Q1 2027 Godrej Consumer Products Ltd Earnings Call

Speaker #1: Ladies and gentlemen, good day and welcome to the Godrej Consumer Products Limited Q1 FY27 conference call. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes.

Operator 4: Ladies and gentlemen, good day, and welcome to the Godrej Consumer Products Limited Q1 FY27 Conference Call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Vishal Kedia from Godrej Consumer Products. Thank you, and over to you, sir.

Speaker #1: Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded.

Speaker #1: I now hand the conference over to Mr. Vishal Kedia from Godrej Consumer Products. Thank you, and over to you, sir.

Speaker #2: Good afternoon, and welcome to the conference call for Godrej Consumer. We have with us Sudhir Sitapati and Asif Malbari. We will start with opening remarks from Sudhir.

Vishal Kedia (Godrej Consumer Pr: Good afternoon, and welcome to the conference call for Godrej Consumer. We have with us Sudhir Sitapati and Aasif Malbari. We will start with opening remarks from Sudhir, and post that, we will open the floor for questions from everyone. Now, I will hand over to Sudhir for his opening remarks.

Speaker #2: And after that, we will open the floor for questions from everyone. Now, I will hand over to Sudhir for his opening remarks.

Speaker #3: Q1 FY27 has been a strong start to the year for Godrej Consumer Products Limited. We delivered broad-based growth across India, Indonesia, and GAUM, building on the confidence and strategic direction we shared at our investor meet in May 2026.

Sudhir Sitapati: Q1 FY27 has been a strong start to the year for Godrej Consumer Products Limited. We delivered broad-based growth across India, Indonesia, and GOM, building on the confidence and strategic direction we shared at our investor meet in May 2026. The operating environment remained challenging through much of the quarter. Input costs were elevated, particularly during the early part of the quarter, and geopolitical developments contributed to significant volatility in crude and other commodities. Despite this backdrop, our underlying volume-led momentum strengthened sequentially, reflecting the resilience of our categories, the strength of our brands, and most importantly, the quality of our execution. At a consolidated level, revenues grew 19% year on year with underlying volume growth of 9%. EBITDA grew 14% with margins at 19%. Net profit grew 11%, reflecting healthy underlying earnings quality, even as margins absorbed some near-term commodity pressure.

Speaker #3: The operating environment remained challenging through much of the quarter. Input costs were elevated, particularly during the early part of the quarter, and geopolitical developments contributed to significant volatility in crude and other commodities.

Speaker #3: Despite this backdrop, our underlying volume-led momentum strengthened sequentially, reflecting the resilience of our categories, the strength of our brands, and, most importantly, the quality of our execution.

Speaker #3: At a consolidated level, revenues grew 19% year on year, with underlying volume growth of 9%. EBITDA grew 14%, with margins at 19%. Net profit grew 11%, reflecting healthy underlying earnings quality.

Speaker #3: Even as margins absorbed some near-term commodity pressure, this was on the back of a strong, broad-based performance in India, with Indonesia coming back to stable growth, and an exceptional performance in Africa driven by FMCG expansion.

Sudhir Sitapati: This was on the back of a strong broad-based performance in India, Indonesia. In India, Indonesia coming back to stable growth and an exceptional performance in Africa are driven by FMCG expansion. While we are pleased with the financial performance this quarter, we are even more encouraged by the structural changes that are continuing to take place across our company. Over the last few years, we have been working towards three important objectives. The first is to build the capability to deliver consistent double-digit volume growth backed by next generation of growth engines while restoring competitiveness in some of our most important core categories. The second is to turn around our Africa business and reposition it as a meaningful driver of profitable growth. The third is to decisively turn around HI in India. Q1 provides further evidence that we are making meaningful progress against each of these objectives.

Speaker #3: While we are pleased with the financial performance this quarter, we are even more encouraged by the structural changes that continue to take place across our company.

Speaker #3: Over the last few years, we have been working towards three important objectives. The first is to build a capability to deliver consistent, double-digit volume growth backed by the next generation of growth engines, while restoring competitiveness in some of our most important core categories.

Speaker #3: The second is to turn around our Africa business and reposition it as a meaningful driver of profitable growth. The third is to decisively turn around our HR in India.

Speaker #3: Q1 provides further evidence that we are making meaningful progress against each of these objectives. Our first objective is to move towards consistent double-digit volume growth.

Sudhir Sitapati: Our first objective is to move towards consistent double-digit volume growth. This quarter, consolidated underlying volume growth reached 9%, supported by increasingly broad-based momentum across geographies and categories. Our speedboats, Godrej Fab, GK incense stick, and Godrej Aer globally continue to grow strongly and are becoming increasingly meaningful contributors to the overall company. Our new entries in toilet cleaners, body wash, face wash, and pet care are also showing strong progress. These businesses are meeting their stated milestones, and we are encouraged by the quality of consumer traction and execution that we are seeing. These businesses are still at an early stage relative to their long-term potential. However, their progress gives us increasing confidence that we are building the next set of scalable growth opportunities for GCPL. Continuing our progress in expanding into fast-growing categories, we are pleased to announce the launch of Godrej Rizz, our entry into liquid dishwash.

Speaker #3: This quarter, consolidated underlying volume growth reached 9%, supported by increasingly broad-based momentum across geographies and categories. Our speedboats, Godrej Fab GK incense stick and Godrej Air globally, continue to grow strongly and are becoming increasingly meaningful contributors to the overall company.

Speaker #3: Our new entries in toilet cleaners, body wash, face wash, and pet care are also showing strong progress. These businesses are meeting their stated milestones, and we are encouraged by the quality of consumer traction and execution that we are seeing.

Speaker #3: These businesses are still at an early stage relative to their long-term potential. However, their progress gives us increasing confidence that we are building the next set of scalable growth opportunities for GCPL.

Speaker #3: Continuing our progress in expanding into fast-growing categories, we are pleased to announce the launch of Godrej Riz, our entry into liquid dishwash. Liquid dishwash is a ₹2,500 to ₹3,000 crore category, which is growing in strong double digits as consumers are upgrading from bars to liquids.

Sudhir Sitapati: Liquid dishwash is an INR 2,500 to 3,000 crore category, which is growing in strong double digits as consumers are upgrading from bars to liquids. We are launching Godrej Rizz in select states and are confident of our ability to delight consumers with Godrej Rizz as we have done successfully with our other innovations. Based on the progress we have seen across these businesses, we believe we are now a few quarters away from consistently delivering double-digit underlying volume growth. Our second strategic objective has been the turnaround of GOM. Our GOM business has delivered an outstanding quarter. This performance was led by our FMCG portfolio, where we doubled media investment alongside continued strength in hair fashion across markets. We successfully scaled air fresheners across the GOM region, and the initial pilot of incense sticks in Nigeria has received strong consumer feedback.

Speaker #3: We are launching Godrej Riz in select states and are confident in our ability to delight consumers with Godrej Riz, as we have done successfully with our other innovations.

Speaker #3: Based on the progress we are seeing across these businesses, we believe we are now a few quarters away from consistently delivering double-digit underlying volume growth.

Speaker #3: Our second strategic objective has been the turnaround of Guam. Our Guam business has delivered an outstanding quarter. This performance was led by our FMCG portfolio, where we doubled media investment, alongside continued strength in hair fashion across markets.

