Good afternoon, everyone. Welcome to the Nestlé India Financial Analyst and Institutional Investor Webcast. I am Shashank Kumar Nair, Senior Manager, Corporate Communication, Nestlé India. I have with me today my colleagues from the Nestlé India management team, Mr. Suresh Narayanan, Chairman and Managing Director, Mr. David McDaniel, Executive Director, Finance and Control and Chief Financial Officer, Mr. Matthias Lohner, Executive Director, Technical, Mr. Ashish Pandey, Director, Supply Chain, Mr. B. Murli, Director, Legal and Company Secretary, and Mr. Sanjay Khajuria, Director, Corporate Affairs. Before we get started, let me first read out the standard disclaimer. This presentation may contain statements which reflect management's current views and estimates and could be construed as forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which hold only as of the date. The future involves uncertainties and risks that could cause actual results to differ materially from the current views being expressed. Potential uncertainties and risks include, but are not limited to, factors such as changes in general economic, political, or market conditions, commodities and currency fluctuations, competitive product and pricing pressures, industrial relations and regulatory developments, significant disruptions in the operations due to unforeseen events, including as a result of the spread of the disease. Volume and mix and organic growth are based on Nestlé internal reporting standards. Figures are regrouped, reclassified to make them comparable. Calculations are based on non-rounded figures. Analytical data are best estimates to facilitate understanding of business and not meant to reconcile reported figures. Answers to questions may be given based on generally available information in public domain. As for the agenda today, we will have four presentations, followed by the question and answer session. The question and answer session will be a little different from recent times. I would invite you to exercise the Raise Hands option on the MS Teams app. My team will enable your mic when you are first in queue. I would request you to please then unmute yourself and state your name and organization before proceeding with your question. As for practice, the entire proceedings are being recorded and will be uploaded on our website, www.nestle.in. I will now request Mr. Narayanan to please take over and make his presentation. Good morning, good afternoon, and good evening to all of you. Dear friends, it's a real privilege and honor for me to once again address you and share with you the developments in the company at this financial analyst and institutional investors meet. It has been my privilege for the last seven years to be interacting with you on different occasions, and this is my eighth occasion that I'm interacting with you. Business is a force, has been a force, and will be a force for good. That's the philosophy at Nestlé that I would like to share with you today as we move forward. The last time we met, which was on February 26th, 2021, I had five takeaways for you from that presentation: strong cost and efficiency management, penetration-led growth, investing and innovating consistently over a period of time, competitive advantage through R&D expertise, and finally, the salience of our brands and the strength of our equity. Today, I rededicate the progress of this resilient organization and will be focusing on some key aspects of our performance, and in fact, probably for the first time, delve in fairly granular and great detail on the ESG initiatives of the company, where we are, what we intend doing, and what are our goals at the end of this exercise. We have a long association with India. I don't have to belabor the point with you, starting in 1912 as a trading company, therefore, we have a 109-year unbroken history in this country. In 1969, we got listed on the Bombay Stock Exchange. In 1990, we got incorporated as Nestlé India. Before that, we were called Food Specialities Limited. As I speak to you today, our ninth factory in Sanand, about which my colleague, Mr. Matthias Lohner, will be talking more about, is also commercially ready. We are committed to Make in India. As I've mentioned before, more than 98% of what we sell in India is produced in India, and that really has started our journey from Moga 60 years ago, now to the latest factory, Sanand, in 2021. Along the way, we have had eight factories, some of them single-category factories, some of them multi-category factories. Nevertheless, dedicated to the highest standards of food quality and safety that the company has to offer. Our commitment to Make in India continues. I'm delighted to announce that we have our ninth factory at Sanand, which is now ready to start the commercial production. It is our ninth factory. It is a state-of-the-art factory, reinforces our sustainability journey that I will be talking to you more about. It is digitally our most advanced factory. Yes, it is a paperless factory. What gives me a lot of pleasure and delight and pride is the fact that more than 60% of the workforce in this factory are women. Hopefully, this will set a new milestone as far as diversity is concerned in the manufacturing sector. Part of our INR 26 billion CapEx that we had announced is now completed. Almost half of it is completed with this cycle. We have a range of products that are loved by consumers. Many of the iconic brands in the country, whether it's MAGGI, Nescafé, KitKat, Munch, or any of the other brands that you can think of, are brands that have stood the test of time and in fact have seen a further strengthening of equity as we move forward. We are one of the largest pure-play F&B companies in India. As I mentioned, we have a 109-year unbroken history, more than 150,000 shareholders, iconic brands, INR 132 billion plus of turnover recorded last year, INR 35 billion plus of contribution to the national exchequer. A market capitalization that's also very strong, almost moving towards the two trillion mark, of course, our CapEx cycle of INR 26 billion, which reinforces our commitment and reinforces our faith in the future of Nestlé in India. If you look at us from a spectrum of where we stand in terms of Nestlé's markets globally, I'm very proud of this chart. Here, there are five markets: United States, China, Japan, India, and Russia. If you take the last three years and you look at the total Nestlé business in these markets, India stands tall with a double-digit growth of 10.9% and 10.6% in 2018 and 2019. In 2020, it stands at 7.2%, that is really the divestiture of the Nestlé Skin Health business. Therefore, the turnover of the entire Nestlé group came down because of the divestiture. Otherwise, as you can see, it is probably one of the strongest and one of the best performances of Nestlé worldwide in any strong or key market, as you call it. In India, the strategy in the last six years has been very, very simple: penetration-led volume growth. New geographies, new households, penetration of our brands, and over a period of time, increased usage of our brands. I've been for very long, ladies and gentlemen, in the trenches, to realize the fact that if you don't have volume growth, organic growth is a myth. After a point in time, that growth vanishes, and therefore, volume growth and mix-led growth has been the focus of the company in these last couple of years. I'm delighted to see and to report to you that on a CAGR basis, in the 2016 to 2020 period, we are almost at 10%, 9.3% volume growth. That was really affected a bit because of the pandemic last year in 2020. Otherwise, these numbers would have been very clearly above the 10% mark. What is, however, heartening is on the right side, that you see that the growth levels, the volume and mix-led growth, have been strong. 9.1% in quarter one of this year, 13% in quarter two of this year, and 8.9% in quarter three of this year. This has clearly translated into value growth, a sustained value growth of close to 11% in the last... in the period 2016 to 2020. Maintaining strength in the last couple of quarters of consistent performance. What is important here is consistency of our performance. We don't have rapid yo-yos that take place, 10.2%, 13.7%, 10.1%. There is a steady clip in the business that we have established, come hell or high water. All this has translated into accelerated profits. If you look at from 2016 to 2020, we have augmented our profits from operations by almost 400 basis points and also maintained some consistency in the strong. We had a record high in quarter one of 2021, now it is at the level that we have been maintaining for a while as a company. The CAGR on this in the last five years is 16.6%. If you look at net profit, again, the acceleration has been salutary by almost 500 basis points. On a CAGR basis, again, it is close to 30%. Almost 10% volume growth, 11% organic growth, 16.6% operating profit growth, and almost 30% net profit growth. This has clearly translated also with a good efficiency of capital. The ROIC numbers, which were at about 31% in 2016, have moved up to 103% in 2020. Of course, this is before the CapEx cycle. Nevertheless, it'll get moderated a bit, but it is still a CAGR of about 39.2%. That gives it one of the best performances in our comparable industry. That has translated clearly to you, investors, into a return that has been solid and strong in this period. Between 2001 and 2021, we have recorded an annualized return of almost 20%. The stock price has moved up by 36.2 x versus the FMCG benchmark index of 15.1 x. As I told you, we are now almost touching the $2 trillion mark of market capitalization or close to $24 billion. During this period, there has been a strong thrust on innovation. There was a time when this company was known as a company that was relatively easy on the wheel as far as innovation was concerned. We've accelerated that journey. I'm happy to inform you that in the last five years, 90 new products have been launched, increasing the share of contribution and heft from over 1.5%- 5% of sales. Yes, as I speak to you, there are 10 new innovation projects also in the pipeline that will be launched and that will be extended, in addition to new categories that are also at play. We have also consistently supported our brands. You can say you made all these profit numbers without investing in brands. That's contrary. We've invested in our brands. The spend levels have gone up, and that has really been on the strength of four or five key factors. A healthy mix between investing in core brands, supporting new brands, improved efficiencies in the buying of media, targeted communication by leveraging consumer clusters. You remember we had talked about this a couple of meetings back. Consumer clusters has now become a way of life. This scene, together with one of our biggest initiatives in the area of analytics called Midas, on which my colleague, David, will be talking more about, brings together forces that are able to channelize and able to categorize and able to put together resources in the right direction, behind the right media, behind the right brands. Enhanced digital footprint. Our expenditure on the digital space has almost doubled. Finally, we are investing more in building the brand equity rather than putting it, the monies, behind short-term promotions. While promotions are important, but the promotion component has today come down, and a significant part of the money goes towards investing in brand equity. We've also looked at progress across channels, so it has not just been in terms of branding and innovation, it's also been in terms of channels. One of the channels that has really opened up for us as a consequence of the pandemic has really been the e-commerce channel. E-commerce, as a business, has grown by about eight times in the last five years. This year, we are growing at about 65%. This is across categories. This is across the Nestlé portfolio. It is by a combination of depth, consumer insight and shopper insight, by customization, by great relationships with the key e-commerce players, and by ensuring that we grow across channels. It's not at the cost of one over the other. Our go-to-market has also been an area of increased focus. In the last five years, our overall reach has improved by about 25%. Today, we cover about five million outlets. Yes, the journey has not stopped. I'm very much a traditional trade man. My teeth were cut in the traditional trade, I realized the value of the fact that almost 85% of our sales comes out of the traditional channel. That's something that will continue to be important for us. We will progress along with the progress of this channel. A lot of debate has happened on the rural versus urban growth in this country. Different companies have had different category performances. I'm putting up here upfront the performance of Nestlé in what we call RURBAN, which is semi-urban and rural markets. Between 2018 and 2021's YTD September, you can see the progress, 10.6%, 11.9%, 12.5%, 16.1%. If you look at Tier 1 to Tier 6, in the last 10 quarters, nine quarters for Nestlé India have been double digit. The only quarter that we had a low single digit was during the severe first wave of the pandemic in quarter two of 2020. This gives us the faith and this gives us the belief in the fact that the time for Nestlé has come, its portfolio has come, and therefore we need to invest in RURBAN markets. How are we doing this? We are doing this through a combination of a customized portfolio. We are doing this by building the infrastructure, the number of touch points, the number of villages, the number of distribution points. We are doing this in terms of localized communication. The regional communication is different from the national communication, and we are customizing it using our cluster-led approach. Outstanding visibility. It has always been known in the sales organization that what is visible is what sells, and finally, building consumer connect. These five simple vectors has led us to an achievement that I am extremely proud of. In 2018, the company covered about 51,000 villages. Our ambition as a company is that all 2,000 population-plus villages in this country should be covered by us, either directly or indirectly. That's 120,000 villages. We have done this by a creation of distribution points that we call small distributors and wholesale hubs, and also thereby enabling the village coverage. Today, as I speak to you, we are covering almost 100,000 villages. Unfortunately, during the pandemic in 2020, the number had come down to about 74,000, more because of operational considerations. This is an area that we're very confident about. Remember, the growth numbers that I'm showing you, 15%, 16% growth coming off the back of these kind of expansions into rural markets and into semi-urban markets. Let me talk a little bit about the not so good news. Commodities. This is a chart here giving you six commodities. In six commodities, in five out of the six commodities, the graph is pointing clearly northwards. We managed this so far through a combination of pricing, through a combination of economies of scale, through a combination of looking at other optimization exercises that we do as a company. The headwinds continue to be very, very strong. This chart gives you the global picture. In nine out of the 13 commodities that are listed here, ladies and gentlemen, we are almost hitting the 10-year max. The 10-year max. Commodity inflation is here to stay, and with the vagaries of the supply chain that we have talked about, and you, gentlemen and ladies, know far more about it because you are in this business dealing on a multi-sectoral basis, this is going to be a big point of contention that we'll have to take forward. As a company, I can give you the confidence that between the portfolio, between pricing, between cost optimization, and between what we call Project Shark, which is cost savings within the organization, which gives between 1% and 2% every year, we will try and mitigate this as best as possible. The winds and forces are much too strong for any one company to be able to combat it fully and successfully. Let me now come to the core of the presentation. This is a presentation I'm very proud to make to you, ladies and gentlemen, because this is an area that we have touched upon, but I've never had the occasion to discuss with you and share with you more in detail on what we mean by business as a force for good. There are four aspects that I'll be talking about today to you: environmental sustainability, societal initiatives, good governance, and people initiatives. Let me come to the environmental sustainability initiatives. I will deep dive into four aspects: climate, packaging, water, and sourcing. I hasten to add that at Nestlé, sustainability is a way of life. We are not doing it because we have to do it. We are doing it because we feel it, we need to do it, and things can only happen in an organization when people feel that there is an absolute necessity for the steps that we're talking about on sustainability. On climate, the three key priorities for us are manufacturing, logistics, and fresh milk procurement. What are we doing in each of these areas? On manufacturing, our reduction in the last 15 years in the direct greenhouse gas emissions has been 53%, and that, ladies and gentlemen, is the equivalent of emissions generated by 50,000 cars per day. Not small. Energy usage in terms of gigajoules per ton, in the last 15 years, there has been a reduction by 48%. That is almost benefiting 400,000 households per day in terms of any energy usage. We are committed to 100% renewable electricity by 2025, and when my colleague, Matthias, talks to you about science, he will tell you a bit about where we are on that journey. Logistics is also being reimagined in this company. A focus on sustainable operations has meant three or four key features. Number one, quite simply, vehicle payload utilization. Improving the payload utilization of the existing vehicles from 90%-92.5%. Increasing usage of bigger-sized vehicles. All seems obvious, but all this has to be operationalized at scale, from 5.9%-9.8%. We've opened up the railways, especially during the pandemic. In 2019, we had almost zero on the railways. Today, we have 8.2% of our haulage that goes across the country by the railways. In fact, we were one of the pioneering companies during the pandemic to feed consumer goods to the Northeast. In fact, the railway minister, Mr. Piyush Goyal, then did compliment the company for its performance. Waterways. This is the other opportunity for us. We opened up now four inland waterways in order to transport our products, and of course, there are more of this to come. Packaging and plastic and waste management. There are four key initiatives that are being done here that are becoming important: plastic neutrality, packaging changes, collaboration, and commitment. We are very proudly, ladies and gentlemen, a plastic neutral company. In 2020, we had 20,000 tons of plastic that we collected and went through the EPR process. We are plastic neutral across our brands, MAGGI, Nescafé, Everyday, Milkmaid, a+, KitKat, Milkybar, Munch, Polo, you've got the brands all here. This is an important part of our journey. This journey doesn't stop here. We are walking the talk. We are the first company in this country to introduce paper straws in our ready to drink. We are eliminating 30 million plastic straws because of this. This is only the start of the journey, but this is an important journey and we are committed to this cause. Mono material packaging, which is a better form of