Ladies and gentlemen, good day and welcome to the Tata Consumer Products Q1 FY 2022 results conference call, hosted by ICICI Securities. As a reminder, all participant lines will be in a listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone telephone. Please note that this conference is being recorded. I now hand the conference over to Mr. Manoj Menon from ICICI Securities. Thank you, and over to you, Mr. Menon. Hi, everyone. It's an absolute pleasure at ICICI for us to host the Q1 FY 2022 Results Conference Call of Tata Consumer Products Limited. The company is represented today by Mr. Sunil D'Souza, Managing Director and CEO, Mr. L. Krishnakumar, Executive Director and Group CFO, Mr. Ajit Krishnakumar, COO, Ms. Nidhi Verma, Head Investor Relations and Communication. Having covered the Tata Consumer stock over the last 14 years, this analyst and ICICI, we continue to have a constructive view. Over to the management for the opening remarks and the Q&A after that. Thank you. Thank you. Thank you, Manoj, for hosting us, and hi everyone, and welcome to the call. Hope all of you are keeping safe and doing well. In terms of the format for today's call, we will spend about 15-20 minutes giving you key updates and highlights of the quarter, and then reserve more time to answer your questions. Without further ado, I would now like to hand it over to Sunil. Sunil, over to you. Thanks, Nidhi. I'd just like to add to what Nidhi said. Compared to our earlier calls, you would see two differences coming up. Number one is the timing of the call. We've got feedback from various quarters saying we were not giving enough time to people to digest the numbers and the disclosures before the call, therefore, they would like more time so that they can ask more questions. That's why while we were ready with our results yesterday evening, we've chosen to have this call around noon today so that all of you get time to go through, understand the details, so that we can get into questions. That's number one. Number two is we've already uploaded the deck. We would want to spend time only on a few pages, giving you the highlights, so that, again, we reserve more time for Q&A in line with the feedback that we've got from various quarters. With that, I will go straight over to the executive summary. All in all, I would say we've turned in a decent performance for the quarter. Our consolidated revenue grew 11% year-on-year, despite a challenging operating environment and a very high base. Just to put it in perspective, we are cycling a quarter of last year where revenue grew by 13% and EBIT grew by 43%. On that 13%, we have still grown 11%, and this is despite a severe second wave of COVID. The India business has performed very well, while international markets, as expected, saw a decline owing to pantry loading in the base quarter. Overall, India business grew by 25%. India beverages up by 23% with a 3% volume growth, while India foods continued its strong momentum of a 20% revenue with a 17% volume growth. International business, which had shown very strong results last year, both in terms of top line as well as bottom line because of reduced promotional and A&P expenses, this time around declined 13% with an underlying decline of 16%, because, remember, we have also divested certain businesses which are sitting in our base, namely MAP Coffee as well as Empirical. The EBITDA margin for the quarter was 13.4%, sequentially up quarter-on-quarter by 300 basis points, but down by 452 basis points, driven by A&P investments in the India business, as well as last year tea costs versus this year, there is a significant difference, and that has impacted the bottom line. The group net profit declined 42% year-on-year. Adjusted for exceptional items, because last year we had a one-time gain of about INR 84 crores on account of the NourishCo transaction that we have done. There was an offset of about INR 21 crores in terms of restructuring expenses that we had taken, net INR 63 crores was sitting in the base. We don't have that. If I adjust it for exceptional items, we've declined 27%. We continue to invest behind our brands to drive long-term growth. We are close to a 50% increase in A&P in India this year, in this quarter, in line with the commitments that we have made in terms of strengthening our brands. We gained market share in both the core categories of tea and salt in India. The tea market share was up by 170 basis points, and salt, where we are number one by far, we continue to go from strength to strength, and our market share was up by 370 basis points. We now have a fully harmonized pan-India distribution system. There were a few pockets where we had still not touched it in line with what we had done last September. During this quarter, we have taken those on, and now the entire country is harmonized on one system. In line with the commitments that we had made of completing the Soulfull integration within 100 days, well on track to achieve that. In addition, we continue to streamline operation and drive synergies, and this is driving synergies beyond what we've committed. We had committed INR 100 crore-INR 150 crore of synergies in 18-24 months when we did the integration of the food and beverage business. Having completed 18 months, we are well ahead on the INR 100 crore bottom of the guidance that we had given, and well on track to achieve both in terms of quantum as well as in time on the INR 150 crore. We are constantly looking for synergies, including network optimization in India. We have started an exercise on simplifying the international business. More of that, because that's right now work in process. If I go down to performance overview and go straight down to group performance, key businesses for Q1 FY 2022. India business INR 1,267 crore, volume up 3%, revenue up 28%. India Foods, strong volume growth of 17%, revenue growth of 20%. In this 17%, very strong volume growth by salt. Sampann, overall top line growth of 12%. Remember, it was cycling a very strong base of about INR 50 last year. CAGR still 30% +. U.S. Coffee and International Tea, both of which saw strong pantry loading last year in the same quarter, decline both in volume and revenue. Shares fairly stable. Tata Coffee had a fairly decent quarter. Volume was - 6%, primarily driven by plantations tea and