Speaker #3: We successfully scaled air fresheners across the Guam region, and the initial pilot of incense sticks in Nigeria has received strong consumer feedback. There has also been a structural improvement in EBITDA from high single digits to a consistent mid-teens level, and we are confident of holding this going forward.

Sudhir Sitapati: There has also been a structural improvement in EBITDA from high single digit to a consistent mid-teens level, and we are confident of holding this going forward. More importantly, the Africa performance is no longer limited to a single quarter. We have now delivered several successive quarters of improvement in both top-line growth and profitability. The business is benefiting from portfolio simplification, stronger execution, improved cost discipline, and increased investment behind our priority brands and categories. Our third strategic objective has been the turnaround of India HI. Household insecticides recorded an important milestone during the quarter. After almost a decade, we gained overall market share in the household insecticide category in Q1 FY27. This improvement is consistent with the action we have been taking to win in this category.

Speaker #3: More importantly, the Africa performance is no longer limited to a single quarter. We have now delivered several successive quarters of improvement in both top-line growth and profitability.

Speaker #3: The business is benefiting from portfolio simplification, stronger execution, improved cost discipline, and increased investment behind our priority brands and categories. Our third strategic objective has been the turnaround of India HR.

Speaker #3: Household insecticides recorded an important milestone during the quarter. After almost a decade, we gained overall market share in the household insecticide category in Q1 FY27.

Speaker #3: This improvement is consistent with the actions we have been taking to win in this category. While one quarter does not constitute a trend, the overall share gain is an encouraging indication that our strategy in household insecticides is beginning to deliver the intended results.

Sudhir Sitapati: While one quarter does not constitute a trend, the overall share gain is an encouraging indication that our strategy in household insecticide is beginning to deliver the intended results. We remain focused on sustaining this momentum through superior products, sharper consumer propositions, disciplined execution, and continued category development. This year has been a year of volatility. In Q1, we experienced significant input cost inflation and instability, with LPG prices going up 3x and similar increases in other costs. This especially impacted India, where the cost impact was close to 6% on the business. Despite this, we delivered a double-digit EBITDA growth. While prices have cooled off from the highs, going ahead, we anticipate volatility to remain, with both crude and palm being unstable and El Niño impacting demand across a few categories.

Speaker #3: We remain focused on sustaining this momentum through superior products, sharper consumer propositions, disciplined execution, and continued category development. This year has been a year of volatility.

Speaker #3: In Q1, we experienced significant input cost inflation and instability, with LPG prices going up 3x and similar increases in other costs. This especially impacted India, where the cost impact was close to 6% on the business.

Speaker #3: Despite this, we delivered double-digit EBITDA growth. While prices have cooled off from the highs, going ahead, we anticipate volatility to remain, with both crude and palm being unstable and El Niño impacting demand across a few categories.

Speaker #3: Our response will remain consistent with our established approach to navigating commodity cycles: calibrated pricing actions, strong delivery on cost-saving programs, and prudent media optimization.

Sudhir Sitapati: Our response will remain consistent with our established approach to navigating commodity cycles, calibrated pricing actions, strong delivery on cost-saving programs, and prudent media optimization. We remain mindful that El Niño conditions can heighten weather volatility across our key markets, with the potential to disrupt agricultural output and rural demand. Though our geographically diversified sourcing and portfolio provide meaningful resilience against such volatility, and as such, we don't foresee any major impact. With revenue growth tracking ahead of our original expectations and input costs beginning to ease, we enter the remainder of FY27 with increased confidence. We remain firmly on track to deliver our guidance for the full year with the confidence to exceed the same in select areas. We remain confident in the resilience of our portfolio, the strength of our brands, and our ability to deliver sustained profitable growth going forward.

Speaker #3: We remain mindful that El Niño conditions can heighten weather volatility across our key markets, with the potential to disrupt agricultural output and rural demand.

Speaker #3: Though our geographically diversified sourcing and portfolio provide meaningful resilience against such volatility, and as such, we don't foresee any major impact. With revenue growth tracking ahead of our original expectations, and input costs beginning to ease, we enter the remainder of FY27 with increased confidence.

Speaker #3: We remain firmly on track to deliver our guidance for the full year, with the confidence to exceed the same in select areas. We remain confident in the resilience of our portfolio, the strength of our brands, and our ability to deliver sustained, profitable growth going forward.

Speaker #1: We will now open the floor for questions.

Vishal Kedia (Godrej Consumer Pr: We will now open the floor for questions.

Speaker #2: Thank you. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone.

Operator 4: Thank you. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Abneesh Roy with Nuvama Wealth Management. Please go ahead.

Speaker #2: If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question.

Speaker #2: Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Avnish Roy, with Nuwama Wealth Management.

Speaker #2: Please go ahead.

Speaker #3: Yeah, thanks. My first question is on dishwash. It's an attractive category. If you could tell us, generally you come with disruptive pricing, and if you could tell us here also, have you managed to do that? And in terms of quality, is it comparable to the current players?

Abneesh Roy: Yeah, thanks. My first question is on dishwash. Attractive category. If you could tell us, generally you come with disruptive pricing, if you could tell us, here also, have you managed to do that? In terms of quality, is it comparable to the current players? Second, which markets, we checked online, putting every pin code, we did not get availability. If you could tell us which market you have started this. I suspect it is again Tamil Nadu or South India. Second is, you have tried dishwash earlier through Godrej Protekt. Any learnings from there? Do you see this as a golden opportunity, given one large multinational player seems to have temporarily vacated, and once they come back, will it be enough opportunity for you to seize that opportunity? That is my first question.

Speaker #3: Second, in the markets where we checked online booking for every PIN code, we did not get availability. So, if you could tell us which markets you have started this in.

Speaker #3: I suspect it is again Tamil Nadu or South India. Second is, you have tried dishwash earlier through Protect, Godrej Protect, so any learnings from there, and do you see this as a golden opportunity given one large multinational player seems to have temporarily vacated? And once they come back, will it be enough opportunity for you to seize that opportunity?

Speaker #3: That is my first question.

Speaker #4: I think, Avnish, on Dishwash, we haven't yet physically launched Riz yet. We are just in the process of launching it, so we don't want to comment on anything because it will be competitively sensitive.

Sudhir Sitapati: I think, Abneesh, on dishwash, we haven't yet physically launched Rizz yet. We are just in the process of launching it, we don't want to comment on anything because it will be competitive sensitive. We thought since this is an opportunity for us to let you know, we thought we'd announce it. In a few days' time, you'll see it everywhere, and the mix will be clear. In general, we end up launching categories if we have a differentiated product and a good pricing. This seems to be our home care strategy. It seems to work very well in Fab. It seems to be working quite well in Stick, I'm sure it'll work in Rizz. More about it, Abneesh, when we actually launch in the market. You didn't find it in pin codes because it's not in the market yet.

Speaker #4: But we thought, since this is an opportunity for us to let you know, we'd announce it. But in a few days' time, you'll see it everywhere and the mix will be clear.

Speaker #4: In general, we end up launching categories if we have a differentiated product and good pricing. This seems to be our home care strategy.

Speaker #4: It seems to have worked very well in FAB. It seems to be working quite well in SPIC. And I'm sure it will work in RIZ.

Speaker #4: But more about it, Avnish, when we actually launch in the market. You didn't find it in PIN codes because it's not in the market yet.