recycling, albeit not the real McCoy, not the perfect solution, but nevertheless, a solution that we are happy with at this stage. Mono material packaging usage. In addition to overall structures of packaging and usage of packaging, since 2018, almost 9% reduction in plastic usage has been introduced across the company. We've also looked at not just doing what we can as far as the packaging structures and usage is concerned, we're also looking at how we can extend our collaboration and cooperation forward. Establishing waste management systems in tourist locations, we call it Project Hilldaari. We work very closely with municipalities in the six locations that we talked about, Mussoorie, Nainital, Ponda, Dalhousie, Mahabaleshwar, and Munnar. What are we doing there? Diverting waste from landfill, waste worker professionalization, ensuring that they have insurance, they have got dignity and respect, they get proper wages, that they are looked after as human beings, apart from just being what they do, essentially, which is clearing of the garbage of the city, and enabling digital monitoring of this to ensure that performance sustains by the measurability of the outcomes that we are talking about. Our commitment: 100% recyclable or reusable packaging by 2025. This is a firm commitment, this is a commitment that we are working assiduously towards. On fresh milk procurement, there are six initiatives that are important. Remember, that we are one of the large private milk collectors in this country. It is our responsibility, therefore, to also look at what we can do in terms of methane reduction and in terms of reduction of the greenhouse gases in the dairy sector. Six initiatives, key interventions that are proposed: feed production, enteric fermentation, manure management. In the interest of time, I'm not going through the details of these programs, but those of you who are interested can certainly access my colleagues to get more on what these programs mean. Energy and processing, in terms of energy usage on the farms and also in terms of the waste matter, carbon sequestration, and of course, academic partnerships, to ensure that the best knowledge technology research comes into play as far as the Nestlé initiatives in fresh milk procurement is concerned. On water, 15% reduction per ton, reducing the water usage of production per ton from 2018. This is benefiting very clearly 15,000+ households. Again, a start of the journey. What is important, ladies and gentlemen, and what my claim is, that not that we have reached perfection, but the fact that we are committed to it, we are putting resources behind it, we are measuring it, and we are ensuring that we track it every single day to ensure that the outcomes that come out are an outcome that is beneficial to this company, beneficial to society, beneficial to India, beneficial to the planet. In responsible sourcing, 100% responsible source coffee by 2025, as far as coffee is concerned, sustainable coffee. Achieve no deforestation palm oil by 2022. That's the other commitment that we have got, and achieve 100% sustainable cocoa for confectionery by 2025. We are one of the big users of spices in this country. You know that MAGGI is a very important brand for us. Therefore, there is a MAGGI Spice Plan that ensures sustainable sourcing as well. What are we doing here? We are working on three aspects: planet, people, and profits. Environmental sustainability of farms, safe living and working conditions for the people on the farms, ensuring that we don't have child labor involved in these farms. Finally, a resilient livelihood and farm profitability, because that's one of the important characteristics and criteria for the development of such farms. The Spice Plan goes to traceability, touching the lives of 1,300 farmers today in 39 villages across several states, focusing on four key spices: chili, cumin, coriander, and turmeric. What does the Spice Plan talk about? Soil health, water usage, pesticide residues, cost of cultivation, looking at the economics of cultivation, and finally, of course, ensuring that there are biodiversity enhancements to these spice farms as well. Incorporation of non-crop trees, hedgerows, buffer strips, et cetera, to augment the income and also, of course, to improve the overall environment of these farms. We are putting, ladies and gentlemen, our money where our heart is. This gives you the investment. I can keep talking about it, but I think it's important for you to know the seriousness of the feeling that we have as a company. In 2018, if we spent X on sustainability, the projected spend in 2021 is more than 12X. I think it is important that while you have heard me speak about the initiatives and speak about all the work that we are doing in sustainability, you should hear it from the people in my organization who work for it, because the proof of these people will give you the confidence that these are initiatives that are here to stay, and these are not just leadership talk at an investor conference. The impact of GHG on global warming is probably the single biggest challenge that mankind faces today. Coffee, cocoa, and oils will be the first movers, which will lead the transformation. Dairy and ingredients are the largest contributors to Nestlé's greenhouse gas emissions globally. It is these farm practices that contribute nearly 70% to the GHG emission that come from milk, wheat, rice, coffee, and others that we source. The balance comes from the way these are processed and cleaned before they reach our factories. Amongst the most exciting prospect of this journey would be partnering with our ingredient suppliers and connecting with the farmers that are part of this value chain. Nestlé has always a strong relationship with farmer community from where we are sourcing our ingredients. We also have our spice and rice procurement model that provide us access to farm, where our ingredients are grown by our supplier through back-end arrangements. Did you know Nestlé India became plastic neutral in 2020? Moving ahead, we are reducing our use of plastic, making it recyclable and reusable. We have moved many brands to recyclable laminate. Major ones being Munch, KitKat, and MAGGI Noodles. We have a roadmap to make all the remaining brands and SKUs to recyclable. We no longer use plastics in our promotional items. The new materials being used are glass, metal, or wood. We also identified over 50 projects to cut down our plastic consumption. Being plastic neutral means we do not allow 285 trucks of plastics to potentially end up in landfills. We also put efforts to divert waste from landfill, professionalize the waste workers, and digitalize the waste management system at six tourist places. Replacing coal and furnace oil with biomass fuel by installing new boilers, adapting new technology for reduction in energy usage, and minimizing wastages in operations. For the reduced groundwater, we have plans in place. Some of these are: re-reducing wastage of water in operations, recycling of process wastewater, high water usage efficiency. These all actions shall be leading to reduction in groundwater withdrawal. We consume fuels like HSD, CNG, and electricity in transportation and storage purpose. Maximizing CNG vehicles for deliveries to reduce usage of diesel. Two, introduction of electric vehicles or alternate fuel vehicles with zero carbon emission. Three, maximizing rail network, reducing carbon footprint by 75% over road transport. Four, introduction of large vehicles to reduce overall usage of trucks. What does the term sustainability mean to you? Did you know that every KitKat bar made in the world is made from 100% sustainably sourced cocoa? Cocoa is actually one of the hardest crops to farm. Which is why the Nestlé Cocoa Plan aims to help cocoa farmers with three things: better farming, better cocoa, and better lives. Two-minute safai ke naam, a campaign which will urge consumers to dispose off their pack correctly, so that we can recycle the laminate and bring them their favorite pack of MAGGI Noodles. Did you know that the Nescafé Plan partners with nearly 1,500 farmers to source 4C certified coffee? The 4C Code of Conduct enables coffee farmers in 28 countries to participate in sustainable markets and profit from higher economic outcomes, improved and fair working conditions, and the preservation of precious landscapes and biodiversity, improved and quality of coffee produced and receiving fair market prices. Our colleagues at Nestlé are being a force for good. Join us in our ongoing journey and be a force for good. Here were the champions, here were the people in my organization, the ones who speak. Ladies and gentlemen, as investors and as financial analysts, you always measure the EQ and IQ of the corporate leaders. You also measure the ecological and environmental friendly quotient, but you do not value many times, or there is no valuation mechanism of what I call the culture quotient of companies. The culture quotients of companies are the companies that there is a harmonization between head, heart, and hands, and that's when values, purpose, behaviors, and outcomes are synchronized in one manner, in one direction, towards one goal. That is the pride that I have in my team, and some of them you saw today, who have expressed their desire to work on these projects. In fact, these projects are voluntary within the organization, people can join these projects. I'm therefore confident that this journey will long outlast any leadership that we have in the organization. Let me come briefly to societal initiatives, because this is the founding roots of the Nestlé organization. Henri Nestlé said this, that the Nestlé organization can thrive only when the community and society also thrives. Societal initiatives are therefore an essential part of who we are as a company. We looked at the philosophy very clearly in terms of five or six aspects. Number one, it is aligned with national priorities and Sustainable Development Goals. Number two, embedding sustainability in all our initiatives. Number three, focus on impact rather than just numbers. We are not a company that will advertise saying one million, two million, five million, 10 million. If 200 people are affected positively and their lives improve over the next 30 years, that for me and that for my organization, is salutary and important. That's something that we'll be happy doing. Number four community initiatives for virtual employee volunteering is something that we did during the pandemic. Of course, employees also have got the option to take sabbaticals and to work on our projects. Of course, once the pandemic hopefully walks away, we will be able to do some more of this as we move forward. Finally, during this pandemic, when compassion takes over competence, when empathy is more important than any other equity, providing relief and easing the suffering of vulnerable communities has been one of the key areas that the company has worked on. What are the impact of key societal initiatives? Let's take the first one, for individual and families. We have Project Jagriti, which is encouraging good nutrition and breastfeeding practices through community action. We have benefited in the last five years, almost 6.5 million adolescents, young adults, 2.2 million direct and 4.3 million indirect. This activity works in eight states and union territories. One of the oldest and one of the better known private sector nutrition education programs, called the Nestlé Healthy Kids Programme, which is held in the B and C grade schools. These are not held in the A grade schools, because A grade schools don't need us. It is the B and C municipal grade level schools where this kind of education is important. Helping adolescents lead healthier lives, almost 400,000 kids have been benefited during the last eight to 10 years. This operates in 23 states and union territories. You look at societal initiatives for communities, numerous programs have been done. Creating access to clean drinking water. Yes, this is an important goal, not only in terms of the SDGs, but also in terms of the country. Around 150,000 students today are served and are able to access clean drinking water in their schools as a consequence of the Nestlé intervention, and this will only grow. We also started this program in conjunction with the National Association of Street Vendors of India, called Project Serve Safe Food, working with street vendors in order to improve the hygiene and quality of food that they give. 21,800 street vendors have been accessed. This is a huge area, increased engagement, increased involvement over a period of years. Sanitation facilities for girl students. This is still a country where unfortunately, girls have to drop from schools simply because they don't have adequate sanitation facilities in the schools. Over 200,000 beneficiaries. We are proud that 200,000 girls, the picture of my presentation that started, are some of those girls, students, who are able to attend school, thanks to a simple issue like having proper sanitation facilities. We have also taken on an interesting project, adopting three villages in the most backward district as per the NITI Aayog. Nuh district in Haryana is the most backward district or one of the most backward districts, and three villages. Village called Rohira and two others, where we are looking at revamping the entire water system, the sanitation system and the education system. You can see some pictures that are telling you these are impact 1,500 people. If 1,500 people's lives can be improved over their lifetime, ladies and gentlemen, that is an important contribution to the country and to the community. Of course, 1,350 more are coming in as far as the two other villages are concerned. If you look at For the Planet, we are working in the Kabini basin with farmers on cultivation, increasing 20% yield as far as their crops are concerned, through more optimized use of water. Creating awareness about water conservation is important, that the generation that's coming in is aware of the fact that India will first run out of water before anything else. Nearly 120,000 kids have been given this awareness, and we hope that they translate it into behaviors in their adult lives. We want to do more, and we make firm commitments to it. By 2024, we talked about 397,000 beneficiaries of the Nestlé Healthy Kids Programme. We want to take that to 616,000. We talked about 6.5 million who have been benefited as a result of Project Jagriti. We want to take that to 12.9 million. We talked about clean drinking water to 150,000 kids. We are taking that up to 432,000 beneficiaries. We talked about street vending and street vendor training of 21,800. We propose taking that up to 36,000. We talked about 1,300 farmers, spice farmers, who are being benefited as a consequence of involvement in sustainable agricultural practices and farming. We take that up to 1,500. About 3,500 farmers work with us on the Nescafé Plan. We propose taking that up to 6,000 farmers. We want to put commitments to the key actions that we take as a company. This is important. During the pandemic, we have done numerous initiatives. I'm very proud of the fact that my team across the country, despite the very difficult circumstances, has touched the lives of more than 1.5 billion people. I'm very proud also of the fact that during this period, we have put up five oxygen plants as part of our initiatives, close to our factories in the hospitals, so that we never again face the travail of not having oxygen at a critical time when the pandemic surged. We continue to support communities, continue with various reliefs, whether it is relief efforts in terms of community feeding, whether it is dry rations, cooked meal, whether it is medical equipments, whether it is oxygen concentrators, you name it, we try and put our best foot forward. Our brands are known for the purpose that they stand for. We were, in 2016, for the first time in this country, the only consumer good company with brands that actually changed the benefit platforms of their brands. For education... Educating the girl child, you might recall in the Project Nanhi Kali campaign, Nescafé Classic became, "It all starts with education." MAGGI Noodles became, "two minutes of education," and KitKat became, "No break from education." 100 million packs were reached to consumers to remind them of the fact that the girl child is an important entity in the lives of all of us, and we are not doing a favor by educating this girl child. Today, I'm very proud of the fact that at the time when we are facing the festive season and on, at a time when people are debating, scientists are debating on whether we'll get the third wave or not get the third wave, we're going ahead again as the only company to put initiatives on its brands. The Face of Hope campaign that you would have all seen, hiding your smile for the sake of protecting one billion smiles. That's really what this idea very simply is. These packs are available on the market. The brands are masked. It is contra-intuitive, it is contra-marketing. Brands are supposed to be standing up front, we believe our equity, we believe our brands are strong enough to be masked and still make the point. They mean to reach more than 250 million people, over three million pledges we've already received for masking by people taking on the pledge that we will mask during this period. Let me come to the next topic, which is good governance. At a time when good governance is being frayed in different quarters, it is not my purpose here to dwell on the various instances of corporate governance misdemeanors that are being talked about in the industry. Nestlé India is very proud of the fact that pristine and good governance, transparent and trustworthy relationships on the board has been the centerpiece of this organization. During this time, the entire board was focused on one aspect, one key aspect, which is the workplace safety during the pandemic. Every board member's first question was: Are our people safe? Are their families safe? What are we doing to ensure that their health and their mental wellbeing is safe? The essential practices were put into play. During this time, I am eternally grateful to the board of directors of Nestlé India. They ensured that the organization serves its employees, customers, communities, and the broader ecosystem. They ensured that the organization stayed ahead of times in terms of critical and strategic thinking on the opportunities and where we can do better than what we're doing. They also ensured that we have a transformative manner in terms of driving value on key organizational priorities during this pandemic. They ensured that at this time, the code of ethics that we have as a company makes certain that ethics will never take a back seat and avoiding complacency of all kinds. This is a time when superhuman efforts by people and by communities ensured that the company continued its operations, and my colleague, Ashish Pandey, will talk to you about the Herculean efforts done in the supply chain initiatives of the company, where people have gone beyond the call of duty to do the things that value us on the culture quotient, making us ensuring that we do the behaviors that are important in the most critical of times. How do we ensure that these people are rewarded and recognized? With gradual phasing out of restrictions, how to ensure that the organization embraces the short-term and long-term steps needed to get back on its feet. Finally, harnessing the digital transformation. I think during this period, what we have seen is a huge digital shift in consumers. Very rarely it has happened