coffee. All other businesses of pepper, extractions, et cetera, have performed very well on the volume and revenue front. Overall consolidated INR 3,008 crores, 11% revenue growth for the quarter. If I move on to overall group performance, I talked about the INR 3,008 crores up by 11%, EBITDA INR 403 crores, -1 7% versus same quarter last year, margin at 13.5%, down by 452 basis points. PBT at INR 342 crore, down 22% at 11.3% margin. Group net profits at INR 200 crore, - 42%, margin of 6.7%. Despite the fact that we have paid out more dividend this year than what we had last year, we're still sitting on INR 2,169 crore of net cash. If I move on to the strategic priorities and talk a bit about where we are, just to give you some snapshots of where we are. In terms of strengthening and accelerating core businesses, our outlets. Just one slide back, yeah. I'll just talk about the details out here. We had made a commitment on expanding our outlets where we had started from 500,000 outlets. We had said by September of this year, we should be at 1 million. We've ended the quarter at 820,000 outlets. Well on track to reach the 1 million target that we have set. On top of that, we've started our rural expansion. As I mentioned in our earlier call, we have tripled the number of feet on street on rural, and we're targeting to expand rural distributors. We've already added 3,000 distributors. On strengthening and accelerating core, the big thing is to build brands. As I mentioned to you, our A&P in India this quarter is up by 50% year-on-year, and you will see that trend continuing as we move forward. Our tea market share, which is the result of strengthening and accelerating core, is up by 170 basis points, salt market share up by 370 basis points. Drive digital and innovation. We formulated our digital strategy. We formulated a new digital structure to make sure we are driving both efficiency and effectiveness, and we have started to put it in place. All in all, as I've mentioned in an earlier call, our entire plumbing, if I may, whether it is from a common data lake to a DMS and SFA system, a new ERP system, a new integrated business planning system, and a new analytics platform, all of that in place. On the innovation side, this quarter, we've had several launches, including a SuperLite in the salt business, 30% reduced salt. We're the only ones in the market with that. We've launched Chakra Gold Care. We're just about launching Eight O'Clock Coffee out here. We've expanded our Sampann range. In terms of unlocking synergies, I talked to you about delivering the INR 100 crore and INR 150 crore of numbers. On top of that, results per se, our working capital is down by two days versus the same quarter last year, so efficient working capital management. If you adjust for some timing differences versus last year, we have continued to deliver 101% of EBITDA into cash this year. Future-ready organization, all the capabilities that we are building in terms of whether it is digital, revenue growth management, e-commerce, the entire organizations are in play. Now, A, we are building out the teams, and B, making sure they've got the tools to drive opportunities as they come forward. Exploring new opportunities organically, we have just launched on our D2C journeys. While we started with Tata Coffee Sonnets, we have now launched 1868 Tea, which is a range of premium curated teas, and just about stepping out into Eight O'Clock. Lastly, embedding sustainability. We have made several strides, including featuring among the top three FMCG companies in the recently released CRISIL Sustainability Metrics. With that, I will just go straight to a macro and commodity overview to just give you a perspective of where margins are headed, because the one question on everyone's mind is: What is tea prices doing to your overall business? If you see the middle of the slide, that shows you how tea pricing has moved, and I'll urge you to stay in the dark blue line in the middle of the chart. Q2 last year was the peak of tea prices as we came out of the lockdown and a bit of flooding in Northern India. From there on, tea prices have started to ease. You would see that reflected in our business because in the India beverage business, if you look at gross margins, Q3 last year was the bottom. From there, from 19%, we moved to 21%, sequentially moved to 26%. You could expect to see this graph going upwards. From Q4 2021, we did see a bit of an uptick into Q1 FY 2022. That is primarily the result of two things happening. One is there was a bit of a drought scare in Assam and North India. More, I would say, in Assam than in Dooars. That caused a bit of a uptick. Apart from that, I think the second wave and the lockdowns which happened, people were highly, I would say, tense about the fact that the scenario what happened a year back with lockdowns, 50% working, reduction in crop, et cetera, would repeat. That is why there was an uptick. That said, from where we saw June-end, we are seeing about INR 20-INR 30 coming up already as we speak. We do expect to see tea prices stabilize, sort of normalize as we go forward. In conjunction with the fact that over the last one year, looking at tea costs, we have taken our prices up, making sure that we are maintaining consumer elasticity, competitive positioning, making sure we are not compromising on momentum or growth. I would say margins are on the upward trend, and you could see them coming back strongly in a quarter or two. Coffee prices, on the other side, you are seeing an uptrend, and the spike probably got exaggerated in the last 10 days or so as, A, the initial spike was caused by a bit of drought-like conditions in Brazil. About 10 days back, there was frost on one of the days, and people were highly skeptical about both short-term and long-term coffee output, and that's why prices went up. Two impacts on us, positive for the Tata Coffee side, and possibly could have an impact on our Eight O'Clock business. Fortunately, Eight O'Clock, we are more or less hedged for our entire commodity input for FY 2022. With that, I will move on and ask LK to walk you through the financial piece. Thanks, Sunil, good afternoon, everyone. I'll just take you through highlights, I'm on slide number 37 for those of you who have the deck. It's coming up in a minute. Starting