Speaker #3: Understood. And if you could comment on the multinational player currently hardly available, almost near zero, which has kind of withdrawn. Is that a big opportunity, because you have tried through the Protect brand earlier, right?

Abneesh Roy: Understood. If you could comment on the multinational player currently hardly available, almost near zero, which has kind of withdrawn. Is that a big opportunity because you have tried through Protekt brand earlier, right?

Speaker #4: See, I mean, the question of a competitor exiting—I mean, we look at the market in terms of the structure of long-term growth, and dishwash liquid does have long-term growth potential in it.

Sudhir Sitapati: See, on the question of a competitor exiting, we look at the market in terms of structural long-term growth, and dishwash liquid does have long-term growth potential in it, and we look at differentiated products. We don't really look at it in terms of In other words, I don't think that has been the major factor in entering it here. I think one difference between some of our earlier home care launches and our current home care launches is we do spend a lot more media now on these than we did in the past, and we also typically launch relatively differentiated, fundamentally differentiated products. I think that's why this is going to be different from Protekt.

Speaker #4: And we look at different shared products, so we don't really look at it in terms of— I mean, in other words, I don't think that has been the major factor in entering it here.

Speaker #4: I think one difference between some of our earlier home care launches and our current home care launches is we do spend a lot more on media now on these than we did in the past.

Speaker #4: And we also typically launch relatively different, fundamentally different, shared products. So, I think that's why this is going to be different from Protect.

Speaker #3: Understood. Second and last question on the SPIC brand. You sound quite confident and you have taken it pan-India. Any initial numbers you can share in terms of, say, market share on e-commerce, or whatever numbers make you confident?

Abneesh Roy: Understood. Second and last question on the Stick brand. You sound quite confident, and you have taken it pan-India. Any initial numbers you can share in terms of, say, market share on e-commerce, quick commerce, or whatever numbers which make you confident? Generally when you do well, other players respond. We have seen that in liquid detergent, you came out with disruptive pricing. Now some of the players are even more disruptive in terms of pricing than you. Can that happen in Stick also?

Speaker #3: And generally, when you do well, other players respond. So, we have seen that in liquid detergent—you came out with disruptive pricing. Now, some of the players are even more disruptive in terms of pricing than you.

Speaker #3: So can that happen in SPIC also?

Speaker #4: I mean, look, we can't share numbers, obviously, Avnish, but our general model is to do a test market. If we're happy, we expand; if we're not happy, we don't usually expand.

Sudhir Sitapati: Look, we can't share numbers, obviously Amit, our general model is to do a test market. If we're happy, expand. If we're not happy, we don't usually expand. The very fact that we've expanded Spic means that we're quite happy with it. Coming to the point on, what was your second question? Sorry.

Speaker #4: So, the very fact that we've expanded SPIC means that we're quite happy with it. Then, coming to the point on—what was the second question?

Speaker #4: Sorry.

Speaker #3: Interrupting is there in SPIC. Has the market.

Abneesh Roy: Disrupting is there in SPIC. Has the market.

Speaker #4: You know what, some of these categories' penetration in India is so low that we continue to look forward to category creation here. And SPIC also is relatively high in urban penetration but relatively low in rural penetration, growing reasonably fast.

Sudhir Sitapati: Some of these categories' penetration in India is so low that we continue to look forward to category creation here. SPIC also is relatively high urban penetration, but relatively low rural penetration, growing reasonably fast. Still, liquid dishwash is pretty low outside FCCA penetrations. The actions that all players in the market take, in general, help us.

Speaker #4: Dishwash—still, liquid dishwash is pretty low outside SECA penetrations. So, the actions that all players in the market take in general help us. In the case of Fab...

Abneesh Roy: Understood. That's all from my side. Thank you.

Speaker #4: Fab has also succeeded in growing the market.

Sudhir Sitapati: Fab has also succeeded in growing the market.

Speaker #3: Following up on that, Sudhir. Fab Riz growth is good on the top line. Currently, inflation is high. Have you managed to cut promotions or implement some price increases here as well?

Abneesh Roy: Follow up on that, Sudhir. Fab growth is good on the top line. Currently, inflation is high. Have you managed to cut promotions or do some price increase also here? Has the industry also behaved in a similar manner in liquid detergent?

Speaker #3: And has the industry also given a manner in liquid detergent?

Speaker #4: Yeah. Avnish, we have taken a price increase in fab. But one of the reasons why our India gross margin fall is pretty sharp this quarter is that three commodities more than trebled in cost.

Sudhir Sitapati: Yeah, Amit, we have taken price increase in Fab. One of the reasons why our India gross margin fall is pretty sharp this quarter is three commodities more than trebled costs, which were LPG, kerosene, and LABSA, which we use in detergents. I think among all companies in India, we were the one who had the highest impact of raw material cost as a company, as LPG in particular has been both a cost and availability issue in the quarter. No amount of price increase, especially when you know it's short-term. For example, all these three commodity prices have again fallen. Of course, we'll still have some impact on consumption in Q2. Replacements have fallen quite significantly. One can't fully price for a crisis like West Asia immediately. One has to take that short-term margin hit. That's what we have done.

Speaker #4: Which were LPG, kerosene, and LABSA, which we use in detergents. So I think among all companies in India, we were the one who had the highest impact of raw material cost, as LPG in particular has been both a cost and availability issue in the quarter.

Speaker #4: So, no amount of price increase, especially when you know these are short term. For example, all these three commodity prices have again fallen. Of course, we'll still have some impact on consumption in Q2.

Speaker #4: But replacements have not, I mean, have fallen quite significantly. So one can't fully price for a crisis like West Asia immediately. So one has to take that short-term margin hit, but that's what we have done.

Speaker #3: Sure, thank you. That's all from my side. Thank you.

Abneesh Roy: Sure. Thank you. That's all from my side. Thank you.

Speaker #1: The next question comes from the line of Kunal Vora with BNP Paribas. Please go ahead.

Operator 4: The next question comes from the line of Kunal Vora with BNP Paribas. Please go ahead.

Speaker #3: Yeah. Thanks for the opportunity.

Operator 2: Kunal, thanks for the opportunity. My first question is on your Speedboat, your target is to go from 15% to 20% contribution this year. However, in Q1 FY27, it's increased by 3%, which is slightly lower. Based on my calculation, you'll need to accelerate growth if you were to get to 20% contribution for FY27. Is it going as per plan or are you seeing any softness? That's the question.

Speaker #1: My first question is on your speed boat. Your target is to go from 15% to 20% contribution this year. However, in the month you expect 27.

Speaker #1: It's increased by 3%. It's slightly lower. Based on my calculation, you'll need to accelerate growth if you were to get to 20% contribution for Expert 27.

Speaker #1: So, is it going as per plan or are you seeing any softness? Yeah, that's the question.

Speaker #4: No, it's going as per plan, broadly speaking. There was a little bit of softness in air in India because of fill rate. So in India, the other big story apart from the gross margin hit is that our fill rates on LPG-related products fell, and air has a large component of aerosols.

Sudhir Sitapati: No, it's going as per plan, broadly speaking. There was a little bit of softness in Aer in India because of fill rates. In India, the other big story apart from gross margin hit is that our fill rates on LPG-related products fell, and Aer has a large component of aerosols. We think that the salience will go on. You have to remember that the salience goes up every quarter because as the business becomes bigger and bigger every quarter, the growth on that business also contributes to salience. 15 doesn't go to 20 in one quarter. Each quarter go up 100 basis points, 150 basis points. That's what I expect in terms of salience of this business to go up. I think we're well on track for our Speedboat, which is why we feel we're well on track for the numbers.