because of the pandemic, that's also given the company an opportunity to look at its structures, to look at empowerment, to look at digital technologies, to look at analytics, to look at data, to look at insight generation, to look at real-time decision-making. The whole area has been opened up, ladies and gentlemen. It's an exciting phase for the company, that's what gives me the confidence that out of this pandemic will probably come the seeds of a future organization that is more agile, that is more adaptive, and that is more resonant with the environment. During this time, our suppliers, I always call it like Nestlé is a banyan tree, dealing with more than 100,000 farmers, dealing with more than 3,000-4,000 suppliers, many of them whose businesses depend on the Nestlé ecosystem. Whether it was in starting up, whether it was in ramping up, ensuring continuous and safe supply of milk for our consumers, awareness to all the driver partners, masking distribution to drivers. Also, of course, supplier safety as being an essential part of what we can provide to the community of suppliers during this period. Extending financial support, ensuring that at this time, no MSME, no small supplier went belly up. We ensured that they either got the orders, they got their payments, they got the help and support to start their business. This is important. This is what ecosystem means. This is what trust in business means. This is what we would like to follow as a company. How do we empower and engage our people? If there are one community of people, we talked here about corporate performance, we talked about double-digit growth, we talked about double-digit profits, we talked about fantastic ROIC. Ladies and gentlemen, the ones who make that happen are the people who work in my organization. I'm extremely proud of these people. Unleashing passion, competence, and commitment for performance. During this time, when the world walked away from assignments, from internships, Nestlé decided to walk in with assignments and experience for youngsters. I'm delighted that during this period we offered a unique program of Nesternships, which is virtual internships, paid internships for young professionals across the country. More than 1,000 were benefited in 2020. About 1,000 will be benefited in 2021. During this period, when we were doing the hiring, almost 40% of our new hires were women during the last two years. We are increasing our diversity quotient as well. During this period, we did not stop training and having education as an essential element for our people. The only Nestlé scholarship that we introduced today goes to over 160 employees in the company out of the 7,000 employees, giving them scholarships in order to pursue the kind of education that they would like to pursue. Executive general management programs and various training programs, all digitally conducted for the front line, keeping them engaged, keeping them active, keeping them going. That has improved, therefore, the gender balance and also the retention of talent. I'm delighted to see that in terms of women recruited as trainees, the number is moving up steadily from about 20%, 35% to almost 60%+ today. There's been a 40% jump as far as the proportion of women employees are concerned, from 16%- 20%. This is not the end of it. This is not the pride point as far as I'm concerned. I would like to see this number going up even more, at least it's a journey that is well worth it and that we are very proud of. Who says that Generation Z and that millennials are walking out of the door? There is a great resignation debate that is taking place across the world. Not that we are immune to attrition, the attrition levels are pretty much under control. Good purpose, good values, good performance, good rewards, good recognition, good ethics, good trust, good transparency. Letting the people do what they should be doing and doing it well every single day leads to people sticking on in companies. Not just people like me, who've been here for more than 20 years, but also youngsters who join this organization. We intensified our focus on well-being. I think COVID brought its own challenges in terms of medical and financial support. We also increased 60% of our employees are covered in mental health awareness sessions. We've also been impacted. We've lost colleagues, young colleagues. We try to support their families and to ensure that at this time, the Nestlé family stays together. In a crisis, you don't run a company, you serve a family. That's the spirit that we would like to continue in this organization forever and ever, continuing to nurture them as a family, because great family spirits also lead to great performance. Over 90% of our employees are vaccinated today with at least a single dose. Hopefully, by the end of next month, we'll have all our employees will be covered and their families will be covered by this. This is a good starting point, in fact, to also opening up the workplace, which we have in a limited way. One of the things and one of the journeys that we've taken is to really leave the past behind in terms of the experiences of the office that we have, and to create a new workplace for the future. As I speak to you, we are having Project Nest, which is a new home for a new beginning. That new home for a new beginning is really these are what the interiors of the new head office are likely to look at, look like. This is modern, this is contemporary, this is digitized. This ensures that people have the adequate protection, that they also have the adequate space. This is what Generation Z would probably look at. Indeed, the people working on these projects are not guys like me, ladies and gentlemen. It is the youngsters of the company, because it is their future. It is their future. It is these youngsters who are going to be running this company in the future, not leaders like me, who have much less time as an organization and as in terms of contribution. What is it that I would like to leave you with today? What are the key takeaways that I think would be relevant for you, for each one of you? Unwavering commitment to India. This company has been in India for 109 years. India is one of the fastest growing markets for Nestlé in the world. We have considerably invested in this country. We will continue to invest in this country. I have no doubts about it. I have no qualms about it. Leveraging the rural opportunities, I've said this last time: the time for every company comes, like the time for every individual comes. The time for Nestlé has today come because our portfolio is becoming resonant and relevant to rural India. We are seeing that growth happen. We are seeing that improvement happen. We are seeing that surge happen. I've given you numbers. I'm not just talking from the hat. These are numbers that I've presented to you today, and these numbers gives us the confidence that we'll be able to sustain this journey. Number three, to strive to continue the robust business model. Double-digit volume growths, double-digit value growths, double-digit operating profit growths, double-digit net profit growths, double-digit ROIC. This is the model that we have established in the last couple of years. We will have our ups and downs. It's not to say that there are no storm clouds. I put transparently the storm cloud of commodities that face us. Believe you me, the organization has got the heft, has got the capability, has got the R&D infrastructure, and has got the mindset and the innovation capabilities to be able to tide over this as best as we can. Sustainability across our operations. Today, I've shared with you in all transparency, all the initiatives that are being done by the company. It's a matter of great pride for me to share it and for my team to share it with you, because this is what is going to define the Nestlé of the future. You know it globally. I think Mark Schneider, our CEO, has been talking about it and has been referring to it in all his communication. I, too, as part of the team that represents Nestlé India, I'm vetted to this journey. It's an important journey that all of us are there to ensure that it happens to the best of our capabilities. Caring for communities as a way of life, this is what has made Nestlé. If you look at our brand equity, if you look at our corporate equity, it is high because of the fact that we always try to do good for the community in an ethical, transparent, trustworthy and in a proactive manner. That is the journey that we would like to continue. Finally. People make this company. The power of the Nestlé organization lies in the people who have made the company as great as it is. Ordinary people achieving extraordinary things, is the greatest pride that I have in this organization, and therefore, creating a vibrant workplace fit for the future, is really the objective that we have as a company. I thank you very much for your attention, for your time. I look forward to taking questions from you at the end of the session, and I do hope that you will enjoy considerably the session that will be taken by David, by Matthias on the Sanand factory, and of course, by Ashish Pandey on another area of the company that we have seldom talked about, which is supply chain and how is it that we made the transition. Thank you all very much. Thank you. Thank you very much, Mr. Narayanan. I would now request David to make his presentation. Thank you, Suresh, good afternoon, or good morning to all on the call. I have around 25-30 minutes now to dig a little bit deeper into some of the aspects around our financial performance, and in particular, to dig into what we consider is driving our strong performance. I'll start with a recap on strong performance so far, as Suresh has already shown, and then I will show some highlights of the year-to-date financials that we've published. As I said, the main part is to go into the performance drivers as we see them, finally coming back to value creation, and a recap of what we have delivered there. First of all, a reminder that the key driver of our performance is always strong volume and mix-led growth. The last five years, we've seen a sales CAGR of around 11%, helping us keep strong market leadership positions across our portfolio. As Suresh highlighted, in addition to our strength in urban areas, we are growing well in rural areas, so those smaller town classes, and this with the customized portfolio, with localized communications, and so on. Our growth in rural areas this year is approximately 1.5 x the company overall growth, and Suresh showed 16%. Manufacturing and supply chain optimization, along with agile operations to respond to the difficulties that we've seen in the last couple of years, for example, is another key driver of performance, and I'll expand on this later in the presentation. E-commerce and digitization are growth accelerators for the company and will continue to be so in future. All of these elements of what I've called our winning strategy here, have helped us to deliver that compound growth rate of 11% and a really good 16.6% growth in profit from operations, and yes, a 39% growth in ROIC over the last five years. I'll move on now to the financial highlights for the nine months ended September 2021. You've seen this information recently. I have just three slides to recap some of the year-to-date financial highlights. First of all, on the left-hand side of the slide, total sales growth is at 10.7% year-on-year. That means we've added more than INR 10 billion in sales value. Again, 90% driven by volume and mix, but it is broad-based across the portfolio. Profit from operations has improved by 40 basis points to 22.6% of sales. That's expanding by INR 2.8 billion in the year to date. The key driver of the profit improvement is, of course, higher sales volumes, which are generating scale benefit across all cost heads, but this has been supplemented by some improved realizations. These upsides have been partly offset by commodity headwinds, and Suresh has talked about these. Net profit is up by 9.9% in absolute. That growth slightly reduced by 10 basis points only due to lower financial income, because we have slightly lower average liquidities in this year. Earnings per share growing in line with net profit and reaching INR 182 per share. Now I'll dig in a little bit deeper into the performance over the last couple of years. Seven quarters shown here, in fact, to illustrate the consistency of our performance. A couple of comments on total sales first, which is the left-hand side of the chart. Q2 last year was our most COVID-impacted quarter, followed by Q2 this year, as the second wave of COVID swept across India. Q2 this year does show a high growth, but over the low base of last year. However, it should be noted that the impact on operations of the COVID second wave was managed very well. Q3 this year, we would see as much more business as usual, with a strong growth of 9.6% over a strong Q3 last year. We notched up our highest ever sales of INR 38.7 billion, significantly above any previous quarter. On the right-hand side of the slide, the last seven quarters of operating profit. Q1 this year started with Nestlé India recording highest ever profit from ops at 23.3%. That was INR 8.4 billion in absolute. Profit levels sustained relatively well throughout the year, despite challenges posed by COVID and more recently by the significant commodity headwinds. Q3 was a new record profit at INR 8.6 billion, as I am sure you have noted. This is the last slide on the year-to-date performance, and is a look at the reported segments. As mentioned, growth is broad-based, with 90% being driven by volume and mix. Overall, the portfolio has become more balanced in the last two years, with confectionery and coffee increasing to a 25% contribution now year to date, 27% in the latest quarter. Milk products and nutrition has the lowest growth of the four, at 1%, partly impacted by pantry stocking last year. We've got good growth in the toddler range, Everyday has been more impacted due to extended COVID wave two lockdowns in some geographies. Prepared dishes and cooking aids is doing very well, with more than 20% growth this year. Q2 2021 had a stupendous growth figure, albeit over that lower base, we're very pleased to see Q3 growth also strong, this on top of strong Q3 in the prior year. Noodles and Masala Magic are key growth drivers with good increase in in-home consumption. Confectionery is doing particularly well throughout the last few quarters, with growth driven largely by KitKat and Munch. Powdered and liquid beverages, primarily our coffee business, has grown well as well, particularly in-home. Out of sales, out-of-home sales have been impacted each time COVID has knocked the out-of-home channel, but out-of-home is recovering very well in recent months as wave two is receding. Now into the larger section of the presentation for today, which is sharing with you what we consider to be some of the key drivers of our performance. I've grouped these into four groups and two key enablers, which you can see on the slide. Manufacturing, supply chain, marketing spend, and the fourth one is creating an organization that is fit for the future. Suresh has talked about some elements here, so I'll try to add some further insights as we go through. Some of the content on the following slides is familiar to you. For example, long-running and successful program called Project Shark, I'm sure some of the drivers of performance in other areas like supply chain and marketing, will also be intuitively known to you. Again, I'm hoping to add a few more insights into some of the what that we are doing in these areas. At the bottom of the slide, very deliberately shown, running underneath all the drivers of performance, are two key enablers. The first one is an ongoing simplification, standardization, and automation journey. The second is important continuations of our Project Midas. I'll dig a little deeper into each of these now in the next few slides. First up, manufacturing. This has been one of the most important factors behind our strong momentum, our best-in-class manufacturing performance. We believe it's best in class because we benchmark internally and externally, and that is our claim. We have continuously delivered improving efficiency in our factories, and this will continue to be so in our new ninth gem, our Navarathna, the factory coming on stream now in Sanand. On the left side of the slide is Project Shark. This launched in 2011, over the last 10 years has contributed tremendously to our bottom line improvement. This through constant focus on cost improvement initiatives. I've noted three areas in the slide, but there are literally hundreds of projects run every year, and the ingenuity and capacity of our technical, and supply chain, and finance, quality, and other teams across our sites to find new opportunities is just truly impressive. Some of the things that we've done in the area of Shark, raw and packing material specification harmonization projects, have included specs on spices and many other materials. We've reduced the pouch dimensions to reduce head space. We're increasing the number of pieces in cartons and shippers, we optimize the shippers there. These are also important projects for the environment because we use less materials. On energies, we've got projects for usage, cost, and mix optimization. These projects include switching to natural gas from diesel in Samalkha, sourcing electricity through solar power in Nanjangud, and reduction in energy consumption across many sites through efficient motors and LED lighting. On fixed overheads optimization, again, many, many initiatives, including savings in service and indirect material purchasing through benchmarking, localization of spare parts, developing additional vendors, quality cost optimization by pooling of samples, and many, many other projects. In the middle of the slide, performance improvement, we have a continuous focus on driving efficiencies, and production losses have been reduced by 42% since 2016. 