with standalone revenue for the quarter at INR 1,966 crores, an increase of 22% over the same period in the previous year. Strong performance both in beverages and foods. India beverages grew by 28%, of which volume growth was about 3%. India foods grew by 20%, with about 17% volume growth. Notwithstanding that, we had a very difficult quarter, particularly the month of May. We saw a good bounce back in June, we are seeing a good trajectory in July. Looking on consolidated revenues, INR 3,008 crores, up by 11%. The growth rate is lower than what we saw in standalone because the international business declined by 13%. A combination of the fact that the previous year had a lot of pantry loading, which is not repeated, plus also due to the fact that we exited some business which we had in the same period last year, which was the Empirical food service business. Commenting on the EBITDA. EBITDA for the quarter in the standalone business is INR 274 crore, down by 16%, largely a function of tea cost, which Sunil talked about. Fortunately, we are seeing some respite in tea cost. Hopefully, the following quarter it should be better. In addition, we've had a fair amount of increase in advertising spend during the quarter, because of which the profitability is lower. Similar trend on lower profitability in the consolidated results, INR 403 crore EBITDA versus INR 486 crore. In addition to the points we made on India, it was the impact of lower sales in international business, which has resulted in a drop in EBITDA. Moving on to the next slide. It's just a standalone and consolidated results that we have released. Some highlights from the SEBI format. The point I want to make here is the EBIT margin, especially in consolidated at 11.2%, is higher than what we saw in the previous quarter. While it is lower than the 15.6% we saw the same period last year, there is clearly an improving trend, which I want to call out. In the standalone results, you will notice that while EBIT has been lower at INR 239 crores versus INR 296 crores, PBT and PAT are higher than the same period last year. That's primarily because of dividend inflow. In the previous year, we had record performance of our international businesses, and we chose to bring back some cash into India in the form of dividends. That's a big reason why you have an improved bottom line, notwithstanding that operating performance is somewhat lower. Moving to segment-wise performance. In terms of segment revenue, we saw India beverages, 28% of which we said volume is 3%. India foods, 20% growth, volume is 17% in that. International business, as I explained, because of pantry loading, the previous quarter was exceptional, which is not repeated. Non-branded business grew by 5% in the quarter, driven largely by the extraction business performance. Commenting on the segment results, the decline from INR 212 to INR 151 in the case of beverages is a function of the tea cost escalation that we spoke about, plus some increase in advertising expenditure. India foods are lower at INR 96 versus INR 105. I want to make a couple of observations here. The first quarter last year was before we started restructuring, and we did a fair amount of change in the structures, and we've also invested for future growth of the foods business, all of which happened in subsequent quarters. In the current quarter, there is an increase in advertising, plus there is also investment behind the Soulfull brand. We need to keep this in mind when we compare. The other comment that I want to make is the INR 96 crores of profit in Q1 FY 2022 is higher than what you saw for the foods business in quarter four of last year. Overall, there is good revenue growth and improving profitability. There is some amount of dampener on profitability ratios because of investment. International beverages, lower segment results because of what we saw, primarily due to lower turnover. Net operating segment total EBIT is INR 336 crore versus INR 499 crore of last year. Commenting on the proportion of different parts of the business, India beverages, 46%, India foods, 26%, and international, 28%. India is now 72% of the total revenue. If you look at the segment results, mirroring a similar trend, not very different. 72% of the profits come from India and 28% from the international business. With that, I think we are concluding the presentation. Over to you to respond to questions that we have. Yes. I'll just take a brief thing on the outlook. While I said we had a decent quarter, and this is in light of the second wave of COVID in India now receding. For those of you who've been through the deck, we've shown our numbers month-on-month indexed. May saw a significant dip, June has come back, July has come back stronger than June. International markets, U.S., U.K., Canada, are now seeing a return to pre-COVID demand trends. Again, we saw a dip during the quarter, all the three markets seem to be coming back to normalcy right now. U.S. and U.K. slightly ahead of Canada in coming back to the normal pace. In terms of business, we are very clearly focused on accelerating the momentum in our business. India beverages, we talked about moderation of tea costs, we will stay focused on competitive and profitable growth. We will continue distribution expansion and innovation. We had held that back during the second wave because we saw execution issues. Now we will start with our innovation launches very quickly. We do see significant improvement in Starbucks and further acceleration in NourishCo. Just as a perspective, NourishCo, despite the second wave, grew by 90% in revenue terms. Starbucks was some 350%+, because by now the team has learned how to tackle the lockdowns, drive delivery, and maximize sales in a constrained environment. The international business, we will see resumption, the normalization of in-home consumption. We will continue to focus on the growing categories of non-black tea and drive innovations in coffee and tea. With that, I would request for questions. Nidhi, Manoj, up to you. Thanks. Thanks, Sunil. Moderators, perhaps you can take the questions from the Q&A queue, please. Sure. Thank you very much. We will now begin the question and answer session. Participants connected on the webcast may type their questions on the chat box appearing at the bottom and click