Speaker #4: So we think that the salients will go on. You have to remember that the salients go up every quarter because as the big business becomes bigger and bigger every quarter, the growth on that business also contributes to salients. Fifteen doesn't go to twenty in one quarter.

Speaker #4: It'll, each quarter, go up 100, 150 bps. So that's what I expect in terms of salience of this business to go up. So I think we're well on track for our speedboat.

Speaker #4: Which is why we feel we're well on track for the numbers. In fact, we'll probably exceed the numbers that we set for this year.

Sudhir Sitapati: In fact, probably exceed the numbers that we've set for this year.

Speaker #1: Understood. So, on that line, you made a comment that you expect to fully exceed your guidance and select metrics. So, what are the metrics on which you are now building more confidence, and what are the ones which you believe you'll just about meet?

Operator 2: Understood. On that line, you made a comment that you expect to exceed full year guidance on select metrics. What are the metrics on which you are now feeling more confident, and what are the ones which you believe you'll be able to meet?

Speaker #4: We'll certainly exceed it on revenue growth pretty significantly. On EBITDA, we may exceed by a little bit the original number that we had set of double-digit EBITDA growth—may go up a little bit.

Sudhir Sitapati: We'll certainly exceed it on revenue growth pretty significantly. On EBITDA, we may exceed by a little bit the original number that we had set of double-digit EBITDA growth may go up a little bit. It depends a lot on what happens to commodity, but it may exceed a little bit there. Volume growth also may be in and around or exceed a little bit. Volume growth does come under pressure when you have this kind of pricing. I would say in most metrics we expect maybe one metric where we may not exceed this kind of volatility, a little bit on cash, you get a little squeezed. I think on most other metrics, you will exceed.

Speaker #4: It depends a lot, I mean, on what happens to commodity. But it may exceed a little bit there. Volume growth also may be in and around or exceed a little bit.

Speaker #4: Volume growth does come under pressure when you have this kind of pricing. So, I would say, in most metrics we expect—maybe one metric where we may not—exceed this kind of volatility a little bit on cash to get a little squeezed.

Speaker #4: But I think on most other metrics, you will exceed.

Speaker #1: Understood. And lastly, you mentioned that early 'know' could impact certain categories. Which categories do you see some risk from LD 'know' for? And what are the factors to watch out for?

Operator 2: Understood. Lastly, you mentioned that El Niño could impact certain categories. Which categories do you see some risk from El Niño from, and what are the factors to watch out for?

Speaker #4: I mean, look, there are positives and negatives to LD now. Firstly, in Indonesia, we expect a strong positive on household insecticide. In India, probably quarter-to-quarter, Q1 was already—June was terrible for household insecticide.

Sudhir Sitapati: There are positives and negatives to El Niño. Firstly, in Indonesia, we expect a strong positive on household insecticide. In India, probably Q1 was already June was terrible for household insecticides. The results we've delivered in India is with a terrible June with poor fill rates and extremely high costs. July also, the H1 was quite poor for household insecticides. Household insecticide, if you have a drier monsoon will get affected, but it's likely also to be a warmer winter, which will positively affect HI. HI H1 will be relatively lower, H2 will be relatively better. Indonesia will be good. I think the good thing about our portfolio now is even when you have a disastrous HI month like June, this portfolio is now diversified enough to manage overall numbers.

Speaker #4: So, the results we've delivered in India are with a terrible June, with poor fill rates and extremely high costs. July also—the first half was quite poor for household insecticide.

Speaker #4: So, household insecticide—if you have a drier monsoon, it will get affected. But it's likely also to be a warmer winter, which will positively affect HI.

Speaker #4: So, HI first half will be relatively lower; second half will be relatively better. Indonesia will be good. I think the good thing about our portfolio now is, even when you have a disastrous HI month like June, the portfolio is now diversified enough to manage overall numbers.

Speaker #1: Understood. That's it from me. Thank you. The next question comes from the line of Latika Chopra with JP Morgan Chase. Please go ahead.

Operator 2: Understood. That's it from me. Thank you.

Operator 4: The next question comes from the line of Latika Chopra with JPMorgan Chase. Please go ahead.

Speaker #2: Yeah. Hi. Thanks for the opportunity. I think you already alluded to HI weakness in June and some bit of challenge on air. I just wanted to better understand the shape of India revenue growth in the coming quarters.

Latika Chopra: Yeah, hi. Thanks for the opportunity. I think you already alluded to HI weakness in June and some bit of challenge in air. I just wanted to better understand the shape of India revenue growth in coming quarters. You had a volume growth of 7%. Given what you mentioned on speedboats, it looks like that this number should ideally be picking up in subsequent quarters. Given the weakness of HI that we saw probably may not be there in the H2. The second bit was on pricing. For 5% weighted average prices in the current quarter, given the gross margin drop that we saw in Q1 was quite steep, how should one think about pricing at your end and what would it imply for the gross margin trajectory for the India business? If you could talk a little about that.

Speaker #2: You had a volume growth of 7%, given what you mentioned on speed boards. It looks like this number should ideally be ticking up in subsequent quarters.

Speaker #2: And given the weakness of HI that we saw, it probably may not be there in the second half. The second bit was on pricing. Five percent are weighted average prices in the current quarter.

Speaker #2: Given that the gross margin drop we saw in Q1 was quite steep, how should one think about pricing at your end, and what would it imply for the gross margin trajectory for the India business?

Speaker #2: If you could talk a little about that.

Speaker #4: See, on volume growth, I think you're right about the fact that while 7% is reasonable, it is on the back of June literally having kind of—June this year didn't rain, right?

Sudhir Sitapati: See, on volume growth, I think you're right about the fact that while 7% is reasonable, it is on the back of June this year it didn't rain. Last year it was raining quite heavily in June. We had high double-digit decline in HI. That has been a significant hit on HI volume. You're right about the fact that as HI volumes pick up, and this happens, Latika, every year in a quarter, you're going to have poor HI volumes. That poor number which used to be negative is still now turning positive, even in terrible quarter. Then you'll also have a very good quarter. That's the way this thing moves. I would say that 7% volume in India is probably at the lower end of the range that we may get.

Speaker #4: Last year, it was raining quite heavily in June, so we had a high double-digit decline in HI. So that has been the significant hit on HI volume.

Speaker #4: So you're right about the fact that as HI volumes pick up—and this happens, I think, every year—in a quarter, you're going to have kind of poor HI volumes. That poor number, which used to be negative, is now still turning positive even in a terrible quarter.

Speaker #4: And then you'll also have a very good quarter. That's the way this thing moves. So I would say that 7% volume in India is probably at the lower end of the range that we may get.

Speaker #4: So, I mean, I think we'll probably be in and around maybe 100 bps more than this, is round about where we should be in India this year.

Sudhir Sitapati: I think we'll probably be in and around or maybe 100 basis points more than this, is roundabout where we should be in India this year. Every year, we're going up by 100 basis points. That's really how we're looking at the India business. I think in terms of gross margins, we've taken up prices by about 5%. We probably will still take up a little bit more, but you see, we are very prudent because now costs have come down again, the last thing you want to do is to take down prices. It remains a volatile situation till crude prices stabilize. As of now, what do we do? What do we assume crude at, and what do we price for? Right now our consumption may be Brent at INR 90. Replacement seems to be INR 84 today. Where we price at is still not super clear.