42%. How? Well, reduction in overfill is one headline item. We're monitoring actual weight and target weight. We're dynamically adjusting machines. We're fine-tuning net weight control and rejection limits on checkweighers. Again, a continuous process and a continuous focus to take some waste out through that. We're lowering rework and waste across the board. One key initiative this year has to bring visibility to variances in a factory through mass balancing analysis approach. This means measuring all the inputs and outputs of a process, increasing, therefore, the chances that we can identify where losses arise. We have longer runs with less changeovers. We're installing buffering and overflow zones inside some of our plants, so if there's a problem on the end of the line, the packing end, we don't have to stop the filling end, for example. We're minimizing packaging material losses. Again, longer runs plays a part here and less changeovers. Finally, on the right-hand side, under generating capacity, we're very pleased to claim that we've unlocked 9,000 tons of additional capacity simply by reducing downtime. How have we achieved this? Again, many projects, among them, cleaning time optimization. Simple. Again, Suresh used the word simple, and many projects are simple, but they have to be thought of, and they have to be executed. We've reduced planned periodic cleaning times. We schedule better. Again, we've reduced changeovers and stoppages with longer runs, and we've reduced our tail SKUs as well. Not just during the COVID time when we did some prioritization, but permanently. We're also focusing on preventative maintenance. We use data and tools to make sure we schedule our maintenance so as to reduce unplanned breakdowns. These are some of the things we've done on manufacturing and really making a tremendous benefit to the P&L. Moving on to supply chain. We know inflation is here, and we know it's going to stay here for a while. Like every business, Nestlé is working hard to mitigate the impact. We believe that there is an opportunity to rethink and reinvent our supply chain. We always work with a ZBB mindset. Our procurement team is, of course, at the forefront of this effort. We're striving for procurement excellence, we call it, and we're running many projects in this area, too. We're increasing local sourcing. We already source nearly everything we buy in India, we are reducing further the already low level of imports. We're using e-auctions more widely than before, which, of course, produces a more transparent procurement process and competitive bidding. Our supplier financing program continues to go from strength to strength. We support an increasing number of suppliers for their working capital needs, and at the same time, we deliver positively for us on working capital. In the middle of the slide, box called Turning to or Technology-Enabled Efficiency, we've been reinventing our distribution network. We want to be as agile and efficient, with products traveling shorter distances. This is good for consumers in terms of as high freshness as possible. It's also good for the environment, as well as being good for the P&L. We've made good progress on Project ONE, which is a redesign of our distribution network, with consolidation from 38 down to 30 distribution centers, and we are leveraging a new team we call our Transportation Hub, to accelerate productivity and logistics, and Suresh gave you some stats. This improves vehicle loads and vehicle type optimization. We've also steadily increased the proportion of our goods delivered direct from factories to distributors. Finally, on this slide, digitization across processes. We've done a lot of work in our back office, if we can call it that. Across source to pay and order to cash, we've implemented many new tools. We're digitizing processes very significantly in the last couple of years, and all this just leads to more efficient ways of working to manage, for example, customer orders, credit approvals, invoicing, payments, and collections. It's good for us, and it's good for our partners. Okay, moving on to the third area, which is marketing. Again, Suresh has already mentioned this, we are very, very consistent in the support for our brands. We've spent 1.35 x more in 2020 than in 2016, and very importantly, we've increased the proportion spend on media from 57%- 82%. This core brand building is, of course, a very important part of our business model. This is an area where we devote resources to ensure we continuously buy media more effectively, and that we target our media spend more and more tightly to specific target consumer groups. Consistent investment behind brands drives growth and market share, of course. Promotions are more tactical and calibrated, and the proportion of spend in this area has incrementally reduced. We're also making our media money work harder. We've got efficiencies in media buying, but we're now coupling these with optimization of spend across channels and slots to get the best outcomes, to get the best bang for the buck. We're also trying to be more efficient with our creative assets. Of course, commercials will have a lifespan, but this can be extended with clever scheduling, and we're using assets for longer than we might have done in the past. Overall, we've seen a good reduction in the cost per view. Finally, in this slide, we've been significantly increasing our spend on digital. We're almost three times higher now than in 2016, and here we keep a healthy mix across core businesses, new products, and again, we see a lower cost per view on this channel. A key investment here has been our AskNestlé platform. AskNestlé is available in Hindi and English, and it helps users understand nutrition and create healthier childhoods. It gives access to healthy recipes with lots of nutritional information, includes tools such as customized meal planners and a growth tracker. The website also gives a lot of guidance to parents through expert articles and community platform support. We're really pleased to say that almost 12 million people have visited the site and are actively using it to better the education situation for them and their families. Finally, the fourth of these performance drivers, at least the final one for today, and as far as this presentation goes, is in creating a fit-for-future organization. Here I'm encompassing our people, our locations, and our processes. Over many years, as Suresh said, we've made concerted efforts to enhance capabilities. We're always upskilling and giving varied exposures to our people. We believe this has shaped the Nestlé family to be a more productive and engaged workforce, and we really believe we are fit for today, but also we are ready for the future. The key KPIs on the chart on the left, we have delivered the last five years' growth with a really very negligible increase in headcount. In the middle, optimizing the footprint, we are wanting to respond to people's changing expectations of the way they want to work, their expectations for flexibility, for balance, for the types of work they will do alone, or in groups, collaborating in the office or at home. We've begun to change our workplaces. Suresh has already talked about Project Nest, so I won't go into more details, but that fit for the future head office will reopen in quarter one next year. Finally, on the right-hand side of the slide, the company continues to focus on developing our business services center of scale and our various centers of competence. These are key components in improving productivity in many of our end-to-end processes, and it is in these processes that we see the most obvious signs of progress being made in terms of simplification, standardization, automation. That brings me to the first of two enablers on the next slide. In the last couple of years, this has been a clear focus area for us, and we've come to see it as a really key enabler of high performance. We have a continuous improvement mindset. Everyone is on the lookout for opportunities to do something better than it was done before. Literally, we ask ourselves if the consumer would be willing to pay for this piece of work or this process that I'm performing. Is it essential to quality or to compliance? Do I actually need to do this work at all? If I do need to do it, then how do I do it in a more streamlined manner? How do I automate as much of it as possible? This constant challenge is leading to regular reengineering of reports and processes. We're using tools which are very familiar to everybody now, like Power BI and different workflow tools. We are achieving a really steady reduction in the time needed to produce data, which gives much more time to analysis and decision making. We put a smile on the chart. We see four key benefits emerging. The first is waste elimination from those existing processes and reporting. Many thousands of man-hours have been saved already. Those hours, as I said, now used on more added value work. We have definitely increased empowerment. Another stream of activity here has been to devolve authority deeper into the organization and increase the authority limits at all levels. Team members throughout are now much more empowered and feel much more responsibility for their own operations. The result of these two is very clearly faster decision making and ultimately speedier execution of those decisions. We've taken 40% of the time out of our decision-making process, and this, again, is something we are very proud of. The final enabler is Midas. This, again, is a key enabler of future performance. We've communicated about this several times before, so you will recall we've been building a data lake of internal and externally sourced data, and we're developing several different tools to interrogate this data lake. The insights generated from this data will be key contributors to our future business performance. In this slide, I've grouped several different use cases into four general headings, starting on the top left with optimizing resource allocation. As our portfolio expands and commodity cost pressures build, it's really imperative that we make choices on where we spend our media and promotion money. Where will we get the best ROI? Where will we maximize whichever KPI we are aiming at with a particular type of activity? Pre and post-evaluation analytics will help us make sharper choices. The second area is effective planning processes. Here we are automating business planning. This will free up tremendous amounts of time for our sales team by reducing their spreadsheeting time. Gives them back time to do what they should be doing, which is selling. Another use case here is around portfolio management and using insights from the market to support prioritizing new product developments and routes to market. At the top right, the box I've called Sharper Consumer Insights. We're starting to get really granular market analysis, helping us to target our generating demand activities to more and more precisely defined consumer clusters. Another initiative under this head will be to improve our forecasting of category growth, our growth, and the market share outcomes. Finally, on the bottom right-hand side, targeted sales and distribution, we have tools built now to help us determine the right product mix to sell at a pin code level. We call that MSS, Must Sell SKU, and also to equip the sales field force with powerful information to do their job better. I hope these performance drivers and enablers have given you some insights into our business. Concluding, what is the result of all of this? Well, it's value creation. We have delivered really strong improvement in our ROIC over the last five years, reaching more than 100% today. Clearly, this is a result of both profit improvement and also some reduction in our invested capital over this period. Some assets have reached full depreciation, and it has been a lower investment period for us, but overall, it's clearly a very, very good performance. We've reached a position, however, where most factories have high capacity utilization, and thus we are now expanding to meet demand. We've been open about this already in the past. Several new lines have been installed this year. We've started commercial production in Sanand factory. We've put a new KitKat line into Ponda factory and many others. All of this part of the INR 26 billion capital investment program that we've announced already last year. As we expand our invested capital, the high ROIC level we achieve today will be impacted, we will, of course, carefully control the timing of new investments. We've paid out steadily increasing dividends, more than tripling the annual dividends since 2016. I think that's a compound growth rate of 33%. Finally, the result, to repeat what Suresh has mentioned earlier, we have delivered sterling shareholder return. On a 20-year horizon, we've delivered average annualized returns of close to 20%, we're very proud to have recently been recognized by Fortune India as being in the top five FMCG companies for shareholder wealth creation. Key takeaways from today. Strong growth continues. Profit momentum is maintained or sustained. Once again, you can count on Nestlé India to deliver that sustained double-digit growth and profit. We have an increasingly balanced portfolio, and higher growth segments in our portfolio are accretive to our business. We have a tremendous focus on cost reduction and efficiencies, and we've proved that year in, year out. Project Shark, excuse me, Project Shark is producing INR 2 billion of savings in the last four years, each year, and will continue to do so. These savings are now increasingly enabled by technology. We are a fit for the future organization, both our people, our facilities, and also our processes, and we have more to do there, but we're on a really good track. We have delivered market-leading and sustained value creation. That brings me to an end of what I was going to present today. Thank you for your attention. Thank you. Thank you, David. I would now request Matthias to make his presentation. Yes, good afternoon, everybody. Good morning, good evening, wherever you are. Yes, you heard just from David a little bit already on the manufacturing, and it is now my pleasure to talk exclusively about our Sanand factory, our ninth jewel, the Navarathna, that we have built in the state of Gujarat. What you see here on the left-hand side is a 3D master plan view that was about just two years ago, and now you see on the right-hand side, a drone picture of what it actually has become. What is remarkable, you have just to remember that this factory was entirely built during the COVID pandemic. Sorry? It's not presenting. You have to- Sorry. I am presenting. No, no. Can you see it? Yes. You have the tone? Mm-hmm. All right. All right. Sorry, I start again. What you have here is the master plan on the left-hand side, two years ago, what was really only a sketch on paper, and now you see the factory, a drone picture of what the Sanand factory looks like in the last couple of days. Still a little bit of landscaping to do there, it is operational. We just have to go back a little bit in time and think that this is a factory that was pulled out of the ground during the worst of the pandemic. While this pandemic was ravaging the country and the globe, we ensured safe operations during the construction and the startup of this factory. We had very stringent COVID protocols that needed to be followed across the sites. They were based on basically four pillars. One was the temperature monitoring, of course, the social distancing, but also the protective personal equipment that we provided to everybody on site that came in contact with the people that worked on the construction site, and the very frequent disinfection of the entire premises. We also extended that protocol to the stay arrangements, to the hutments, that is just adjacent to the construction site. Of course, we also ensured that as construction site contained some safety hazards, that we followed all the strict protocols to ensure that everybody was always safe when executing work that entails certain hazards, like work at height, welding, or in confined spaces. It's really a pleasure to tell you that we have 0 irreversible injury to record during all that period. We provided over 9,700 training man-hours, and over 4,600 safety toolbox talks, how we call it, and these are basically talks that are provided at the beginning of a shift to a work team, to a crew, and that explain the work that needs to be done and the risks that might lie in that task. You see also a picture of the hutment area with a dedicated ambulance. Of course, we also had a dedicated wastewater treatment set up, temperature screening everywhere and around, and this really allowed to have a very safe operation across the site. Now, why is Sanand so special? Why is it a gem amongst our factories? Basically, and Suresh mentioned already a few of these points, they have to do with sustainability, but also the digitalization and gender diversity. Let me talk about each of them briefly. In sustainability, we clearly aspire for zero carbon emissions, and in the Sanand factory, we are one big step closer to reaching that aspiration. We have a 68% reduction through cleaner fuel and hybrid power. How do we reach that? We have a biomass boiler installed for the steam generation. You see the picture of biomass fuel pellets that are sourced from nearby agricultural byproducts. Also, the picture of the boiler on the very right-hand side, which of course, then allows to have, for that energy source, zero emissions. We also use a hybrid power for electrical. Hybrid of solar and wind that will be installed by Q2 next year, that will cover 26% of the total electrical energy will be from hybrid, this is actually also the maximum that is, for the time being, allowed in the state of Gujarat. If we move on to the digitalization and the connected factory, it's really. We want to go into a fully integrated, digitally integrated unit, we are very close to doing this. We do have connected workers now in that factory. DMO stands for Digital Manufacturing and Operations. That's a global standard that we also implemented with different modules, it brings direct benefits in the manufacturing processes, also in ensuring our superior product quality and stability, of course, also in the machine performance itself. It allows the digitalization to a certain level, also to customize production with highly automated end of lines, packaging areas. We also use digitalization in the training, and this through augmented reality. We use this a lot for onboarding new people, that they can visualize how such a line looks like. We also use now the augmented reality for our maintenance personnel to help make their work easier and more professional, and of course, also faster. Digitalization brings also a lot in terms of process mastership through the real-time process data capturing, versus what was used to be on paper log sheets, capturing data from analog instruments, and then in a back office, recording this data. In Sanand, this is done real time, automatically, and it allows to have an advanced process control. You see there an operator console snapshot with the real-time data entry. It allows the operator, with the expanded responsibility that they have, to intervene immediately when deviations arise, and to correct it very, very swiftly. What does this bring? It brings higher productivity, and we measure about 20% increased productivity on top of what we already have as best-in-class noodle lines when we benchmark them, as also David mentioned it. We really do have cutting-edge process technology that reduce manual operations. We have a digitalized shop floor and optimize or reduce, to a great degree, the back office structure. It's also paperless, as was mentioned earlier in the afternoon. Our work teams, they are line-centric, autonomous work teams or work groups that have a high degree of autonomy and of responsibility, and are empowered to make the right decisions right on the shop floor. We also have an end-of-line automation level that is not comparable with the other factory, with robotics, with cobots, industrial palletizers. You see there some pictures of auto case packers, of palletizers, and this mainly in the areas where it is also often linked with repetitive movements and risks that go with it in terms of ergonomics. If we move on to the gender diversity, specifically, and also specially abled personnel, the site has been designed to receive a very heterogeneous workforce, and it is really a pleasure to mention, and I repeat it, what Suresh already mentioned: we have more than 60% female employees at the site, actually 63%. We have a very nice creche for children, for toddlers on site. Of course, we have a separate social building, a social block for the female employees, and we also do have a dedicated parking area for expecting mothers. For the specially abled people and employees that we have, we have ramps at the factory entrances to the buildings and also the emergency exits. They're all designed in a way that can be used by people using wheelchairs. Toilets, et cetera, social buildings, they're all made, designed with ample