couple of quarters. Regarding the GT primary stock correction, I think it again, maybe one or two quarters again. And you must realize that, and this is just not for us, it is for everybody. If you look at today, the growth of quick commerce that is happening, the channel that is getting impacted, according to me, is the urban GT, because the entire quick commerce growth is happening mostly in the top eight cities. And therefore, it is imperative upon us to ensure that we protect the margins and protect the ROI of the distribution system, so that there's a response system. Having said that, I think what will also happen is, as we expand Setu, especially opening up food or say, cosmetic or chemist outlets, which throughout our, you know, diversified portfolio, there's an opportunity to actually sell a bigger range and at a higher realization, because these are especially both food and especially personal care, like, you know, things like Livon and others, which are at a higher realization, their turnover increases. I think the biggest thing is irrespective of the... You know, whatever growth, they have a fixed cost increase that happens in cities, like say 8%-10% every year. So how do I able to give that 8%-10% turnover so that they maintain the ROI? Got it. Great. Secondly, was on the three-year case plan for Setu. You know, 1 million going to 1.5 million direct reach. I just wanted to get a sense about how does this reduce the wholesale mix from your channel sales? You know, from what currently to how much does it go down to? It's very difficult, but I will tell you what are the two, three things that happen when you increase direct distribution. Firstly, it increases range, because what happens is, the wholesaler or the B2B usually handles high velocity leader brands. They don't have that assortment, okay? The second thing, in urban Setu, we'll be able to also drive the diversification portfolio because we are opening up some of the... So give you an example of it. You know, if you see, go to Bengaluru or you go to Coimbatore or Kerala, you will see bakery outlets. Now, bakery outlets are. We never used to service those bakery outlets. But today, if I have a critical mass of food, which is basically some snacking, some oats, some plain oats, because plain oats is a big thing in the south, you know, you can get into those outlets. We might open some chemist outlets because, you know, you know, with hair fall and like we have just started, you know, in one or two markets trying to take Plix into GT, for example. So what will happen is that we will open these set of outlets, which will give growth. Automatically, as I alluded to earlier, is that obviously when my distributor opens a new outlet, that person has to sell Parachute and our Shanti Amla also. And therefore, we want to make that, you know, that sales process reasonably attractive, that, that guy doesn't have to reach. So these outlets which are opening, it's not that nothing, no Marico stock is available. Some Marico stock is available sporadically. It's very difficult to say how much wholesale will reduce, but I think consciously what we are doing is that we are not disproportionately incentivizing wholesale or B2B, but encouraging a direct sale. I believe having a far more direct sale is a source of competitive advantage. Yes, we will open 500,000 outlets. At the same time, we will also look at some outlets which are non-profitable to serve and close it down, because they can be anywhere serviced by if they're only stocking, say, only Parachute small packs. We are most happy if they pick it up from wholesale. There's no point trying to service those outlets. And last question was on the, you know, general industry question. You know, you mentioned in your presentation as well as your opening remarks that the pickup in industry has been seen more in HPC over foods. Do you look at this more as a base thing that, you know, HPC has been weak last year and little before that as well? Or, you know, anything else to read into this industry trend, because that's something we've been seeing across the board for the last quarter now. Yeah. I think a combination of both. One is base, the other one is, if you look at it, last year's FMCG growth was driven entirely by urban. And obviously, food is primarily, packaged food is primarily urban, while HPC had a little more rural skew. Now that rural is recovering, maybe that's one of the other reasons. So it's a combination of a base and the way urban and rural is performing... that I must say that at the premium end, urban continues to grow. I mean, we are seeing significant like, for example, if you see the growth in our digital brands. And if I look at the food companies, our food growth surpasses all the food company growth. [audio distortion] Thank you. Thank you. The next question comes from the line of Mihir P. Shah from Nomura. Please go ahead. Hi, thank you for taking my question, and congrats on good set of numbers. Firstly, on Parachute, does Parachute need further price hikes? You know, last quarter you'd mentioned that there's a possibility of another round. Is that done, or there's another round in the