submit. Participants on audio may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may please press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Thank you. The first question is from the line of Abneesh from Edelweiss. Please go ahead. Yeah, thanks, and congrats on the volume growth. My first question is on salt. You have reported 20% value growth. I want to understand what is the volume growth, and how is the market share behaving in the mass end, because you have said 34% growth in the premium. I want to understand the [audio distortion] gain in market share. Is it primarily because of the premium growing fast, or even in mass end, you are gaining share, and from which place are you gaining share? Thanks, Abneesh. I would say significant amount has come from volume and not in value in the overall top-line growth for salt. That's number one. Salt, I think, A, we are gaining by distribution, better execution, and making sure our supply chains are much more efficient. That's number one. On the premium salt, premium salt is still a small portion of the portfolio, Abneesh. The whole objective is that it is significantly accretive to the P&L, number one. Number two, does great things both from a brand image perspective as well as a future growth perspective, and that's why we are focused on that. 34%, incidentally, the single biggest item in the premium salt for us, and that is we had held it back till the second wave got over, which was the SuperLite, which is the 30% reduced sodium. We've just launched that. You could see this 34% holding/accelerating as we go forward. One follow-up. Are you giving the mix of mass and premium in salt? We have not given the mix of mass and premium, but you could touch base with Nidhi, and she can give you some more color on that piece. Last question on Sampann. Q4 was disappointing. There is a recovery here. On the small base, 30% CAGR over two years, are you happy with that? Within Sampann, there are multiple products. Which ones are doing the best? For example, poha, pulses, spices, or anything ready to cook, et cetera. Which ones are you the most confident? Abneesh, I said this earlier, 30% is not a good enough benchmark for us. Our ambition is much higher, and we are working towards that. We would target very aggressive numbers in Sampann as we go forward. That's point number one. Point number two, if you look at the overall segments which we play in, I think pulses, poha, spices, and probably mixes in that order is the scale of the different categories per se. The biggest traction in terms of growth we are seeing in poha, followed by pulses, and followed by spices. Mixes is still a relatively smaller segment per se, I wouldn't comment on growth because it's a very small base. That said, like I said, Sampann, across the portfolio, work to do to make sure we are accelerating the entire Sampann top line. Okay, that's all from my side. That's quite helpful. Thanks a lot. Thank you. The next question is from the line of Jaykumar Doshi from Kotak. Please go ahead. Hi. Thank you. Good afternoon. I've got two questions. The first one is, tea commodity prices are down about 20% from the last year's peak, but it's still up about INR 50, INR 70 per kg versus the year before. If the prices remained at current level, would you be able to recover profitability? You mentioned about recovery in profitability over the next two quarters. Were you referring to recovery on an EBITDA per ton basis, or do you think that at EBITDA margin perspective also you can get back to that 16%-17% margins where tea business used to generate? Let me give you a few data points before I get to answering the specific. Number one is, while we are seeing prices coming down, they are still significantly above where we started in, say, calendar year 2019. We do think that as we go forward, while they will settle down, they will still be higher than where they are in 2019. Where they will settle, your guess is as good as mine, because there will be several twists and turns on the road as we go forward. That's number one. Number two, while we have taken pricing in tea over the last 12-15 months or so, we have taken it in different parts, making sure that we are remaining competitive, both from a consumer perspective as well as from a competition and therefore market share perspective. That said, we have not translated the entire cost increase on tea into pricing. There is still a gap. Therefore, when the tea cost comes down, we do expect a margin expansion. When we are talking about margins, we are talking of percentage margins per se and not absolute margin, because absolute margins depends on where the tea prices finally settle. In percentage terms, I would say in a quarter or two, you would see us coming back to normal levels. That is 2020 levels, 1920 levels? Thereabouts, yes. That is very helpful. My second question is, you now have three brands in coffee, Tata Grand Coffee, Sonnets, Eight O'Clock. What is your strategy for coffee business in India? You also mentioned about that a lot of innovations are underway. I would like to hear your thoughts on where do you see this business and your broad strategy. Before I answer that, let me give you the landscape of the coffee market in India. The big coffee market in India is in the instant coffee business. There is a smaller play in the whole beans and the roast and ground, et cetera. All the brands that we have launched so far have a distinct role to play in the different categories. Tata Coffee Grand primarily plays in the instant coffee space and is going after the roughly INR 2,500 crore market out there. We've got a small share, but given the distribution that we have, given the coffee expertise that we have, given the Tata Coffee brand name per se, we do think we can get to a high single digit, low double digit market share per se. Long way to go, we've started the journey. That's point number one. Point number two, both Tata Coffee Sonnets and Eight O'Clock Coffee are targeted at a premium consumer. The consumer who's looking for very specific origin and micro lots is what Tata Sonnets addresses. There is a consumer who is more in tune with the international trends and looking for a premium coffee from the international space. That is where Eight O'Clock Coffee comes in. Both Tata Coffee Sonnets and Eight