pathways so that, again, wheelchairs and people in wheelchairs can easily pass through. Again, also a dedicated four-wheeler car parking area is very close by to the office building, to the factory buildings, and it's reserved for specially abled people. Now, on this diversity journey, of course, it's also important that we train people to receive that community. We did this, again, all this training on the lines during the pandemic, again, ensuring the safety of the trainees, but of course, also of the trainers. We also used a lot of video modules that we purposely developed for onboarding, absolutely freshers, new people that never worked before in such an industry. We used small batches of employees that we sent to our sister factories to be trained on the job on similar manufacturing lines. Again, maintaining all the safety protocols related to COVID. We also had online platforms delivered to give this training that was developed by the Nestlé R&D experts and other subject matter experts. A lot of virtual training modules were deployed. Of course, everybody, every job has its job matrix with the training needs and the competencies that are needed to execute that job well. This is how we track people and the training needs, and ensure that also people can be deployed at various levels, at different jobs along the manufacturing lines or in general, in the factory. It all, of course, starts also with the leadership in the factory. Again, it's a pleasure to mention this, that also the factory manager is a woman in Sanand. We make sure that we have a very inclusive environment, the work climate in Sanand, that is also built on respect, and of course, it goes without saying, again, always safeguarding a safe workplace. Now, with this, I really would like to extend the thanks to all of you, to the investors. A big thank you here. You see the crew in Sanand that want to say thank you, and I can conclude this presentation with a small video. It is a time lapse that shows how this literally was pulled out of the ground and what it looks like today. Thank you very much. Thank you. Thank you so much, Matthias. I would now request Ashish to make his presentation. Okay. Thank you, Shashank, good morning and good afternoon to all of you. I would present here a storyboard of how we made our supply chain resilient in the face of adversity during the pandemic. If you look at the value chain, it's very complex for Nestlé. It has a huge portfolio, a lot of SKUs, huge volumes, and it's end-to-end. We source milk from close to 100,000 farmers. We buy all the ingredients, raw and packing materials, from close to 500 suppliers. These materials move to our factories. We have nine factories and 14 co-manufacturing units. There we produce over 500,000 tons of product in a year, roughly 60 million cases, that our logistics teams move across the length and breadth of the country. There are 30 distribution centers we have. It gives us a good access to our customers, be it the export customers or our modern trade, e-commerce, general trade customers. We have around 1,700 customers that we serve. With GST coming in, we have also started servicing our customers directly from factories, and in this way, we are supplying fresh product to our customers. There's high agility in terms of meeting demand and lowest cost to serve. Approximately 12%-13% of our volumes today are moved directly from our factories to our customers. The value chain also is segregated. There's an ambient value chain, there's a reefer value chain for our chocolates, and there's a chilled value chain for our yogurts. Let me take you back to 24th of March 2020, when the government announced a complete lockdown in the country, and we all remember what happened there. Since it was announced overnight and there were no clear conditions in terms of business operation and people movement, the entire value chain, end-to-end, of our country came to a grinding halt. Our suppliers had to close down because they were not very clear on what permissions to operate to start their units. Our factories had to shut down. Luckily, we could still work with our dairy and nutrition factories because they were classified as essential products. The rest of the factories closed down. All our distribution centers across the country closed down. Close to 1.2 million trucks across the country came to a grinding halt, and hence, there was no transportation, either from factories to distribution centers or from distribution centers to customers. Our customers obviously closed down, and the shoppers could not go out, and the whole supply chain was totally halted. Now, what did we do? We worked very closely with across the value chain. We helped our suppliers to get permission to operate. We helped them in terms of starting up their operations, gave them good training about COVID protocols. Our factories did the same with our people. Our distribution centers organized permits for our people to come and work, because there was curfew all over the place. Our customers also took permission to operate, and so does our retailers. I'm very pleased to share with you that within seven days, we could have our supply chain up and work, running, and we could connect our products to the customers and shoppers. What were the lessons that we learned in managing the volatility during the pandemic? There were five frames, which we worked on. First was to have a realistic view of the current situation. The situation on the ground was changing every day. Demand patterns were changing, the channel requirements were changing, the supply constraints were many. It was very important to have a daily review of across the value chain. We set up a control room, a control tower, where we monitored each and every leg of supply chain in terms of constraints, availability, and throughput. Scenario planning. Since the scenarios were changing week to week in terms of how the lockdown was progressing, how the economy was opening up slowly, and the demand patterns and the consumption requirements. We quickly changed our planning processes to go towards a weekly cadence. We looked at what are the broad postures and direction that we can give to our team, so that they are very clear in terms of designing the agile value chain and the strategic moves leading to actions. What are the four broad actions? The first thing that we did was we empowered our teams. Since our teams work on the ground in with suppliers, with distribution centers, factories and branches, it was very clear direction to them to take appropriate actions based as a broad framework, so that our operations do not stop. Strengthening partnerships, both upstream and downstream, with our suppliers and customers. Without working closely with our suppliers and customers, we couldn't have started the flow of goods across the value chain. There was a close collaboration, which was done on a regular basis. A lot of process improvements and changes were done to adapt to the new situation and new reality, and supply networks were changed to support agility in business planning. We focus on the four Ps to navigate through the crisis. People, health, and safety. We focused on well-being and caring for our people. The portfolio strategy. How did we optimize our portfolio to maximize the throughput and reduce the complexity across the value chain? How did we change our processes and systems to be more agile and in terms of ramping up our operations and the partnership with our customers and suppliers? I'll cover them one by one. When it came to people, I think single-minded focus of the entire operation was to ensure that our people are safe and healthy. We took various measures across the value chain so that the people feel comfortable. We created a lot of SOP, standard operating procedures, in which we defined how people would work during COVID, the social distancing norms, the PPEs, and so on and so forth. With our procurement colleagues in our milk district, we worked very closely with our farmers to explain to them the COVID protocols. With and with demand going down drastically, and especially the out-of-home channels totally stopping, there was surplus milk which was available with our farmers. We made sure that we picked up each and every drop of milk to build a trust that Nestlé is there and supporting the farmers during the difficult times. We did a lot of training in terms of safety and COVID protocols. With factory, the PPEs were immediately supplied to everyone so that people are safe. Some of our lines and packing stations were not designed to have social distancing, so quickly the factories made sure that the entire design is changed to a two-meter social distancing, so that the COVID protocols are followed. The shift management and the health checks were started so that our operations are safe and COVID compliant. The same thing we did with our distribution centers. Distribution centers are run by third party, so we had to do a lot of training of these third-party people, provide them PPEs, and make sure that the COVID protocols are understood. Crisis management was explained that if there is a COVID issue, what is to be done, and also if there are COVID issues in an industrial area where the distribution center is and there's an outage, how to sanitize the distribution center and get it up and running very quickly. These distribution centers also have a lot of drivers and transport partners visiting, so a comprehensive plan of their health checkups and training was also organized so that there is no infection in the distribution center. In our offices, regional offices and head office, we had actually moved to working from home before the shutdown was lockdown was announced by the government. The challenge was to make sure that our people stay connected and they have the right office infrastructure to work. A lot of good work was done by people during the pandemic period, then we created a lot of recognition program where people would come and present about the actions that they've taken to ensure business continuity. Similarly, we were communicating very closely with industry and looking at any synergies and partnership so that we can leverage the situation and be more agile. Some of the examples where people went above and beyond the call of duty, if you remember that the road transportation was totally hampered. We quickly tied up with railways, and we made sure that our goods started moving using rail. We export a lot of infant formula from our factory in Samalkha, in India, to Bangladesh, and the entire road transport and the border was choked. We could arrange a train which moved from Panipat directly to the border in Bangladesh in order to make sure that our goods are available then at Bangladesh for our customers and consumers. Similarly, for Northeast, which is a difficult terrain, there was no accessibility to that terrain. We again moved a train from our dairy factory, which is in Moga, to Guwahati, and ensured that Nestlé was the first FMCG company delivering products in Northeast regions. Coming to the portfolio strategy, we quickly realized that keeping the full portfolio would create a lot of complexity in the entire supply chain, it will not help us to be agile and responsive. We quickly aligned on A-class SKUs, covering the channel requirement, the geography, and the brand strategy, we moved from around 500 SKUs that we normally have, to around 100 odd SKUs, so that we are focused in value chain in terms of selling these SKUs, producing these SKUs, moving these SKUs, and sourcing raw and packing materials for these SKUs. This cut of 75% of our portfolio helped us to be more agile. The throughput was increased, we could reach these priority products to our customers in time. Once the unlock happened and things started coming back to normal, by September, within six months, we came back to the full portfolio. We believe that this is a good learning, where a company can come together quickly, identify the A-class SKUs, then rejig the supply chain efficiencies to maximize the throughput and availability. Our business partners also joined us in terms of helping us with the growth. We had a packaging innovation day, where our packaging suppliers came forward and showcased what are the leading innovations that can be done using Nestlé products. A lot of good ideas were then put into new product development process. Similarly, our co-manufacturing partners also came with the kind of capacities and capabilities that they have, where they can manufacture non-sensitive Nestlé products. Leveraging that, we created a strategy of co-manufacturing, where we leveraged the capacity and the know-how available with our manufacturing partners, and even launched new products like Poha and Upma during pandemic. We de-bottlenecked our existing supply constraint because due to demand changes, some of the lines were getting constrained. We looked at distributed manufacturing strategy, where we created co-manufacturers in east and south of India, and we also looked at flexible manufacturing for our low price point SKUs to ensure that product availability is there and there is lower delivered cost. Co-manufacturing was used as a lever to drive growth and efficiency in the organization. Coming to process and systems, we quickly realized that the monthly planning process is of no use. We moved towards a weekly cadence and operation review. We would refresh demand, supply, distribution, logistics, procurement strategy every week, depending on how the situation was on the ground. The demand was changing every week. The consumer behavior and consumer buying patterns were changing. The portfolio requirement was changing. The constraints which were there in the supply chain were changing. Weekly cadence really help us to be more agile in the marketplace. Post-pandemic, we also did a lot of event management in terms of new product launches and consumer promotions. We created a digital database and analytics system, in which we could track end-to-end the entire planning and execution of these events. This also helped us to improve speed to market and improve execution of the commercial strategy wherever there were consumer and customer-facing commercial activities. Similarly, for manufacturing, when the unlock happened, we slowly ramped up the manpower strategy, built up the full portfolio, and also looked at the improving the footfall of people at our factories. This was done very cautiously, so that there's no risk to our people, yet the product availability is ensured. We definitely prioritize infant formula and dairy and other essential food items as part of availability and requirement of consumers. I think Suresh touched in his presentation about the uses of rail. We realized that in such pandemic and shutdowns, the normal road network will not work, so we started collaborating with railways. We were very surprised that the railway team was very upcoming, very keen to help Nestlé, and we could move big volumes through rail. As part of now our regular strategy, we want to increase our mix with railways, not only to improve reliability of supplies, but also to reduce the carbon footprint. With our stakeholders, we also helped across the value chain. There was a time during end of March and early April, where the drivers were not willing to go on the road because all the dhabas and eateries on the national highways were closed. We organized packed food for them. For our distribution staff, we organized pickup and drop facilities during curfew and difficult times, so that our people understand that Nestlé cares, and Nestlé means safety of people and then continuity of business operation. Coming to partnerships, our customers were also struggling in terms of maintaining the demand and the portfolio and requirement. We worked very closely with our modern trade and e-com customers, aligned the must-sell list of our customers with the SKUs that we were producing, so that there's a full synchronization in terms of what the customer can expect in terms of demand and supply. This worked very well because there were geographical clusters, where the product portfolio requirements were very different, and our customers appreciated this proactive action from Nestlé. There were weekly, monthly review calls with our customers to ensure that product availability is maximized, either at e-com, modern trade or grocery trade. Direct deliveries, we were looking at 5%-6% of our volumes going from factories to customers, but during the pandemic time, in order to cut the lead time and length of supply chain, we moved as much as 15%-20% of our products directly from our factories to customers. This helped us to provide not only fresher products, but we were very agile to the customer requirement and ensured full availability at reduced cost. A lot of our e-com customers opened new fulfillment centers during pandemic because the demand was very high. This was another collaboration we did, and we took on ourselves the challenge that for the new fulfillment centers that our e-com customers opened, we will give 100% service levels. That is what we did with our key partners, and this built a lot of trust and transparency with our customers, and they appreciated the effort by Nestlé. Similarly, with our suppliers and business partners, we helped them in terms of their operations, things like getting simple permission to operate, because some of our Tier 2 and Tier 3 suppliers found it difficult to pass through the government bureaucracy, so our teams helped them to get the permission to operate. We helped them with their working capital requirement by making early payments. We had special focus on our MSME suppliers. We also looked at onboarding new suppliers, because during COVID, we saw that there could be a particular part of the country which could immediately go under lockdown. If we have exclusive suppliers for a particular material in South, and if South goes under lockdown, business continuity is a challenge. We had to do risk mitigation and do a geography mitigation also and develop alternate suppliers in different geographies so that the lockdowns do not impact business operation. We also learned that getting materials from outside an international supply chain is a big challenge. You all know about the container shortage globally that is happening and the sea freight issues. We are also developing most of the materials that we buy internationally, locally. 