offering? Also, when one looks at the offtake volumes is much stronger than expected. I mean, I heard you mentioning that it'll take a couple of quarters for this, you know, stock adjustment in GT to coincide with the primary sale. But given that the offtake is so strong, should one expect, you know, high single-digit growth going forward or, or, you know, especially you've taken the price hikes? And also if you can triangulate how the competitive intensity is playing out. I heard that the flanker is growing, flanker brands are growing in mid-teens, but other competition is, you know, you know, talking something different. Can you talk a bit on these three aspects, please? I didn't get your third question. So apparently, you know, there's a lot of competitive intensity in coconut oil, is what we picked up from the, one of the other players, and there's a lot of deep discounting happening. We heard that you mentioning that the flanker brands are growing in, low to mid-teens, I think so, mid-teens, I think so. So, you know, maybe you can shed some more light on, you know, how the competitive intensity is panning out there. So I think, let me answer the first one. So Parachute, let me first address the Parachute growth. I think, as far as, we have taken around 6% price hikes in Parachute. If there is further copra inflation in the back half of the year, we might take a little bit, but we expect a marginal inflation in copra. We will take that price hike. And as I said, that we like this marginal, you know, commodity price increase because of our procurement and position building. It actually helps us, so it's good for us, you know, in relative terms. Now, coming to the, Parachute volume growth, yes, you are right. While we will continue to take some adjustments in both for, to facilitate Setu and some of the distributor ROIs, because we... See, at the end of the day, I don't want the distributor ROI to suffer because of our supply chain and working capital, because that's okay, it's not offtake. The offtake primary growth gap will remain a little bit. Having said that, we expect Parachute volume growth to increase gradually as we move in Q2 to Q4. And, yeah, you can expect mid-single-digit volume growth definitely coming in. I don't know, after that, what happens in the second half of the year. Regarding the third question, see, if you look at the overall, both Parachute is gaining market share, and overall, you know, Marico CNO has gained market share, so it's not that Parachute has got impacted. The so-called competitive activity has happened in certain markets which are not Parachute natural markets. These are, you know, some markets in the north, maybe. But I would assume what is happening is that, you know, some of the smaller players or some unbranded, they may be, I mean, of course, I mean, they may be, you know, suffering a lot, but I think it could be a little bit of because of some of the competitive activity, there could be consolidation of market share amongst the, you know, larger players. But I don't think it affects Marico or Parachute per se. Both, as I said, the flanker brands and Parachute have continued to gain share. Perfect. Thanks for that, Saugata. Secondly, on Saffola, it seems the pricing-led growth going forward in second, Q3 will be closer to low to mid-teens. Do you see any pricing action here that you may want, need to take to ensure the volume growth trajectory is maintained? Or do you think that, you know, there's no need for another, further pricing action and the volumes will still hold to, you know, mid or single-digit growth? So just to clarify, what we meant is that the pricing will come flat, so the anniversarization of the price drops will come. So therefore, going forward, sometime during this quarter, volume growth and revenue growth is going to be the similar. Understood. Got it. Got it. Thank you very much. That's all from my side. Wish you- Yeah. Thank you. Thank you. The next question is from the line of Avi Mehta from Macquarie. Please go ahead. Yeah, hi. I just wanted to revisit this Bangladesh thing. Could you help us understand how should we look at, you know, the performance from a near-term perspective? Does it impact the portfolio diversification base in any manner? And, you know, I just wanted to kind of better understand how should we incorporate this bit in. No, I don't think it's-- I think it's too premature to comment on it. And, I think, as I only said, that, if you look at India, Bangladesh, Egypt, everywhere, all the countries, we have gone through volatility. And as I said, that, I, we always believe the strong get stronger and the weak gets weaker in certain, in these kind of situations. But I think it's, let's revisit it after we see the, this quarter going by, yeah. Okay. So would it be fair, Saugata, to say that, you know, from our perspective of how we look at the business, this is something that should not significantly change the broader growth trajectory, even from an annual perspective, is that? No, long term, this is not going to change. I think long term basis, nothing is going to change. Got it. Got it. And, second is on the Kaya business, while I understand the