O'Clock, because they are premium and not as much scale as Tata Coffee Grand, we have right now gone with the online model. We are testing out the waters. We will see where it goes. We are learning the D2C space. First of all, we'll fine-tune that, and if we find that it has legs, then you'll probably see us slowly expanding into the offline space. That is if and when at a later date. Very clearly, three different brands focused on three different segments executed differently. That's helpful. Thank you so much. Thank you. The next question is from the line of Arnab Mitra from Credit Suisse. Please go ahead. Hi, thanks for taking my question. My question was on this volume growth slowdown you've seen in this quarter. What we've seen in most other companies is wherever the end demand has not been impacted, let's say something like a skincare or ice cream. We have seen the main impact being made up in June, and most companies have had a normalized volume growth in the quarter. Any reason why you would think your business got more impacted, especially tea? Because what I see is the dip in May was a lot more in packaged tea rather than in foods. Is there any chance that the very high price increases that have been taken in tea are starting to impact the demand at the slightly mid to premium price segment? Just wanted your thoughts on that. Thanks. Number one, I would say the cost of tea in the end cup of tea, the total price, this thing is actually insignificant. While the prices have gone up significantly, I am not sure that has a direct bearing on the volume that you see. That is number one. Number two, I think it is primarily the result of lockdowns. If I just point out to May is when the dip happened and June started coming back. The entire country did not unlock in June. Especially some of the southern states held on to their lockdowns till, I think, about the third week of June, and very stringent lockdowns. In tea, remember, a significant portion of consumption happens out of home, either in the tea stalls or in the restaurants, et cetera. Even the restaurants, et cetera, even after opening up, are still at a 50% capacity. That has an impact. Like I said, June has been better than May, and July has been better than June. We're just hoping that this is the start of a trend where everything comes back to normal, but keeping fingers crossed. Okay, understood. That's very clear. The second question was, you made a comment about potentially looking at simplifying international business as one of the future focus areas. Broadly, will this be more about cost efficiencies, profitability improvement projects, or is this more of some potential strategic review of certain businesses? Just wanted a broad thinking on that. Let me leave you with, on a strategic review basis, we do that every quarter. There is no new news in that. As a result of that, if you saw, we first divested MAP Coffee, and then we divested Empirical. This is not an exercise. This is a one-time overall exercise to look at the entire international business and figure out where we can simplify various things that we do. This is not a strategic review per se, but you could expect the end result to be driving efficiency and effectiveness. Okay, got it. Sir, one last question on your standalone EBITDA margins are almost back to what they were before the tea commodity inflation started. If you recover your gross margins from here, would you expect ad spends to also kind of go up back to the 7%, 8% levels? Do you think you could end up at a significantly higher new normal of margins once you've recovered your gross margins back to the old levels? That was my last question. I would just leave you with one of our stated strategic objective is to strengthen our brands and make sure we are putting enough fuel behind our brands. We've already demonstrated this quarter by despite being under pressure, we are still up the ante in India and upwards of 50% increase on A&P. You would see that trend going up. That said, we've got entire stakeholders, shareholders, board, everyone to manage. We will make sure that we're delivering good top-line growth, making sure that we're doing the right things to build the business for the future while delivering short-term results. Okay, thanks so much. That's it from my side. All the best. Thank you. The next question is from the line of Percy Panthaki from IIFL. Please go ahead. Hi, sir. My question is on the tea prices and how the companies would respond to that. Typically, we have seen that tea is a very competitive segment, and when the tea prices come down, the smaller players, or sometimes even the slightly larger players, pass on the benefits to the consumer. What is your read on the situation? Do you think anything has changed because of COVID that the small players have fallen by the wayside and therefore you have better pricing power? I mean, just trying to understand what gives you the confidence that if tea prices come down, there won't be a pass-through to the consumers. Firstly, let me just say, I don't think we made a statement saying if tea prices come down, it will not be a pass-through. There will be a fine balance. There will be a pass-through, there'll be some part of hold back, but I'm not trying to second guess what will happen in the future. That's number one. Number two, we have said very clearly that we will strengthen both our execution as well as brands going forward, therefore we should be on a stronger wicket when we go out to the market. Just as a perspective, this quarter, we have gained share 170 basis points compared to last year, please remember, this is in spite of having an intense competition, this is in spite of having the large competitors, small competitors, everyone per se. Again, the pricing actions that we have taken, it is not one size fits all. There are geographies in the country where we have dropped prices in this quarter. There are geographies in the country where we have taken prices up in the quarter. Depending on what we want to achieve market by market, we are going surgical behind it while making sure we're keeping the full portfolio in sight not to lose the total margins and deliveries that we have to do. Right. While you said that you would come back very soon to the EBITDA margin, which you used to do before the