50% of the materials are already on way to be localized. There are some proprietary materials that we need to manage. We are looking at exploring all ways to localize imported materials so that our value chain is short and is not impacted by the global crisis. The support was extended to milk farmers in terms of timely payment to them, in terms of picking up milk from them. Our tomato suppliers and farmers came forward with surplus crops. We made sure that we picked up the commitments that we gave to them and even beyond, because we don't buy tomatoes directly, but we buy tomato paste, so we could buy and store them. There was a lot of help that was given to suppliers where, when they were in difficult situation during pandemic, due to drop in demand overall in out-of-home channel and otherwise. We also moved to digitalization in a big way. You would remember that when the lockdown happened, even the courier services were not working for around two months. Our suppliers used to send our bills to us for payment through couriers. We quickly onboarded them onto digital solution, where they could digitally upload their invoice, and that really gained momentum. We also implemented a control tower called Transportation Hub, which started doing tracking and tracing of all the shipments that we have inbound and outbound. Our customers could get automated messages about when the truck has left the distribution center, what is the transit time, and when is the truck expected, so that they can also plan their resources. It was good to see digitalization forcing its way, and I must say that what we were planning to do in three years in digitalization, we could do it in three months. That was a big positive and plus for us. In short, we have grown our supply chain to be resilient and agile during this pandemic by focusing on people's health and safety, by making sure that there's a robust portfolio strategy is in place, and whenever required, if the resources are tight, we can optimize our portfolio for some time to support throughput and business growth, constant improvement and change in planning processes and systems, moving to weekly cadence, looking at refreshing demand supply as often as possible, changing the supply networks with a single-minded focus that our customers should have Nestlé products always with them, and working on partnerships, because if you don't collaborate with our customers and suppliers, we can never win at the marketplace. These were the key learnings that we had during pandemic, and these are the learnings which will stay with us always, and we are proud that we could develop a resilient supply chain during pandemic to help support business growth. Now, the work that we did in last 18 months also found some recognition. Nestlé supply chain team won various awards during last 18 months. We were awarded the Best Customer-Centric Organization, Best Supply Chain and Logistics Excellence Company, a lot of awards on digital innovation and supplier and procurement process improvements. A lot of external recognition also came in our way, which has really motivated the teams to excel further. I thought I would share some of the recognition that we received externally during last 18 months. That's it from my side. Thank you very much! Thank you. Thank you so much, Ashish. Ladies and gentlemen, with this, we conclude the presentations for today. I would now open the session for Q&A. What I would request you is to use the Raise Hands option, which is there on Microsoft Teams. My teams would enable your mic, after which you would need to unmute yourself to ask the question. As is the practice, I would genuinely request that all of you state your full name and organization before asking the question. We have the first question from Manoj. Manoj, go ahead, please. Yeah. Hi. Hi, Suresh, and team. Congratulations for a very detailed presentation with a lot of, you know, updates on all your learnings from what you have done in the last 18 months. Congratulations. Three questions actually from my side, or I'd rather say clarification. The point number one, you know, while a lot of credit is given to you and a lot of your responsible organizations like, you know, Nestlé India, let's say, you give us examples for, you know, really pushing the ESG agenda. I'm just trying to understand the Indian context, you know, where is the regulation, you know, currently? You know, I understand that a lot of these things are likely voluntary, but just correct me if I'm wrong. Basically, what I'm trying to understand is that there is a cost of, you know, let's say, you know, being a little ahead of the curve, you know, from a consumer sense, in the front of you. Let's say, as a consumer, ultimately there is a cost here, right? Whether it is plastic production. I'm just trying to understand where are we on the regulatory front. What I'm interested in understanding is that when does the regulatory essentially move up and where, you know, companies like you are already ahead of the curve. That's point number one. The sub plot there is, you know, in your consumer research and understanding, is the consumer today, let's say, willing to pay that price in the Indian context, you know, for, you know, you being actually ahead of the curve? You know, just trying to understand that first. That's one. The second question, in fact, thank you for that wonderful slide where, in fact, we pre-empted something so wanted to discuss about actually on the ad spend, or the brand spend, rather, you know, still, I would push the envelope a little bit. You know, when I actually, from the denominator, you know, exclude the one category where, you know, there is zero, there is no advertisement whatsoever, I understand that your brand spends are fairly high. The context of this question was, you know, I actually joined about 10 minutes prior, and I was actually watching a lot of the ads, which were actually airing. I just realized that many of these ads, you know, I've actually not seen it, and it has some powerful messages of, let's say, increasing, you know, let's say, how, where and all, you know, MAGGI can be used. I was particularly referring that familiar, which I was just questioning. Just trying to understand that do you think that while you are spending more, let's say, than 2016, I saw that slide of 1.4x was 2016. You know, is that the right metric, or do you think that, you know, let's say in a normal... I know this is again not the right time for this question, when you are faced with a lot of increases. On a normalized way, you know, is there an opportunity for you to invest more and get growth more? That's number two. Conceptually, on your existing, you know, businesses. Point number three, which I keep asking at all points in time, and more silently on, you know, higher innovation and, you know, what exactly are you driving for the next couple of years? Is it more number of affordable packs? You know, so generally trying to understand where is that extra 5% growth over and above the market growth to come from outside of market share, given that you are the market for many of the categories. Thank you, sir. Thank you. Thank you, Manoj. Thank you. Thank you very much for your questions. Thank you for your participation. Let me try and frame the answers to it. I think one of the things, Manoj, that is happening today in the context of the consumer. I must say that this has been exacerbated in the post-pandemic world. Consumers are today willing to pay for more trustworthy brands, better nutrition brands and brands which have got a better signature as far as quality, safety and sustainability is concerned. That is the trend that is happening across categories. When I told you that the time for Nestlé has come, in a sense, I was alluding to this shift between buying at any price versus buying good quality at a price. I think this behavior is getting strengthened in some categories. If you honestly were to ask me, I think as a company, we will still have price point and popularly priced propositions. I think it's still an important part of our business, so it's not going to walk away in a hurry. Nevertheless, I think this consumer trend that is happening, especially in certain of our categories, you know, whether it is, whether it is in the milks and nutrition area or whether it is in the coffee beverages area or indeed in the prepared dishes area, this is becoming an important element of consumer choice. The question is: Is the Indian consumer ready to pay the full price as far as sustainability initiatives are concerned? I think you saw the number ramping up for us from 1x to 12.2x in the last five years. The answer to that is that I think lies in what David also talked about, which is as a combination of getting in greater strengths of equity on the brand, able to get in greater savings as far as Sharks and other efficiency savings are concerned, optimizing a bit more on the value chain that we are able to do as a company, we should be able to mitigate some of this.... The question is, will it be entirely? I really don't know, Manoj. It's very difficult for me to answer that question, that, you know, if all of it will be mitigated. It depends on the strength of the, of the kind of headwind that we are getting. Today, I must say, as I told you know, nine out of the 13 are reaching the 10-year peaks. If this continues, then obviously, you know, there will be a recalibration of how much we need to put behind different heads of expenditure to be able to meet that, to be able to meet that equation. That's, that's as far as the consumer's willingness to pay is concerned. Visibility and advertising, I think the fact of the matter is that, consciously, over a period of time, we have tried to calibrate our expenses more towards core categories, core propositions, and getting the necessary share of voice in some of these categories. I'm afraid some of the ads that you have seen today may not have been the most ubiquitous in terms of the category presence. I think as a combination of some of the initiatives on the media front, that again, David talked about, and using the power of analytics, we are trying to drive the communication both in category, channel, regional basis, as also digital. Digital expenses have also gone up substantially, and that is also giving us a fair amount of benefit in terms of sales. We will continue to invest in growth. I think the question for us is, as a company, we are operating on different spectrums. On the one hand, we are expanding infrastructure, and therefore that is investment. Other hand, we are expanding our presence in categories. We are looking at getting into new categories, so whether it is plant-based proteins or whether it is healthy snacking or healthy aging products, I think these are all again, categories that are opening up, where the company will participate. We'll have to make a judicious balance in where we invest how much. The fact of the matter is that the secular trend that we are seeing now in terms of reducing the pure consumer promotion-led approach to getting sales, to a more equity building approach to getting sales, I think that will strengthen. The innovation platforms will continue to be strong. I think there is. As I said, we have got the innovation bug now, and it is part of the company, so it's within our DNA now to be experimenting and to be trying out new ideas. We will continue to try out new ideas and new categories. Some will succeed, some will not succeed, but as I told you, earlier, Manoj, my task as the leader of the team, is to allow for manageable failures to take place, to teach us and give us the lessons for future success. That experiment and that, let's say, attitude towards innovation will not change. I hope I've answered your questions as best as I could. Yes, Suresh. Thank you. Thank you so much. You know, particularly on the ad spend part, you know, I do vividly remember, you know, watching, you know, what you have done in e-commerce recently, which I did circulate with investors, actually. Truly outstanding work. Sir, just one follow-up, if I may, and that's the last question, and I'll come back in the queue. Just on the regulatory update on the FOPL in India, where are we currently? See, the regulatory, I think, you know, if you are talking about the Front-of-Pack Labelling, I think there are two things, there are two pieces to it. One is on the entire regulatory framework on what will be asked of companies in terms of nutrition profile and in terms of ingredient profile. As you might have read, there is IIM Ahmedabad, which has been given the task of doing a consumer-centric survey to understand the imperatives from a consumer's stand. I think as an industry body, you know, since I sit on the CII as well, I think there is a full support for this. iveness as far as Nestlé is concerned because we have made commitments upfront in 2018 as part of the Eat Right campaign on reductions in salt, in reductions in sugar and reduction in fat. We will be supportive of this journey. As far as some of the other mandatory regulations were concerned in terms of front-of-pack labeling, I think it has been now, permission has been given till July of 2022. That is also something that we will implement as and when it becomes mandatory. Sure. Sure. Thank you. Thank you, sir. Thank you, team. Appreciate. Thank you. Thank you, Manoj. We have the next question from Percy now. Percy, you can unmute yourself and go ahead. Percy, I would request you to please unmute yourself and then ask your question. I think Percy is having some. We'll come back to Percy. I think, ask the next question, and then we come back to Percy. Yes. Yes, sir. Arnab, you're next in queue. Request if you can proceed with your question. Yeah. Hi, Suresh and team, and congratulations on very consistently delivering high growth over the years. My first question was on distribution. You showed that chart where, you know, the, your rural number of villages coverage is increasing and you aspire to go up further. However, your direct reach data seems to be, like, static. I just wanted to understand, if you would help us appreciate that disconnect, and, when you talk of covering a village, what does it entail? How do you kind of ensure that it's reaching, all the outlets in that village or a substantial, number of outlets? Good question, Arnab. Nice to hear your voice, once again. Look, you know, distribution, there are different ways of skinning the cat. One is by having a direct, distribution model. One, of course, is, you know, you go through an omni-channel approach, which is what companies are looking at today. If you look at, the kind of brick-and-mortar distribution models today, you've got the capability of trying to expand your own direct distribution, and you also got the capacity, or you need to develop the capability, of being able to do auxiliary, indirect distribution models. When you get into the hinterland, and when you talk about a greater capillary distribution, the incremental cost or the incremental return on distribution, is much lower than the incremental cost of distribution. Therefore, while in urban centers, we look at direct distribution models and look at increasing direct coverage, because the throughput size, the portfolio profile, the future value addition capabilities are distinct. In many of the areas where we are trying to seed the portfolio for the first time, auxiliary distribution models work better. That's the reason why we are looking at the auxiliary distribution model of doing two things. One, we are creating more rural distributors, and we are creating more wholesale hubs. As you know, in India, there is a combination of the two. There is rural distribution, which is distribution done by rural entities, and there is wholesale hubs, which leverages on the wholesale dimension of trade in this country to also give you availability and access into the villages. We are choosing more this model to try it out. It is possible, Arnab, that after a couple of years, there might be a situation where couple of Tier 4, 5, 6 towns and some of the surrounding rural hinterland might actually lend itself to a direct distribution model. Today we would rather go with relatively lean and mean and lower cost, higher efficiency models in order to get the portfolio availability and accessibility happening, and then look at augmenting it with direct distribution models. That's generally the approach that we are taking as a company. Just one follow-up to that. In, in practical terms, I mean, would it mean that, you know, there is a wholesale hub and you kind of assume that the villages around that get covered? When you say 100,000 villages, is there a way you figure out that you actually have reached 100,000 villages? Yes. through that wholesale hub strategy? Yes. What we do is that there is a tracking of outlets as far as, or access points, as far as the wholesale hub is concerned. Remember, you know, Arnab, the question is not just of keeping stocks at that wholesale hub. You have to have a service platform, you have to have a credit platform, you have to have a sales incentive platform, you have to have your sales guys going there and doing calls. You will have your auxiliary field force actually visiting some of the villages to check whether availability is actually there or not. You know, your wholesaler can tell you, "I'm covering Arnab Mitra's outlet in Barddhaman," but actually, it's not there. I think. It is as tedious as creating your own distribution model, except that you use a third party as an entity, and you don't try and create it yourself. Understood. Thanks. That's very clear. My last question was, you know, two categories or brands where I think at least a lot of investors had a lot of expectations from. One was Milo, the other was NESPLUS. We haven't seen probably you put as much effort after maybe initially trying. Is it a choice that you're anyways growing well in other categories, this is a battle you want to fight later, or is the incumbency just too strong in those segments for you to break through in a few years' time? No, I think, I don't think there's any lack of seriousness in the intention, Arnab. I think one of the things that clearly during the pandemic, as Ashish also explained to you, there is a clear focus on protecting the core. That's really what we have tried to do, protecting the core of the company, which is the four or five categories in which we operate, which are stable. The intentions on brands like Milo and breakfast cereals continue to be very strong. In fact, in the context of the rural strategy, we might be able to unveil growth engines for these brands that could be quite distinct and different. That's the way we look at it. Don't discount Nestlé ever. We can be delayed, but never denied. Thanks so much, Suresh, and all the best. Thank you. Thank you, Arnab. We'll go to Percy now. His mic issues have been fixed. Percy, over to you. Looks like Percy doesn't want to speak to me. Percy, you have some anger with me, huh? We have to settle it over a kebab, I guess. Okay, I think there's probably some network issues. We'll circle back with Percy later. Next in queue is Nirman. Nirman, over to you. ... Hello, good afternoon, Suresh and the Nestlé team. My name is Nirman, I'm a private investor. I have only one question, and there are three facets to it. This is relating to the pet care business of Nestlé. The first part is my understanding correct, that the pet care business of Nestlé currently resides in Purina Petcare India Private Limited, which is a fellow subsidiary of the Indian public company, but not a part of the Indian company. The first question is: Is that understanding correct? The second question is: Is there not going to be an opportunity for the minority Indian public shareholder to participate in the growth of the pet care business, given its size and scale globally in other countries? Thirdly, is the management of that business, sort of shared with the Indian public company? Thank you. Look, I think it's a very good question, Nirman. You know, when we decided to, or when the Nestlé group, not Nestlé India, but when the Nestlé group decided to go to set up an independent entity for the pet care business, it really stemmed from two or three things that were different at that point in time. Number one was category familiarity. I mean, there was nobody within this organization here that had any great category familiarity as far as pet care. The rules of pet care are quite different in terms of channel marketing, regulatory affairs, et cetera, et cetera. That's Number one. Number two, there was no synergy seen in terms of the core channels, because the pet care went through, largely through veterinary stores and through pet shops, and less extent coming out of modern trade or any of the other things that they went through. The third element was really the