sales number, could you give us a sense on how the profitability would be shared between the two entities? There's no profitability. It's just a model in which we pay a royalty towards Kaya. That's it. We will be paying the royalty- That's it. All, everything accrues to us. Any rate that is, available in the public domain, or you could share? So we won't be sharing the royalty rate, obviously, but it's in standard terms, so it's not a very significant amount, and therefore, large part of the profitability will be accruing to Marico. Okay, perfect. Perfect. That's all from my side. Thank you. Thank you. The next question is from the line of Kartik Chellappa from Indus Capital Advisors. Please go ahead. Yeah, thank you for the opportunity. I have two questions. The first is on the value-added hair oil portfolio. If the premium and the mid-segment is actually doing better than the bottom of the pyramid segment, could you give us some color on how that impacts the margin profile of the value-added hair oil business? No, no. So let me just give you a full color. But as far as the category is concerned, the bottom of the pyramid may be doing, is growing, but more than the medium, mid or the premium part of the category, okay? So if you look at players who participate in hair fall or some of the other premium players there, and I'm not talking of a quarter number, you have to look at from a two-year, three-year perspective, okay? So what exactly happened is that as Ukraine happened and as shrinkflation happened, the category suffered because of shrinkflation consumption, and the category suffered in the face of downgradation from the top end to the bottom end, okay? As far as Marico is concerned, what we are saying is that we are okay to lose some share at the bottom end, and there it is not so profitable, but I would rather invest at the medium and the top end and grow value share there, okay? Because they make much more profitable. Rather than getting into the mug's game, which we have been perhaps doing, and trying to just fight at the bottom of the pyramid. Technically, to answer your question, Kartik, yes, if my mid and premium is doing better and bottom of pyramid is declined, so weighted average gross margin for the quarter will definitely go up. But as Saugata said, we are anyways focusing more in terms of how do we drive the value share and value growth. So we'll continue to have that strategy. But to answer you, yes, the weighted average gross margin would have gone up. Okay, my next question is one for one of the drivers of medium-term margins. I think Saugata earlier mentioned that the Middle East and South Africa also will start to see an improvement in their margin profile. Could you give us some color on, relative to the international margins, how far is Middle East and South Africa today? No, I think, Middle East, as I said, that Middle East, there's a significant pool available for top line and market share, which we are doing, and Middle East is a profitable market, okay? As far as South Africa is concerned, we have also improved the profitability. What I alluded to saying is that the structural profitability creeping up long term is these markets, which scale continue to improve on profitability. We can assume that currently these two geographies are probably tracking below your international margins, right? Obviously. Yeah, yeah. So it is definitely below at this stage. But as Saugata alluded earlier in the call, that these are the structural levers that we see that this can improve the margins further as we go ahead. Because these businesses are growing at a very fast pace, we are getting a scale, and the scale advantages will kick in. So it has improved from the past, but we still see there is a potential of improvement, going ahead as well. So structurally, in Middle East, CPG companies make high operating margins, but that will only happen through scale. Perfect. Okay. Thank you very much, and wish you and the team all the very best. That's all from me. Thank you! Thank you. Ladies and gentlemen, we will take that as our last question. I would now like to hand the conference over to the management for closing comments. Over to you, gentlemen. Thanks for listening on the call. To conclude, FY 2025 has started well with some green shoots in domestic demand trends, robust performance of foods and digital-first brands, and the international business maintaining its momentum. We expect to sustain an improving trend in domestic revenue growth on the back of a gradual uptick in domestic volumes, supplemented by pricing growth picking up as commodity prices may see mild inflation in H2. We expect the continual broad-basing of the international business to hold us in good stead. In adding to driving strategic priorities of aggressive portfolio diversification in India and overseas, and in strengthening our GTM through Project Setu, we continue to strive towards achieving our target to deliver double-digit revenue growth and hold on to operating margins in FY 2025. So that's 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 great evening. Thank you. On behalf of Marico Limited, that concludes this conference.