inflation hit, I'm sure that's not the end objective. I mean, even before the inflation hit, what margins you had, you would want to expand on those margins. Would you give some kind of idea as to, in the medium term, what kind of EBITDA margins you would consider reasonable for your tea business and for your salt business? Firstly, I'll just leave you with, we've got more internal pressure to deliver good profitability than outside pressure. We will continue to make sure that we're delivering top-notch results. Like I said, I've always made the statements, and we will make sure that we're gaining market share, driving strong double-digit top line, keeping costs very tight, and making sure that there is a flow-through on the bottom line. As we get to scale and keep our fixed costs constant, you should start seeing the shape of the P&L come back very strongly. Right, sir. My last question is that in terms of the growth of the India tea business and the market share gain, which would you say are your top-performing or best growing states in India? Ideally, the larger states is where you should grow to make the biggest impact. This is scattered across the place. Most of the southern states and some of the northern states are the big picture, apart from a few in the west. That said, we've got a very clear state-by-state objective, state-by-state strategy, including which brand to play in what state at what pricing, to make sure that when we put the whole picture together, we're landing up on top. Right, sir. That's all from me. Thanks and all the best. Thank you. The next question is from the line of Tejas Shah from Spark Capital. Please go ahead. Hi, sir. Thanks for the opportunity. My first question pertains to cost synergies and other expenses. Last four quarters since inflation started or hyperinflation started, we did very well to absorb GM pressure at EBITDA level. Last two quarters, that element is missing, and you had called out that there was some one-off cost in last quarter's other expenses for employee both because of some integration and capability building costs. Just wanted to understand on that line item in particular. If you're looking at employee costs per se, you will see last quarter to this quarter, it is broadly constant. This is despite the fact that we've given salary increases, et cetera, and built extra capability to boot. I'll ask LK to come in and comment. Yes. I think there are different elements when you look at quarter to quarter. Overall, the message I think I made the point is that the margin at 11.3%, I think are better than where we ended on a consolidated basis last year. Right? That is what I think should be the focus because the shape of things would change from quarter to quarter. If I can just add, please separate out the synergies piece and the investment piece. The point I made, Tejas, last quarter was also that when you look at quarter-to-quarter, there are some costs which we have to account in the quarter, but it's not a balancing with revenue and other things in the same quarter. That's the point I was trying to make when we talked about employee costs. If you take employee costs as an example, we may have increased people in certain functions, but in that quarter we've recruited, so there is increase. That doesn't mean that you're going to compare it with revenue and percentage of quarter-to-quarter. Some of the benefits, as we build infrastructure, we increase sales force, we invest in IT. These are all costs sometimes because we do a particular study in a quarter, we come in that quarter. That's the point, and these all come under the other expenditure category that we focus on. Don't compare that. Got it. Thanks. My next question pertains to recent changes in the leadership team. Pardon my ignorance here, but most of the changes shared on PPT are mostly replacement except Mr. T. V. Swaminathan, Global Chief Digital Officer. Just wanted to understand what is the digital roadmap for the company, and is it largely internal efficiency-led, or you want to expand the same in form of online direct to consumer, that kind of initiative also? Digital actually is all encompassing. It is not only just driving efficiency within the company. Like I said, we've right now finished laying out the base plumbing in terms of an ERP system, business planning system, a common data lake, setting up an analytics platform. Right now we are at the stage where we are able to collect data from across the organization, but we need to now figure out how to leverage that data using analytics to drive both efficiency as well as effectiveness. There is work happening across different functions, whether it is the frontline sales to enable better selling or procurement to enable more cost-effective procurement, or to your point, within the organization, driving digitization to help reduce bureaucracy, enable speed of decision-making, et cetera, apart from looking at how to engage with consumers, whether it is on media or it is on commerce and online sales. Across the board. Swami and team are responsible for this entire strategy per se. I did mention in my overview saying that we've sort of finished the strategy and a broad structure to make sure that we are able to execute this strategy. We will start both staffing as well as executing against this. Okay. Sir, last question pertains to NourishCo. You mentioned in your opening remarks also that despite the second wave, NourishCo did very well. If you can share some thoughts on the brand and mid-term target here, are we sensing that the scalability in NourishCo is way easier than Sampann? If you can comment on the margin profile also of the business. I would not want to compare Sampann and NourishCo. I would say there are opportunities in both of them, there are completely two different opportunities per se. In Sampann, it is more about product and price. In NourishCo, it is about scaling geography and portfolio. Just as a perspective in NourishCo, if I dissect the pieces, all the brands have done well, but relatively Tata Water Plus and Himalayan have done significantly well. Remember last year at the same time, Himalayan was outsourced distribution. We took it in-house and started scaling it through. We are extremely bullish about where NourishCo can go because, especially like I said, despite the