kind of attention, time and focus that needed to be provided to this business in order to get it off the ground. Those were the three reasons that it was kept aside of the Nestlé India network. The fact of the matter is that the business has got off to a good start, and it's doing fairly well. I think we, as a company, will continue to evaluate the opportunities for growth, and in terms of where it sits and how it sits. I mean, it's not, you know, these are not decisions that are cast in stone for all times to come, but this is evaluated, consequentially, every year or every couple of years. In order to, if it, at some stage, ever makes sense, that it should be part of Nestlé India, in order to harness the greater equity, heft and salience of the organization, that would be something that would get looked at. At this stage, I think it is working quite well. It is a member of the Nestlé family, let's be very clear. It is not that, you know, it is left, you know, I don't have any active management in it, that's for sure. It doesn't mean that the Purina Petcare colleagues don't have access to friends and expertise within the Nestlé organization in order to help them to open doors and to, and to seek opportunities. That, that still continues. We are focused on getting the pet care business right, and I am focused on getting the rest of the portfolio right. Great, thanks. Would you be able to share the scale of that business? It's a reasonable sized business, Nirman. We are quite happy with. It's a couple of million Swiss francs at least. It's encouraging, and I believe that, you know, watch that space as well. Thank you, Suresh. All the best. Thank you. Thank you. Thank you so much, Nirman. I believe we have our next question from Shirish. Shirish, go ahead, please. Shirish, you'll have to unmute yourself, before asking the question. Yeah. Hi, Suresh. Good evening. Good evening. Thanks for the opportunity. What I learned while my days back when we were working together, you were always averse for wholesale. Now I'm seeing that you have made some comment which is very positive. In the Indian context, I think wholesale is a double-edged bunny. I mean, if it is opportunity, you will definitely get, but extracting the juice out of wholesale distribution is a challenge. That's what my experience goes back. How are you managing? You mentioned that you are covering 100,000 villages. What is that art or what is it that it is doing? I'm asking this question in the context during pandemic. I came to see that small pack for MAGGI was not available, and now is that the strategy now we have sorted out the supply chain is going to be a big bumper growth driver for your company? Thank you, Shirish, for your question. Yes, you hark back to the days when we were getting worried about Colgate Dental Cream 50 grams, getting an overemphasis on, on wholesale, and when I was the sales director of Colgate. That's a different, a different context. You know, a brand that is, that is overchoked as far as the wholesale channels, and we're talking about 20+ years ago, where there are key issues in terms of consumer demand and offtake, the response can be very, very different. I think today what we're looking at is two objectives: One, getting the portfolio of the company in its relevant form into as many outlets as possible. Number two, being able to do it most efficiently and cost-effectively, as compared to creating your own distribution infrastructure for it. I think there is therefore, brands which have got reasonably strong pull, and they are put into wholesale channels in geographies which are a bit more difficult for you to set up your own distribution models immediately or where the costs are extremely high. You know very well, Shirish, from your days, and I certainly remember from my days, that brands with a strong pull always do very well in wholesale. Of course, there is the truth that the wholesaler is nobody's friend, so the minute somebody comes with a decimal point of higher margin, he goes towards that. I think we will. This is not the end game that we are looking at. It is not that the model will be exactly this for all times to come. Today, what we want to do is to capitalize on the increasing salience, using speedy, efficacious, efficient and linear models in order to ensure distribution as a combination of creating rural distributors and wholesale hubs. Later on, if we find that there is a opportunity there, and that was really the question that Arnab also asked, if there is a possibility to create our own distribution model there, we will create it. It is no aversion or any great love for the wholesale channel. Okay. My second question is on the new product. You last time when we had a physical meeting, you were very positive, and now you have data to back it up. Resource is one of the big achievement you guys are having. Other than Resource, if you can quantify, which are the other promising products, you think? Maybe if you can spend a minute, how Resource is shaping up, and maybe quantitatively, if you can tell us how it is in terms of numbers. You know, if you're talking about Resource High Protein, I think the brand is doing extremely pretty well. It gets about 15%-20% of its share from e-commerce, actually. It's a very strong e-commerce brand. It is in my belief, and many people tell me this, it is the best protein supplement you can get on the market, 78% whey protein and the least amount of sugar that you can get. Therefore, it is working well. There are other products. Unfortunately, one of the launches there got affected by the pandemic. It's a product called Optifast, which is an obesity control product. We are really looking at that becoming now, hopefully in the post-pandemic world, where the bariatric surgeons start to operate. You know, this kind of product also has room in fertility, infertility clinics, because, you know, weight management is also one of the issues that they tackle there. I think the health science portfolio for the way we see it, is it's a relatively small business today, but it's a very promising business. In a post-pandemic world, Shirish, you know, the strength of that business lies in the efficacy of its products. You find, and I anecdotally can tell you, I get enough requests every week for somebody asking me for, you know, Resource Diabetic or for Resource High Protein or for Resource Hepatic or for Peptamen or, you know, some of these products, because these are highly efficacious products, and where people are going through different kind of health-related issues, I think it's a powerful proposition. We will be working on products like this and more in the nutrition space as we move forward. These are done well. You know, some of our other products also in the MAGGI space have done well. The Masala-ae-Magic products, which have been, some of them have been relaunched as for the South, are doing extremely well. The Nescafé Black Roast that has been launched has also got off to a good start. There are different products that we have launched in different stages, which are picking up well. Some of it, unfortunately, gets clouded because of the pandemic, that there is an operational slowdown somewhere and a shutdown somewhere, and therefore it has to bounce back. I think fundamentally, we've got 10, 15, 20 products in the pipeline and also which have been launched, which are quite promising and capable of taking that dial from 5% upwards. Okay. My last question is on the margin. In the bad times, not bad times, in the say, last disrupted times, you have very well managed your cost structure. If inflation is there and if inflation is going to be benign, I'm not saying guidance, but is there a case that your margin will be little higher? I'm not saying% term, I'm saying absolute margin should be higher. Meaning, well, you know, absolute margins will also be determined by the NNS of the company, so the net sales of the company. Therefore, to that extent, look, you know, traditionally, when the market moves between 200 to 300 basis points of variation in commodity costs, it helps the company as a consequence of its various, both pricing, mix, and also the sharp savings, to be able to mitigate most of it. If it becomes 500, 600, 700 basis points, which commodity inflation could get to if it is unrestrained, then the challenges become much more in terms of maintaining the margins in the short term at those levels. What we will not sacrifice is a wholesale jettisoning of the growth model that we have created for the company. If you're telling me, you know, Suresh, there is a 20% increases in costs, please increase your prices by that much. We will sweat a lot because that will kill the growth model of the company. Let's be very clear, anything multiplied if the growth number is zero, that multiplied by any margin will be zero. You're not going to get very much out of it. I think we will try and moderate it as best as we can. As David very clearly explained in his slides, there are capabilities within the organization to manage things at up to a certain level, which is what we have done, and therefore, you see the steadiness of the margins. Yeah, that's it from me. Thank you, Suresh, and all the best. Thank you. you. Thanks. Thank you. Thank you, Suresh. We reckon Percy is now ready. Yes, Percy. Please go ahead. Percy, you're genuinely angry with me, huh? I mean, I don't know. I think, we'll have to circle back again. Sorry, everyone. Tejas is next in queue. Tejas, go ahead. Yeah. Hi, Suresh. Am I audible? Yeah, yeah, you are very much. I'm not angry with you. Yeah. Coming to, thanks, first of all, thanks for a very detailed presentation on Friday evening. First, Suresh, under your leadership, we have seen many initiatives like bolder commitments to NPDs, not being afraid of getting failures there, more consistency in growth, profitability, and now a very big CapEx. Considering the penetration level of our portfolio, our aspiration and our, more importantly, our capabilities, when we look at that, we think that, do you think that the slow double-digit growth does justice to our strength and opportunities in the market? What can take this aspiration to, let's say, something like mid-teens or higher kind of number on terms of revenue growth alone? Look, good question, Tejas. You know, in my view, there are three capacities or capabilities that organizations with this kind of opportunity will need to demonstrate. Number one is what is the business model that we are talking about? You know, Tejas, I can give you a 20% growth model, but if I give you operating margins of 5% and 6%, you guys will shoot me down saying that your valuations don't justify anywhere near it, and you should really junk the model that you're talking about. I think you need to look at it as a kind of a entrée to dessert dish that we offer, meal that we offer, rather than focus on just one part of it. We need healthy growths, we need improved penetrations, we need penetration-led volume growth, but we also need sustainable margins and profits coming out of this business. Otherwise, it's of no interest to you, it is of no interest to any other investors, it's of no interest to the company. That's the way, that's point number one. Number two, sometimes the comparison is made that in some categories, you are able to ramp up numbers extremely quickly, and you're able to go from zero to 100 in less than 10 seconds. In food products, Tejas, one of the challenges is habits take time to establish themselves. It is not as easy as you think. You know, a MAGGI Noodles for the first 15 years made a deadweight loss. It took that much time for the brand to establish itself. Today, we talk about the iconic nature of the brand and the fact that it went through a huge crisis and still came back strongly. All that is fine. The fact of the matter is that habits in food take time to build. Therefore, there is a certain gastric capacity that the organization needs to have in terms of managing the short, medium, and long term to be able to make these businesses happen. I think that the third thing is organizations in a rapidly changing environment, organizations also are rediscovering different business models in order to get their appetite and their objectives in terms of penetration and in terms of growth. Today, that is rapidly changing. You know what? E-commerce, what it was two years ago and what it is today is very different. Digital technologies are very different. The whole modern trade space is going through a huge change. I think companies also need to manage this capacity and capability to embrace the changes that are taking place in the market. Number one, business model. Number two, gastric capacity and the need and the time it takes for change. Number three is adapting to new opportunities and business models. This is where some of what David and some of what Matthias talked about are relevant. Making the organization more simple, standardized, greater access on empowerment, greater access on speed, greater access on data and on data-related decision-making, greater power of analytics. All of this will help us to embrace that third capacity a lot. What I believe, honestly, Tejas, is that it is better to play this game in a consistent and in a steady manner, than for me to give you one quarter of 20% growth and next quarter of 2.5% growth. I don't think you would be very happy with that kind of a performance, because you'll say: "Look, you know, you guys are bizarre in terms of what you, what you do. Yeah, fair enough. I am boringly consistent, but I'd rather be boringly consistent than intemperate, and completely unpredictable. Sure. We'll any day go for boringly consistent. Second is when we look at our portfolio and respective categories, at least at this stage, it has a lot of urban and premium print and then mastheads. When we saw your presentation, you spoke about our aspiration to leverage urban. How do this match? Does it mean that we'll have to do alteration in our portfolio to expand to those opportunities, or the same portfolio can do it? Well, honestly, Tejas, you know, there is a difference between what you perceive and what is the reality of the Nestlé portfolio. Nestlé's portfolio is almost 30% popularly priced products. About 15% premium, as premium, and the rest of it is mainstream. Mm. Contrary to your understanding that we are a pure premium player, and therefore it is difficult to find resonance in RURBAN and in smaller markets, actually, the contrary is true, that we have a fairly strong PPP portfolio that has remained robust for a while. We have a mainstream portfolio that's very strong. We have a premium. That premium is more urban-centric, albeit, and therefore, when I talked about customizing the portfolio, that's what I meant is, I will not take all my super premium products and put it down. For example, you know, Shirish talked about Resource High Protein. I will not take Resource High Protein and put it in some village in Uttar Pradesh, because it's not going to sell very much and nobody will understand why should I pay, you know, INR 400 or INR 500 for this for this pack. Sir, what will be your top three brands to penetrate urban apart from MAGGI and... Again, it'll depend. You know, it's a geography cluster center, but the core portfolio of the company, which is, you know, milks and nutrition, coffee, part of the confectionery portfolio and, the prepared dishes. You know, combinations there would still be the most relevant, that we see. Sure. last one from my side. On food products export opportunity, what is the real potential here? What are we doing on at least can we tie up the skeptics to that opportunity, what we are doing in Sana? Well, we do. We do have a reasonable sized export business, about 5% of turnover. Let's be clear, Tejas, I think for Nestlé India, export is more a sourcing opportunity, because I cannot take my Nescafé and start launching it all across the world when the U.K. and the U.S. and every other market have got their own brand. You know, it doesn't make sense for me to take a Nescafé from India and go launch it in the U.K. and say: "Look, we got a Nescafé." The fact of the matter is that it'll have no traction. We look at more as developing the opportunities out of India because of the large Indian diaspora, and therefore, the opportunity is there. Sourcing opportunities in the region, whether it is Bangladesh or whether it is Sri Lanka or whether it is Singapore or Malaysia or any of these countries, sourcing opportunities there. Developing the Indian portfolio in countries like U.K. or U.S. or Canada or Australia, where there is an Indian diaspora and people. You know, it's anecdotally told that when a youngster goes to the U.S. to study, he carries 19.5 kilos of MAGGI noodles and one jean and one T-shirt. It is to... Later on becomes a billionaire in Silicon Valley and still continues to enjoy his MAGGI Noodles. It's that kind of portfolio that we would like to, or that kind of consumer that we'd like to keep going with our brands. Thanks. Thanks for a very detailed answer. Happy Diwali to you and whole team. Thanks. Same to you, Tejas. Same to you. Thank you. Is Percy back? Sorry, sir? Is Percy back? I think we're still trying to work with him, but Vivek is next, so we will go to Vivek. Vivek, just unmute your mic, please. Hi, Suresh and team. Very good evening to you. Am I audible? Yes, very much. Okay. Suresh, my first question, and sorry, it's a follow-up to, you know, what Tejas asked you just now, on the growth side. You have given a very detailed answer, so I will, you know, and incidentally, I have had the same question, but two sub points, you know, to that I wanted to pick your brains on. One is basically, if I look at 2007-2011, Nestlé Group compounded at about 20%, per annum. If I look at last five years under you, it has been very consistent. What will take it, you know, to push up the growth rates? You know, was it just the economy, you know, doing very well and once, you know, growth picks up... It's more of an external economy factor, rather than anything internal, because you have launched, you know, as many products as you could have done, distribution, expansion, et cetera, et cetera. I'm not talking about, you know, the base has moved up a lot, so I'm not saying 20%, but maybe 15%. What will take it to grow to that level? That's one part. The other part is, you know, if I look at 2010 versus 2020, your gross margins are up almost 600 basis points. Your EBITDA margins are up almost, pre-royalty, almost about 450 basis points. Suresh, I hear you know about, let's say, we don't want you to get into a 5% EBITDA margin business, but what's the harm in, you know, getting into a 15% EBITDA margin business? If it dilutes your earnings, sorry, margins, if it's incremental rupees or dollar profit, what is the harm in, you know, capturing the bigger piece of that cake or the opportunity? Good question, Vivek. I want to keep you recorded. The day I record 15% margins, I want to see what this Vivek will do. He'll probably dump into the Ganges, and he'll get David as a witness for that. I think. No, just to clarify, Suresh, 15% margins on incremental portfolio. I'm not saying the blanket margins on the portfolio. You are anyway sitting on 24% EBITDA margins, right? Yeah. My point has been consistently, if that goes to 20%, but your growth accelerates, is that a big problem? I don't know. I don't think so. No, look, I don't think... No. Let me be very, very clear, Vivek, and it's as straight an answer as you can get. I'm not, and my team is not in the business of low-balling growth numbers. I don't think we would have reached where we are by understating