Speaker #4: Every year, we're kind of going up by 100 bps. That's really how we're kind of looking at the India business. I think in terms of gross margins, we've taken up prices by about 5%.

Speaker #4: We probably will still take up a little bit more, but you see, we had to be prudent because now costs have come down again, and the last thing you want to do is to take down prices.

Speaker #4: So, it remains a volatile situation until crude prices stabilize. Because as of now, what do we do, right? What do we assume crude at, and what do we price for?

Speaker #4: Because right now our consumption may be Brent at $90, replacement seems to be $84 today. So, where we price at is still not super clear.

Speaker #4: So, I know it's not a super clear answer, but frankly, the macros are not super clear right now on commodity costs.

Sudhir Sitapati: I know it's not a super clear answer, frankly, the macros are not super clear right now on commodity costs.

Speaker #2: Sure.

Latika Chopra: Sure.

Sudhir Sitapati: I think whatever happens, we will manage in this range of volume growth and EBITDA. I think in India, we may be standalone double-digit or if things go really bad in EBITDA, high single-digit. I think consolidated, having a lot of tailwinds, it will probably take the overall number higher than what we had anticipated. Let's see how crude and palm behave.

Speaker #4: But I think whatever happens, we'll manage in this range of volume growth and EBITDA. I think in India, we may be standalone double-digit, or if things go really bad in EBITDA, high single-digit. I think consolidated, having a lot of tailwinds.

Speaker #4: It'll probably take the overall number higher than what we had anticipated. But let's see how crude and palm behave.

Speaker #2: Understood. The second bit was on Africa. You did talk about the stronger growth in the FMCG business, but the 25% constant currency growth is still quite high.

Latika Chopra: Understood. The second bit was on Africa. You did talk about the stronger growth in FMCG business. The 25% constant currency growth is still quite high. I just wanted to understand if you could share more color on how the revenue salience of Africa is looking like today, and what is the confidence in what kind of sustainable growth for the full year FY27 one should work with? Also your investment in this business, is there any influence on margins in the short term? Thank you.

Speaker #2: I just wanted to understand if you could share more color on how the revenue salience of Africa is looking like today. And what is the confidence in what kind of sustainable growth for the full year FY27 one should work with?

Speaker #2: And also, your investments in this business—is there any influence on margins in the short term? Thank you.

Speaker #4: Yeah. I mean, look, Africa has had an exceptional performance. I think there are three reasons. One is, I do... Africa as a continent goes through headwinds and tailwinds, and right now, the macros in Africa are quite good.

Sudhir Sitapati: Look, Africa has had an exceptional performance. I think there are three reasons. One is I do think the continent goes through headwinds and tailwinds, and right now the macros in Africa are quite good. Secondly, on our core business of hair extension, I think Aasif and team have done an excellent job in improving operations there because there was a lot of governance, a lot of wasted cost, and so on and so forth that has come off. Thirdly, and I think most importantly, is that we have made significant progress in FMCG, especially hair care in Africa. Now, to give you a perspective, in 6 months after launch in South Africa, we are a double-digit market share in hair care. We have seen success in Nigeria, Kenya. Now we are seeing success in Argentina, Chile, US.

Speaker #4: Secondly, on our core business of hair extensions, I think Asaf and team have done an excellent job in improving operations there, because there was a lot of governance, a lot of wasted cost, and so on and so forth that has come off.

Speaker #4: And thirdly, and I think most importantly, is that we have made significant progress in FMCG, especially air care in Africa. Now, to give you perspective, in the last six months after launch in South Africa, we are at a double-digit market share in air care.

Speaker #4: So, we've seen success in Nigeria and Kenya, and now we're seeing success in Argentina, Chile, and the US. So, we're seeing a lot of fundamental success in FMCG, led by air care for Africa.

Sudhir Sitapati: We are seeing a lot of fundamental success in FMCG led by hair care for Africa.

Speaker #2: All right. And so, mid- to high-teens constant currency growth looks sustainable for this region for FY27—rest of the year.

Latika Chopra: All right. Mid to high teens constant currency growth looks sustainable for this region for FY27 rest of the year?

Speaker #4: I think for FY27, for the rest of the year, possibly so. I would say in the longer term, you may or may not get 17% volume growth; that may not be what we can sustainably achieve, even with FMCG growth. As I told you, it is a volatile continent, but I still suspect it will be much better than what we've had in the past.

Sudhir Sitapati: I think for FY27 rest of the year, possibly so. I would say in the longer term, you may or may not get 17% volume growth, may not be what we might sustainably get even with FMCG growth because as I told you, it is a volatile continent. It will still, I suspect, be much better than what we have had in the past.

Speaker #2: And margins you've been able to hold out were stable. So there is no higher investment-led challenge on margin or anything. Just checking on that.

Latika Chopra: Margins, you have been able to hold out. They were stable. There is no higher investment-led challenge on margin or anything? Just checking on.

Speaker #4: No, there is not. In fact, in Africa we have significantly increased our advertising spend and still done reasonably well on margins. And actually, when you have this kind of currency appreciation in the African currency, actually it hurts margins.

Sudhir Sitapati: No, there is no. In fact, in Africa, we have significantly increased our advertising spend and still done reasonably well on margins. Actually, when you have this kind of currency appreciation in the African currency, actually, it hits margins. While it's good on top line, it's not so good on bottom line. I would say this kind of mid-teens and margin in Africa is perfectly sustainable. As FMCG becomes bigger and bigger, you'll get some kind of benefits in margin as well.

Speaker #4: So, while it's good on the top line, it's not so good on the bottom line. So I would say this kind of mid-teens margin in Africa is perfectly sustainable as FMCG becomes bigger and bigger.

Speaker #4: It'll get more and more; you'll get some kind of benefits in margin as well.

Speaker #2: Sure. Thank you so much.

Latika Chopra: Sure. Thank you so much.

Speaker #1: The next question comes from the line of Arnab Mitra with Goldman Sachs. Please go ahead.

Operator 4: The next question comes from the line of Arnab Mitra with Goldman Sachs. Please go ahead.

Speaker #3: Yeah. Hi. Hi, team. My first question is on margins. If you look at the India margins, which are down 450 bps sequentially from what you did in the last quarter, you mentioned the specific commodities which had spiked have now somewhat cooled down.

Arnab Mitra: Yeah. Hi, team. My first question is on margins. If you look at the India margins, which are down 450 basis points sequentially from what you did in the last quarter, you mentioned these specific commodities which had spiked have now somewhat cooled down. If you had to take a view of the current spot prices where they are, how much of margin recovery do you think you can get over the next couple of quarters from where you were in this quarter, assuming you don't have to take any more pricing?

Speaker #3: So, if you had to take a view of the current spot prices where they are, how much margin recovery do you think you can get over the next couple of quarters from where you were in this quarter?

Speaker #3: Assuming you don't have to take any more pricing.

Sudhir Sitapati: In the next couple of quarters, we should get back to normative margin in India. It's still a slightly complicated period right now because costs are yo-yoing so much that one doesn't know what to do with pricing. In these cases, better be circumspect. In any case of this 500 basis points, a good part of it will get recovered with the current costs. We just have to wait for this current cost to see where they are, take up some pricing. Look, our target is to be in this, 22% to 26% kind of margin for India, even in a weak quarter. That kind of target remains. Unless you have an exceptional quarter like West Asia or some exceptional palm year. We have had two exceptional quarters in the last two years.