lockdown, we have grown 90% on NourishCo. The objective for them is not percentage growth. It is multi-fold growth, that is what the team is focused on. That's all from my side, and thanks a lot. Thank you. The next question is on the line of Sumant Kumar from Motilal Oswal. Please go ahead. Yeah. Hi, sir. My question is regarding the food business margin. We have seen through past two quarters, 13.5%, 13.6% kind of margin. When going by the data of the Q2 and Q3 of 2021, the margin was in the range of 15%-16%. Can you talk more about what is the sustainable margin in the food business going forward? No, I think we would certainly improve from where we are. Let me again repeat. We are investing on Soulfull, we are investing on faster growth in Sampann. We are investing in, we talked of digital as an example. We're investing in digital and some of the costs will also be borne by the food business. The return, if you take this as an example, the return will come from growth for Soulfull as well as the Sampann portfolio and digitization will accelerate revenue growth or reorient the structure to get profit. That won't happen in a quarter. Long story short, it is impacted by some of these initiatives, and we expect to get to higher margins or improve on this going forward. Thank you so much. Okay, moderator, we'll go to the webcast and take a couple of questions from there. Sure? Yeah. Okay. There's a question from Aditya at Goldman Sachs. He's asking, why is there such a pronounced impact for India beverages in May and June? Was this supply-driven or demand-driven? Essentially, I think, I did allude to it in an earlier answer, this was not a supply-driven issue per se, as in this year, there was no issue of raw tea and therefore finished goods and package. That said, there was severe challenge on last mile logistics, as infections spread across the board, both within our team and across different partners, including distributors, C&FA, et cetera. That was one big challenge. I think the real impact in terms of volume, et cetera, that you see is driven more by the fact of the lockdowns, fact that a significant amount of consumption happens out of home, in restaurants, the tea stalls on the roads, et cetera, and in several parts of the country, it was almost a total standstill. I would say demand-driven, but it is not as in consumers dropped demand, it is simply because the demand was not accessible, as simple as that. Like I said, June has come back, compared to May, and July has come back better than June. We are, I think, significantly en route to getting back to a normal business curve. There is a question on Sampann, and Aditya, I think that's been answered by Sunil in one of the earlier questions. There is a question from Devanshu at Yes Securities on instant coffee. Again, I think Sunil has addressed this question earlier in the call. There's a question from Rohit, from Entrust. He's again asking about the dichotomy in volume growth between India Foods and India Beverages, which Sunil has just answered, talking about the out-of-home saliency of tea. There's a question from him on what are the medium-term plans to scale up the India branded coffee business, and any thoughts on divesting non-core business in India and international. Yeah. I think the medium-term plans in scaling up the India branded coffee business, I did talk about, we've got three brands now out there, Eight O'Clock, Sonnets, as well as Tata Coffee Grand. Tata Coffee Grand is probably a low single-digit share in the instant coffee market right now. We do believe if we play things right, we should be able to get to a high single-digit, low double-digit market share, and that remains the ambition. This will not happen as a result of only the execution that we have in the market or the products that we have in the market. You'll see both execution scale up as well as the innovation pipeline beginning to play out. A very exciting innovation pipeline, I would say. That's number one. On the looking at the non-core businesses per se, I did talk about saying we look at it on a constant basis. It is not a one-off exercise that we do. As a result of that, you've seen us divest MAP as well as the Empirical in the short term. Even over the longer term, if you look at the company, we walked out of Russia, we walked out of China, and most recently we walked out of Czech. Taking decisions on what doesn't fit in or what is not performing is not a very difficult decision for us to make. Moderator, we'll go back to the Q&A queue now, please. Sure. Thank you very much. The next question is from the line of Viraj from Securities Investment Management. Please go ahead. Yeah, hi. Thanks for the opportunity. Most of my questions have been answered. I just have two questions. On Sampann, if you look at the overall business scale, it was still around INR 5 crore, excess all kind of a scale business. It's not much of a scale yet. We talked about aggressive growth going forward. Can you give some color, because in last year or two or more, we have seen many new launches as well. Are there any product brands which are more than INR 30 crore, INR 50 crore scale? What's the coverage of existing products which have been launched earlier? We were primarily into category A stores, and probably in the main metro cities. How is the coverage now? What is the roadmap there? Of the products which have been launched, what is the repetitive sales kind of any indication you can say of how is the traction building up on existing sales for Sampann? Second is on the synergies part, I think a quarter or two back, you talked about a run rate of being around INR 6 crores-INR 7 crores per month. How is that now? Just two questions. Thank you. Let me start with your second question first. The INR 6 crores-INR 7 crores that we alluded to was purely cost synergies. We had still not counted revenue synergies. When we had made the commitment, it was INR 100 crores-INR 150 crores of cost and revenue. I did talk about we are right now already ahead of the INR 100 crore per month run rate, a significant amount coming from cost itself, which is directly bankable. That's number one. We remain confident of getting to that INR 150 crore run rate. Again, significant portion coming from cost more than revenue synergies, per se, within the 24 months