our ambitions. As I told you, I go back to the point that I made earlier, on this. There is a clear opening up of the portfolio in India, the way I see it. That growth, while we expect it today to help us to continue the double-digit, maybe it is able to give us a bit more. That's a clear possibility. I'm not ruling it out, but again, at this stage, I would rather work with a more realistic plan rather than with an overambitious plan. Number two, I talked about the gastric capacity of sustainability of the portfolio in the rural markets. The consumer finds the brands attractive, but it makes it worth my while only if it continues over a period of time. I think that is the longevity that we have to give it in order to establish that these categories are truly working. Today, the signs are very good. You are seeing that, you know, the last four-year growth going up from 10%- 16% is not small numbers, and these are fairly reasonable numbers. I think that's the second one is on the sustainability of the portfolio. The third one is, yes, you know, we are in the process of putting together at least two or three new category entries. Those can give us an extra dollop of growth. Hopefully, it can give us growth which is, which is, you know, not diluted in terms of the margin that we have got. I think the fact of the matter is that the way the economy is evolving, the way the trend lines are showing for us, one of the things in establishing a 15%, 20%, 25% kind of growth model is also a fair amount of stability as far as commodity prices are concerned. Because adoption is a question of also affordable price points. If sitting with 600, 700, 800 basis points of headwind, I go in with price points that are unaffordable, then I have to wait for the storm to subside before I start getting adoption levels going up. At the same time, with such kind of inflation levels, if I decide to forsake the category margins and go take it down reasonably, substantively, there is no guarantee that this will remain consistent over a period of time. I think it is between a rock and a hard place as far as putting up numbers there are concerned, which are much higher than what we are doing today. The objective of the organization, let me be very clear, is if the exercise that we are opening up to gives us a incremental opportunity, believe you me, the bias is for growth. We will go for it. Very, very good to know that part. Now, the second question is, you know, slightly opposite to, you know, what I asked on the earlier one. Suresh, when, let's say, you know, if you are sitting in 2015 or 2016, when you took charge of Nestlé India, let's say if you know, you would have certain thought process about how India will evolve over the next 10, 20, 30 years, because packaged food runways for growth is very, very long and very high. How do you... You know, there is this sudden phenomena of food aggregators, Swiggy, Zomato. As a customer, I have two choices: either to cook MAGGI Noodles or actually order a vada pav, which, you know, which Swiggy or Zomato actually, you know, pretty much delivers, let's say, for INR 30-40 evening snack. How do you think about, you know, let's say, what you probably would have thought in 2016 versus what you think in 2021? Do you think the long-term growth rates of packaged food industry have gone down a bit, at least a slight bit, you know, if you take a 10-20 years view because of this aggregator phenomena? Do you think that both will coexist and... I mean, I would love to know your thoughts on these things. Look, I think, you know, let's be very clear, Vivek, the packaged food phenomena is a relatively new phenomena in this country. We still have a larger corpus of the population, and on the assumption that they recover economically and their income levels come back, you know, there is an assumption there that I'm making. Their proclivity to buy branded quality, safe products is far more today than what it was five years ago. Earlier, you were looking at today, for example, I mean, and you know, Vivek, very well, the growth of some of the staples has been on this phenomenon, that consumers have said: "Look, I want quality stuff, I want safe stuff. I don't mind paying one rupee more, but I need something or two rupees more. I still need a very, very safe products to consume. In the post-pandemic world, it is going to be even more. Honestly, the opportunity of in-home penetration that a retail brand might have lost because of food aggregators coming in, is more than compensated for by the incremental number of households that will move into the packaged foods category in some form or the other in the next couple of years, versus the phenomenon of seeking better quality, better value, better nutrition, and better reliability over a period of time. I don't see this... In fact, some of us, you know, and Nestlé included, are looking at working with food aggregators to see how our brands can be part of it. In fact, we've had very good experience with people like Swiggy and others. You know, we started this before the pandemic actually, where we looked at, you know, creating the Happy Bowl with these guys, because the brand is so powerful that, they said, "You know, people would love to have this MAGGI at their home." Okay, it goes in larger, packs for out-of-home. We can coexist, but the size of the price on adoption is much bigger than what you can, at the fringe, lose because of, food aggregation. Got it. Got it. A last question, if I may, and sorry if it's a naive question, but, you know, I'm seeing a lot of your peers on the personal care side, you know, caught by surprise with this D2C phenomenon. I know foods is a bit of a different, you know, and you are also doing e-commerce. You know, Suresh, is there a possibility that, you know, let's say, foods as a segment versus personal care, is, let's say, five to 10 years behind on the D2C curve? Does that mean there is a very strong, you know, rationale for you to basically be aggressive in that space? Because at least on the personal care side, I see a lot of companies trying to do a damage control. I take an example of, let's say, someone like a Titan. Titan acquired CaratLane way ahead of its time, and, you know, and the rest is history, as you say. Do you think there is a strong case, or you think foods as a category is very different and therefore not conducive for D2C because growth margins are lower? There may be some other nuance because it's more, it's more oligamous or whatever, you know? We'd love to know your thoughts on this. I think, you know, all I can say in Hindi to you, Vivek, is..., it's not that it's not for Matthias and David, it basically means keep waiting and see as the picture unfolds. I think, you know, it's not a no-no for us, Vivek. We are looking at how best to differentiate, discriminate, the offerings and make it robust and engaging for the consumers. I don't want to create a platform that is going to compete wholesale with all the other platforms that I'm dealing with, because my job is as a purveyor of brands. I am not a retailer, and I'm not a channel manager. To that extent, I'm trying to look at how we can sharpen the proposition. It's an area of interest for us. It's not that we are naive to it or we are blind to it. Got it. Thank you, as always, Suresh. Thank you all. Okay, welcome. Thank you, Vivek. We have around 12 minutes left, so we'll try to squeeze in as many questions as we can. Next is Avi Mehta. Avi, go ahead, please. Hi, sir. Am I audible? Very much. Yeah. Hi, this is Avi here from Macquarie. I just wanted to follow up on the, you know, the last question that Vivek also highlighted. You did have to say that your portfolio is a lot more, you know, mainstream, you know, in terms of focus. Is it wrong, or is it fair to say that rural share of mainstream, and, you know, popular products or low-priced products would be higher than what your portfolio share is? Is that understanding wrong? If you could kind of help us decipher that, please. We are talking two different things. The portfolio being between PPP, mainstream, and premium is relevant to brands, categories, and price points. I'm not for a moment comparing my price points to, let's say, toilet soap or to toothpaste or to any of these categories, where the cost per gram or cost per unit is very different. We look at it relevant to categories and the average price point of, let's say, 100. What part of the portfolio is popularly positioned products, what part of it is mainstream products, which is between the PPP and, let us say, the premium products, and what are genuinely the premium products? Clearly, the relevance of this portfolio, the way the mix is very different in the mega cities and metro cities as compared to Tier 1 to 6. That's absolutely clear. I mean, I'm not for a moment saying that Nescafé Gold sells more in the rural markets as compared to the urban markets. No, it's still very, you know, urban-centric, and within urban-centric, particular class of outlets is where this brand really goes well. Overall, as a company, I have a roughly an 80/20 or 75/25 share between rural and urban. This, I hope, is likely to move upwards with over a period of time, with the sustained unleashing of the rural potential. Okay. The portfolio will still have its geographic biases, depending on the purchasing power, catchment area in particular geographies. The overall business contributions between rural and urban, I see it moving upwards if the exercise that we're doing as a company sustains itself, and we get the kind of growth that we're getting over an extended period of time. Okay, sir. Okay. Okay? I get it. Just a related bit, you know, and more from a near-term lens. If, say, for example, the inflation, surprises us, and, you know, it kind of rises to the 500, 600 bits that you were kind of highlighting, that becomes disruptive, would you then relook? How would you balance between this initiative and, you know, margins? Because clearly, though, that would be a time that, you know, some hard decisions would be taken, need to be taken. I just wanted to get your thought process on the same. Look, let's cross the bridge when we get to it, Avi. I think, you know, it's a bit premature to do it, but I think, you know, again, my colleague, David, put out the three vectors very clearly. Sharp savings, portfolio efficiencies, and squeezing more from the investments that we have got, and pricing. What I can tell you is that the core of the company is still looking at penetration-led volume growth. What I would urge you as analysts, as investors over a period of time, please don't flatline margin deliveries and assume that everything is going to be sanguine for the next year, two years, three years. There will be some wobbliness, depending on, as you rightly said, Avi, whether the outlook on commodity headwinds are 200, 300 basis points or 800-1,000 basis points. The equation will completely change, and the business model of the company at that stage will not be that I drop my margins, 1,000 basis points and say: Look, this is what it is. Now, take it or leave it. No, I get you. I get you, sir. Fairly clear. Thank you very much, sir. That's all. We'll have to cross it, Avi, hope and pray. I mean, in the Diwali time, don't pray that we land up with 500 to 1,000 basis points. Yeah. I understand. It's a reality we have to look at. I mean, all I'm saying is, I don't want to sound like a Cassandra on food inflation, the fact is global commodities are moving up pretty sharply. No, fair enough. I hear you. I hear what you're trying to highlight, and I kind of take that. Again, sir, seasons greetings to the entire team. Thank you. Thank you. Thanks. Thanks, Avi. We'll take in a couple more questions, one from Aditya, followed by one from Latika. Aditya, why don't you go first? Yeah, hi. Thanks, happy Diwali everyone. My question was on your on Prince again. You talked a lot about and explained a lot about efficiencies that you've gained, and that there's been incredibly efficient in doing that and getting more and more efficiency out. The question is: would you look to use that efficiency to and pass it on in terms of either developing new brands, or would you look to say, drive margins up further, given that you're already at record margins, maybe significantly higher margins than even the parent company? I think, look, efficiencies are broadly used in order to mitigate the circumstances that face you in the total P&L as far as costs and commodity-related costs are concerned. The challenge that we have as a company, with Shark and with other savings that we are looking at, is to try and see how much of that commodity headwind or cost headwind are we able to mitigate. I don't think as of now I have had the luxury, I must confess to you in all my six years in this market, of discussing with my finance director and saying: Let's flow it all to the waterline of this company. Unfortunately, we don't land up with that kind of situation. Where we land up is to really try and keep our margins the way it is to try and squeeze out. Efficiency seeking, let's say, Project Shark seeking, I assure you one thing, Aditya, whether we have a commodity headwind or a commodity tailwind, Project Shark and the other efficiencies in this company continues. It is like sharks, they have to be fed. I mean, there is no question of suddenly saying that, you know, we're not going to be having these programs. These programs will continue, but it is as a result of these programs, as was explained by my colleagues, that we are able to mitigate a lot of the headwinds that we get as far as commodities and other costs are concerned. That, I think, is going to be the challenge going forward. All I want to tell you is that the company is prepared for it. You know, The company has a DNA, it has a culture, it has got the necessary R&D technology heft, it has the operational competencies, and it has got the scale to be able to manage it as best as it can. Thank you, Suresh. No, that was very clear. Season's greetings to all of you, and thank you. Thank you. Thank you. Team, thanks for the detailed presentation. Certainly appreciate the ESG insights from you. My first question was on market shares. You know, I understand markets have been quite disrupted over the last year, but any qualitative sense on how shares have been trending across key categories for you? The second bit was if, you know, you could provide a little bit more color on how the mix and growth is shaping up for the two main subsegments under milk and nutrition, you know, infant nutrition and the dairy whitener business. What kind of confidence you have that this segment could, you know, deliver a double-digit growth pace like the rest of the portfolio? I'm just trying to understand whether the industry dynamics are such that don't really allow that kind of growth, or you think otherwise. Look, I think, let me take your first question on market shares. I think market shares, you know, one of the, one of the disruptions in the pandemic has been, is that the measured market shares coming out of Nielsen have been a bit wobbly. Let me be putting that upfront on the table. That's because, you know, retail surveys were not possible. The kind of enumeration process that they go through also had a lot of infirmities because of the lockdowns and various other things. Having said that, you know, we have got our own database as well, our redistribution data and other syndicated data. Our market shares have actually in some categories improved, but have been broadly as a company stable. We maintained, you know, in I believe in seven out of nine categories, we are market leaders. We continue to have that market leadership. I think we have not lost any ground in in that. The question, however, is how will this evolve as you go forward? That time will tell. I think the portfolio itself has been quite robust and strong, despite the vagaries that we have had in terms of the of the pandemic. If you look at our milks and nutrition portfolio is concerned, I think there has been some impact. The impact has been on the milks part of it, because some of the key milk geographies have also been very badly affected because of the pandemic. For example, places like the Northeast or Kerala or some of these places where we sell a fair amount of our dairy whiteners, they have taken a beating because of the pandemic lockdowns. It's got technically nothing to do with the brand, but, you know, it's, if you can't distribute and you can't make it available, you're not gonna, you're not gonna record a ticker as far as the cash register is concerned. Therefore, that is some of the things. If you look at the overall portfolio itself, it continues to be fairly strong. Let's be very clear, you know, the products there, the nutrition products are stage of life products. And in stage of life products, you can't make the same assumption that you will, you will make for products that are consumed over the next 15, 20, 25 years. MAGGI Noodles or chocolates or a coffee is over a fairly long period of time. Whereas, in a nutrition product is over a certain window that you're looking at. So, I, you know, it's... But it's an area of strength for the company. That whole category is an area of strength, I think we will continue to innovate, you know, especially in the toddler nutrition area, where we have seen very good growth, Latika, coming in. Brands like Ceregrow and LACTOGROW are doing quite well. There is an increasing tendency for mothers to look at quality nutrition there, to look at efficacious and trustworthy products for their kids at this point in time. I think that gives us hope to be able to have new initiatives as far as the toddler category is concerned, where there are at least 25 million-30 million toddlers in the SEC A+ age group, or parents in the SEC A and A+ age group. Very clear. Thank you so much, Suresh. Thank you, Latika. I hope you're keeping well. Yes, all good. Thank you. Thank you. Thank you, Latika. With those are the questions that we'll take in the designated time. Any final words from you before we wrap up the session? I don't know. Is my friend Percy on? No, sir, doesn't look like it. Okay. I'm deeply saddened that Percy is not on. Percy, you owe it to me now. you know, we should have some time together next time we meet. let me firstly really thank everyone who's joined the call. I deeply appreciate your time, your energy, your spirit. I know this is a Friday evening, so this is not the best time to be talking about many of the topics that we have had. I really want to thank you all. I've, you know, many of you, I've got to know you over years now, and I think there is a relationship that goes just beyond the usual company versus investor or analyst relationship. We understand each other better. Today's presentations, I hope you have found them useful. We have opened the doors and windows, a lot more in terms of what we do and what we share. I do hope it gives you a very granular appreciation of the ESG journey of this company, which is not greenwashing, which is all stuff that we do, that we practice, that we are beholden to, that we are committed to over an extended period of time. I really, really thank you for your time and attention, and looking forward to catching up with you guys, sometime in the new year. Till then, have a happy Diwali, and have a merry Christmas for those of you who celebrate it. Thank you very much for your trust and for your confidence in the Nestlé company. Thank you very much. Thanok you, sir, and thank you to everyone for joining in. With this, we conclude the session. Thank you. Thanks a lot. Thank you. Thank you all.