Speaker #4: In the next couple of quarters, we should get back to normative margin in India. It's still a slightly complicated period right now because costs are yo-yoing so much that one doesn't know what to do with pricing.

Speaker #4: So, in these cases, better to be circumspect. So, in any case, of this 500 bps, a good part of it will get recovered with the current costs.

Speaker #4: We just have to wait for this current cost to see where they are, take up some pricing. But look, our target is to be in this 22% to 26% kind of margin for India.

Speaker #4: Even in a weak quarter, so that kind of target remains, unless you have an exceptional quarter, like West Asia or some exceptional palm oil.

Speaker #4: We have had two exceptional quarters in the last two years. So if you look at India margin, the first half of last year was bad, then we really recovered in the second half.

Sudhir Sitapati: If you look at India margin, H1 of last year was bad, then we really recovered in H2. H1 this year is again not going to be good and therefore two different reasons. By H2 we'll get back to normative margins.

Speaker #4: The first half of this year is again not going to be good, and that's for two different reasons. But by the second half, we'll get back to normative margins.

Speaker #3: Yeah, got it. And my related question is on the advertising spends, which have come down a little bit in the last couple of quarters as the gross margin was impacted.

Arnab Mitra: Yeah, got it. My related question is on the advertising spends, which has come down a little bit in the last couple of quarters as the gross margin was impacted. Do you think these spends have to be significantly dialed back up? Is there any risk of keeping the spends low in terms of your growth investments that you are planning to make?

Speaker #3: So, do you think these spends have to be significantly dialed back up, or—and is there any risk of keeping the spends low in terms of your growth investments that you are planning to make?

Speaker #4: See, we've cut our media spends by maybe 7–8% this quarter. But we calculate another measure, which is media reach. And our media reach is down only 3% from the same quarter last year.

Sudhir Sitapati: See, we've cut our media spends by maybe 7%, 8% this quarter. We calculate another measure, which is media reach, and our media reach is down only 3% from the last year's same quarter. Partly because of deflation in conventional media, partly because of superior technology and planning that we use. It is not a massive media cut, for the ambition that we have in new categories, we will have to increase the media when costs cool down. I don't think we're underfunding the core, if, for example, costs were lower than they are today, we would have probably been a little bit more aggressive in new launches, et cetera. I mean, some of these launches that we're doing in this quarter, we may have done in last quarter and we pushed them, et cetera.

Speaker #4: And partly because of deflation in conventional media, partly because of superior technology and planning that we use. So, if you ask me, it is not a massive media cut.

Speaker #4: But for the ambition that we have in new categories, we will have to increase the media when costs cool down. So, I don't think we're underfunding the core.

Speaker #4: But if, for example, costs were lower than they are today, we would have probably been a little bit more aggressive in new launches, etc.

Speaker #4: I mean, some of these launches that we're doing in this quarter, we may have done in last quarter and we pushed them, etc.

Speaker #3: So, in the core part of the portfolio, would your share of voice broadly have been maintained in the last couple of quarters?

Arnab Mitra: In the core part of the portfolio, would your share of voice broadly have been maintained in the last couple of quarters?

Speaker #4: Yes, our share of voice has been maintained. Competitors have also faced the same inflation in each category, so the response has been roughly similar.

Sudhir Sitapati: Yes. Our share of voice has been maintained. Competitors have also faced the same inflation in each category, the response has been roughly similar.

Speaker #3: Sure, thanks. That's very helpful. My second question is actually again on Africa. So, assuming you're able to hold the constant currency growth at higher levels, given that it's a very complex basket of currencies, the currency tailwind seemed much higher than what we had anticipated.

Arnab Mitra: Sure, thanks. That's very helpful. My second question is actually again on Africa. Assuming you're able to hold the constant currency growth at higher levels, given that it's a very complex basket of currencies, the currency tailwind seemed much higher than what we had anticipated. Does this tailwind stay for the entire year based on where currencies currently are in your own assessment?

Speaker #3: So does this tailwind stay for another entire year based on where currencies currently are, in your own assessment?

Aasif Malbari: Arnab, it's likely to stay for another four to five months, towards the lag end of H2, it's likely to reduce.

Speaker #1: Arnab, it's likely to stay for another four to five months. And towards the latter end of the second half, it's likely to reduce.

Speaker #3: Got it, got it, understood. And my last question was on soaps. If you could just give some sense of how the volumes in soaps have grown, and is there a positive effect on soaps this year due to the weather—like there is on HI, where you're seeing a negative effect?

Arnab Mitra: Got it. Understood. My last question was on soaps. If you could just give some sense of how the volumes in soaps have grown, is there a positive effect on soaps this year due to the weather like there is on HI, which is a negative effect that you're seeing?

Speaker #4: See, we've grown soaps volumes in the quarter. Firstly, they were positive. We expect soaps in this quarter and the next to grow faster.

Sudhir Sitapati: We grew soaps volumes in the quarter, firstly. They were positive. We expect soaps in this quarter and the next to grow faster, it'll still be early single digits. After a few quarters, actually, we've grown positively on soap volumes.

Speaker #4: It'll still be early single digits. But after a few quarters, actually, we've grown positively on soap volumes.

Speaker #3: Got it. Thanks. That's it from my side. All the best.

Arnab Mitra: Got it. Thanks. That's it from my side. All the rest.

Speaker #1: The next question comes from the line of Anurag Dayal with Philip Capital. Please go ahead.

Operator 4: The next question comes from the line of Anurag Dayal with PhillipCapital. Please go ahead.

Speaker #5: Yeah. Hi. I can hold for opportunities, sir. I have one clarification first. Is there a change in the way we report our domestic segment revenue? Was home care sales around ₹100 crore, and personal care ₹1,400 crore?

Anurag Dayal: Yeah. Hi. Thanks for the opportunity, sir. I have one clarification first. Is there a change in which we report our domestic segment revenue? Home care sales is around INR 1,100 crore, personal care is INR 1,400, India total is INR 3,500. This means the unbranded and exports is virtually nil. Have we clubbed that along with the home care and personal care?

Speaker #5: India total is 2,500. So, which means the unbranded exports are virtually nil. So, have we clubbed that along with the Home Care and Personal Care?

Speaker #1: That's right. We've done that because we realized, when we get into reconsiderations every quarter—so this time, you'll see that both the categories actually tie up to the total.

Aasif Malbari: That's right. We've done that because we realized when we get into reconciliations every quarter. This time now you'll see that both the categories actually tie up to the total. We've also restated the historical numbers accordingly.

Speaker #1: And we've also restated the historical numbers accordingly.

Anurag Dayal: Okay. What would be the growth if you could have been? Exports are doing really well in the last quarter. If we remove the exports part, especially in home care, then what would be the growth?

Speaker #5: Okay. So then what would be the growth if you could have been — because exports are doing really well in the last quarter.

Speaker #1: So, if we remove the exports part, especially in home care, then what would be the growth? I don’t think it would kind of materially change.

Aasif Malbari: I don't think it would kind of materially change. I mean, it won't kind of materially change. Some of this gets netted off, at a console level.

Speaker #1: I mean, yeah, it won't kind of materially change. And some of this gets netted off at a control level.