timeline that we had laid out. If I come back to Sampann per se, the big categories that we are playing around and will be focused on will be poha, pulses, and spices, not necessarily in that order. Just as a perspective, your question about repeatability, if there is one thing that I have figured out as a result of multiple market visits, consumer touch points, as well as talking to retailers, is all that you have to do is make sure the consumer takes Sampann home once. Because once you've done that, given the quality of the product and the fact that we deliver to our promise, you would find a very high sticky rate. The question then is to make sure, A, we've got the right product portfolio per se, and number two, we are executing it and getting into distribution on scale. Just as a very simple example, right now we are slicing and dissecting about which product to focus and which market in the Sampann portfolio. For example, there is masoor which sells in the east of the country and toor which sells in the west of the country. There are different formulas that we are adapting to make sure that we are driving scale, which is relevant in that market. Apart from that, the sales team is now immensely focused on making sure that they're driving. Right now, like I said, we've got 820,000 direct outlets. They are now focused on driving distribution of Sampann into a significant number of those 820,000 outlets. We just want to make sure that we get into the relevant outlets, so you'll not see it reaching all the 820,000 outlets. Definitely where this category is relevant and the stores are significant, you will see the sales team pushing in. Of the 1 million target, which we will be eventually by September, and what is the relevant coverage for Sampann brand, and where would we right now? Right now, we are very small in the scheme of things. Again, it is not a percentage growth that we are seeking for Sampann, it is a multiple growth. I would say, please watch this space. Okay. Thank you. Good luck. Thank you. The next question is from the line of Ankit Kanodia from Smart Sync Services. Please go ahead. Thanks. My question was related to the BigBasket acquisition, which Tata Sons has made recently. Just to draw an analogy, with what happens with a Zomato-like thing, wherein they have all the data of the customer all around the country, who is ordering what and what. How much of that we think can play a role in our journey as well, specifically in terms of Tata Sampann going forward with this BigBasket acquisition by Tata Sons. Has this any role to play in the last quarter as well? Let me give you two specific answers to that. Number one, in any business, once you have got consumer data, you can leverage it to the hilt in terms of what is the profile of the consumer, how often do they buy, what are the other products that they buy. There's a whole range of analytics which you can do to it. Consumer data in any form or manner is extremely valuable. That's one piece. The second piece is, BigBasket is a group company, and we are working closely with them, trying to figure out areas where we can cooperate and we can drive mutual synergy. Right. One thing again, related to that only. What I noticed, we generally order a lot from BigBasket and many products which were earlier sent non-branded, but we are seeing a lot of Tata Consumer Products in that, specifically like, say, dhaniya or something like gur powder. How do you see the margins in these products compared to the other products? See, as we expand the portfolio, each product is dependent on scale and margin profile, and what is the incrementality that it brings to the profile. That is one piece I would leave on the table. The other piece, I would say, you would find enhanced availability and visibility of overall Tata Consumer Products, More specifically Tata Sampann products, not only in BigBasket, but also in Amazon, Flipkart, and all the other platforms. This Soulfull integration is still not done, so current numbers do not include any sales of Soulfull, right? Soulfull integration started at the end of the quarter, middle to end of the quarter. The Soulfull numbers are collated into this, but the integration is just about complete. I would say the real traction begins now. Okay. Thank you so much. That really helps. Thank you. Moderator, we'll just take one last question now. Sure, ma'am. The next question is from the line of Jaykumar Doshi from Kotak. Please go ahead. Hi. Thanks for the follow-up. Quick one. What is the profitability of poha, and is it comparable to pulses spices? What is the threshold you have in terms of what are the categories in staples that you're not present in, which fit into your criteria from a profitability perspective, and you can potentially enter? Let me leave you with, we've done a very detailed analysis of every possible segment that we could enter in the pantry space, which is where Sampann is focused on. We have made specific choices depending on scale of that segment, profitability in that segment, fragmentation, number of competitors, growth rate, what does the Tata name do in that space, what are the capabilities that we have, what differentiation can we bring to bear. Then we've made a conscious choice to play or not play in certain categories. All that I would leave you with is, we've got an internal threshold on which we play. We also got, in some categories where the percentages are lower, we've also got a plan on how to move the margins upward through either procurement efficiencies or scale efficiencies or bringing in differentiation and a premium play later on. Understood. Thank you so much. Yep. Thank you. Ladies and gentlemen, this was the last question for today. I now hand the conference over to Mr. Manoj Menon for his closing comments. Over to you, sir. Thanks, Tata Consumer team, for the opportunity to host. Nidhi, would you want to have any closing remarks from your side? Yes. Thanks, Manoj, for hosting us, and thanks everyone for joining and for your time. If you have any remaining questions, please feel free to get in touch with me. Thank you, and thanks from everyone here. Thank you, members of the management. Ladies and gentlemen, on behalf of ICICI Securities, that concludes this conference call. Thank you for joining us. You may now disconnect your lines.