Speaker #5: Sure. Second question is on Indonesia. So, just jumping in on UEG at 10%, which is much better than what you were expecting. Could you just give some understanding of what has happened there? Which segments have done well, and how is the competitive intensity currently? How do we foresee the growth going forward?

Anurag Dayal: Sure. Second question is on Indonesia. With this jump in UVG at 10% has been much better than what we were expecting. Could you just give an understanding of what has happened there, which segments have done well, and how the competitive intensity currently, and how we foresee the growth going forward?

Speaker #4: I think there are three things. One, Indonesia is sitting on a slightly slower base. And even last year, we were unduly worried about the volume because, the second thing is that our air business—we have significantly stepped up media on our air business there because we realized it was the same model across the world, and we needed to step up investments.

Sudhir Sitapati: I think there are three things. One is Indonesia is sitting on a slightly slower base, and even last year we were unduly worried about the volumes. The second thing is that our air business, we have significantly stepped up media on our air business there because we realized it was the same model across the world and we needed to step up investment. That growth rate has stepped up, which I think is sustainable. I suspect we saw a little bit of the benefits of the El Niño already in Q1. We'll see more of it in Q2.

Speaker #4: So that growth rate has stepped up, which I think is sustainable. And I suspect we saw a little bit of the benefits of the El Niño already in Q1.

Speaker #4: We'll see more of it in Q2.

Speaker #5: Okay, that's what I can. Thank you, sir.

Anurag Dayal: Okay. That's what I meant. Thank you, sir.

Speaker #3: The next question comes from the line of Harith Kapoor with Investech. Please go ahead.

Operator 4: The next question comes from the line of Harit Kapoor with Investec. Please go ahead.

Speaker #5: Yeah. Good evening. Just two questions from my end. One was on HI. I think you did mention about market shares expanding in this segment.

Harit Kapoor: Yeah, good evening. Just two questions from my end. One was on HI. I think you did mention about the market shares expanding in this segment. If you could just double-click more on whether it’s largely still been driven by incense or you’ve seen some of the other segments also, which anyways had very high market shares also contribute to this. Just wanted to get a sense of competitive intensity and how you manage that.

Speaker #5: If you could just kind of double-click more on whether it’s largely still been driven by incense, or if you’ve seen some of the other segments—which anyway had very high market shares—also contribute to this.

Speaker #5: I just wanted to get a sense of the competitive intensity and how you've managed that, sir.

Speaker #4: It's actually been driven by two reasons. It has not been driven by gaining share in premium segments, where we already have a very high share.

Sudhir Sitapati: It’s actually been driven by two reasons. It has not been driven by gaining share in premium segments where we are already very high share. It has been driven by two reasons. One is very sharp share gain in incense sticks. The second is we are parallelly doing a de-influencing on illegal incense sticks, which has slowed down the incense stick category. Because we have higher shares in premium, and the incense sticks was growing at 30% last year, it’s now down to, I think, high single digit or early double digits. That gives us a differential mix. That negative headwind that we had because of incense stick category growing very fast is significantly reduced. These are the two reasons.

Speaker #4: It has been driven by two reasons. One is very sharp share gain in incense sticks, and the second is we have been parallelly doing a deinfluencing on illegal incense sticks, which has slowed down the incense stick category.

Speaker #4: So, because we have higher shares in premium, and the incense sticks were growing at about 30% last year, it's now down to, I think, high single digit or about high single digit or early double digit.

Speaker #4: So that gives us a differential mix. So that negative headwind that we had because of the incense stick category growing very fast is significantly reduced.

Speaker #4: These are the two reasons.

Speaker #5: Got it. So this, ideally, should be maintained, right? In terms of growth, etc., you should start to—I mean, obviously it's contingent on sector growth—but share gains, these are kind of structural in the way you're looking at it.

Harit Kapoor: Got it. This ideally should be maintained, right? In terms of growth, et cetera. Obviously, contingent on sector growth, but share gains, these are kind of structural in the way you’re looking at it.

Speaker #4: I think share gain in HI is structural. See, this is a very small share gain we got in Q1. So, as I have written in my note, we don't have to, but it is structural because over the last decade, I think we've lost 15 or 20 percent share of overall household insecticide.

Sudhir Sitapati: I think share gain in HI is structural. See, this is a very small share gain we got in Q1. As I written in my note. It is structural because over the last decade, I think we’ve lost 15% or 20% share of overall household insecticides. We are now 16 share of incense stick. As incense stick becomes bigger and bigger, and our share of handlers is close to 45. That’s where we’ll end up eventually. Now structurally, we should start gaining back share after this quarter.

Speaker #4: Now, we are at 16% share of incense sticks. Now, as the incense stick market becomes bigger and bigger, our share of handlers is close to 45%.

Speaker #4: So that's why we've ended up eventually. So, now structurally, we should start gaining back share after this quarter.

Speaker #5: Got it. And just one question, non-result, which is on your pet care investment—recently, you put in an additional ₹200 crore on rights. If you could just talk a little bit about the commitment to that business incrementally, that would be helpful.

Harit Kapoor: Got it. Just one question, non-result, which is on your pet care investment recently that you put in in relation to INR 100 crore and rights. Could you just talk a little bit about the commitment to that business incrementally? That'd be helpful.

Speaker #4: I think the important thing is that when we launched the pet care business, we committed ₹500 crore of capital to pet care. These are long gestation businesses, with an entirely new supply chain and an entirely new sales force.

Sudhir Sitapati: I think the important thing is that when we launched the pet care business, we committed INR 500 crore of capital to pet care. These are long gestation businesses with an entirely new supply chain, entirely new sales force, one has to be prepared to take losses for a few years. I think the good news in pet care is we've been launching it in Tamil Nadu now for, I think, the last one and a half years. To be honest, for the first 6, 7 months, we didn't have product market fit, which is why we didn't expand beyond Tamil Nadu. We've now got product market fit in TN, as we speak, we're expanding to the rest of South India.

Speaker #4: So one has to be prepared to take losses for a few years. So, I think the good news in pet care is we've been launching it in Tamil Nadu now for, I think, the last one and a half years.

Speaker #4: And to be honest, for the first six or seven months, we didn't have product-market fit, which is why we didn't expand beyond Tamil Nadu.

Speaker #4: But we've now got product–market fit in TN, and as we speak, we're expanding to the rest of South India.

Speaker #5: Great. Wish you all the best. Thank you.

Harit Kapoor: Great. Wish you all the best. Thank you.

Speaker #4: Thank you.

Sudhir Sitapati: Thank you.

Speaker #3: The next question comes from the line of Nitin Shakbir with Green Capital Single Family Office. Please go ahead.

Operator 4: The next question comes from the line of Nitin Shakdher with Green Capital Single Family Office. Please go ahead.

Speaker #5: Hi. Good afternoon to the management. This is Nitin Shakdir from the Green Capital Single Family Office. My question is more as an investor rather than an analyst.

Nitin Shakdher: Hi. Good afternoon to the management. This is Nitin Shakdher from the Green Capital Single Family Office. My question is more as an investor rather than an analyst. Obviously, you've acquired Muuchstac, and obviously, your M&A team is very active in terms of looking at opportunities. My question is more strategic. What's been the experience of management acquiring or building a new category, and in terms of top line, and what's your strategic experience with acquisitions and how you've been able to look at different categories, just as a forward-looking vision in terms of strategic actual revenue?

Speaker #5: Obviously, you've acquired Mostrak, and obviously your M&A team is very active in terms of looking at opportunities. My question is more strategic: what has been the experience of management acquiring or building a new category in terms of top line? And what's your strategic experience with acquisitions and how have you been able to look at different categories?

Speaker #5: Just as a forward-looking vision in terms of strategic additional revenue.

Speaker #4: I think the Mostrak acquisition is working quite strongly. I think since we took over the acquisition itself, we have grown by about 70 or 80 percent from the run rate.

Sudhir Sitapati: I think the Muuchstac acquisition is working quite strongly. I think since we took over the acquisition itself, I think we have grown by about 70% or 80% from the run rate. This rate of growth continues. It's also, as we told you at the time of acquisition, a highly profitable business. From day one it was an EPS accretive acquisition. It's a digital-first brand and one of the few digital-first brands that are profitable. I think that's good. I think there are learnings in acquisitions in terms of this seems to be the right size. I think one has to be quite confident of the fundamental profitability of an acquisition, especially in this smaller DTC space. I would say a lot of learnings for us from Muuchstac, but it's still early days. One shouldn't call these wins too soon.

Speaker #4: So, this rate of growth continues. It's also, as we told you at the time of acquisition, a highly profitable business. From day one, it was an EPS-accretive acquisition.

Speaker #4: It's a digital-first brand and one of the few digital-first brands that are profitable, so I think that's good. I think there are learnings in acquisitions in terms of this seems to be the right size.

Speaker #4: I think one has to be quite confident in the fundamental profitability of an acquisition, especially in this smaller DTC space. So, I would say there are a lot of learnings for us from Mostrak, but it's still early days.

Speaker #4: One shouldn't call these wins too soon. It's only been six or eight months, but these six or eight months have been very good. And some of the capabilities of Mostrak—which is the other thing about Mostrak—we are starting to use it on other brands.

Sudhir Sitapati: It's only been six or eight months. These six or eight months have been very good. Some of the capabilities of Muuchstac, which is the other thing about Muuchstac, we are starting to use it on other brands.

Speaker #5: Sure. My question is more from an investor who looks at very niche categories. Where large companies can sort of look at building value. So there are categories which are coming up in personal care, which is, let's say, hair building fibers, which are there's a brand called Topix which does a 50 million annual run rate on hair building fibers.

Nitin Shakdher: Sure. My question is more from an investor who looks at very niche categories where large companies can sort of look at building value. There are categories which are coming up in personal care, which is, let's say, hair building fibers. There's a brand called Toppik, which does $50 million annual run rate on hair building fibers. Is GCPL also looking at smaller categories to acquire rather than just building the portfolio? It's a chicken and egg story, right? Whether you invest to acquire or whether you build a category, there's no right or wrong answer. I'm sure with your 20-plus years in experience in media, you've seen it and done it all. Just a quick short perspective on that in terms of innovation within GCPL.

Speaker #5: So, is GCPL also looking at smaller categories to acquire, rather than just building the portfolio? Because it's a chicken and egg story, right? Whether you invest to acquire or whether you build a category—there's no right or wrong answer.

Speaker #5: I'm sure with your 20-plus years of experience in Unity, where you've seen it and done it all. So, just a quick, short perspective on that in terms of innovation within GCPL.

Sudhir Sitapati: As a company, I would say GCPL has done, in the last 5 years, quite a large portfolio transformation, which is why even in a quarter in which we have a disastrous HI season, we're still able to pull off with good results. Otherwise, it wouldn't have happened if the portfolio was as dependent on HI and soaps as it used to be. I think, firstly, we have had a dramatic portfolio transformation. I think what is slightly different about us is most of our portfolio transformation has been organic. We have entered or expanded categories like detergent, liquid, hair care, pet, dishwash or toilet cleaner. Having said so, I would say our first priority, it is less risky to enter a category organically than it is to enter inorganically.

Speaker #4: As a company, I would say GCPL has done, in the last five years, quite a large portfolio transformation, which is why even in a quarter in which you have a disastrous HI season, we're still able to pull off good results.

Speaker #4: Otherwise, it wouldn't have happened if the portfolio was as dependent on HI and soaps as it used to be. So, I think firstly, we have had a dramatic portfolio transformation.

Speaker #4: I think what is slightly different about us is most of our portfolio transformation has been organic. We have entered or expanded categories like detergent, liquids, air care, pet, your small or dishwash, or toilet cleaner.

Speaker #4: So, I would say our first priority is that it is less risky to enter a category organically than it is to enter inorganically.

Speaker #4: But if you can't, for some reason, enter a category inorganically—like, I think we would not have been able to enter deodorant fragrances organically, or we would not have been able to enter face wash organically.

Sudhir Sitapati: If you can't, for some reason, enter a category organically, I think we would not have been able to enter Dior and fragrances organically, or we would not have been able to enter face wash organically. These are very competitive categories. Or if one doesn't have the technology, one has to enter inorganically.

Speaker #4: It is a very competitive category. One has to, or if one doesn't have the technology, one has to enter inorganically.

Speaker #5: Thank you. Thank you for the clarity, and all the best to the team and management at GCPL. All the best.

Nitin Shakdher: Thank you, Sudhir, for the clarity and all the best to the team and management at GCPL. All the best.

Speaker #4: Thank you.

Operator 4: Thanks.

Speaker #3: The next question comes from the line of Sudesh Deshmukh with IIFL Capital. Please go ahead.

Operator 4: The next question comes from the line of Siddhesh Deshmukh with IIFL Capital. Please go ahead.

Speaker #5: Yeah. Hi, sir, this is Percy Pantheki here. Just wanted to understand—in the nature of performance, a few quarters ago it was like we were sort of in really dire straits.

Siddhesh Deshmukh: Yeah. Hi, sir. This is Siddhesh Panteki here. Just wanted to understand Indonesia performance. A few quarters ago, it was like we were sort of in really dire straits, and now sort of it's really high growth. What really has changed here? I'm sure the macro cannot really change so much. Is it some kind of destocking, restocking of modern trade, or is there some sort of major distribution expansion, or is there some completely new star product which has turned around? What really is driving this?

Speaker #5: And now, sort of, it's a really high growth. So, what really has changed here? I'm sure the macro cannot really change so much. Is it some kind of restocking of modern trade, or is there some sort of major distribution expansion, or is there some completely new star product which has turned around?

Speaker #5: What really is driving this?

Speaker #4: Percy, there are four reasons. Macro is one. Base is a second. El Niño is probably a third. And the fourth, which is structural, is faster growth in our Stella business, which has been a laggard for many years.

Sudhir Sitapati: Siddhesh, there are four reasons. Macro is one, base is the second, El Niño is probably a third, and the fourth, which is structural, is faster growth on our Stella business, which has been a laggard for many years. I think it's too early to say, but given the fact that we seem to have a global air model, is the fourth thing.

Speaker #4: Seems to have—I think it's too early to say, but given the fact that we seem to have a global air model, is the fourth thing.

Speaker #5: Can you elaborate a little bit on the El Niño part? Sorry, I joined late in case you’ve covered it already.

Siddhesh Deshmukh: Can you elaborate a little bit on the El Niño part? Sorry, I joined late in case you have covered this.

Sudhir Sitapati: Oh, it's okay. No, I'd already said that somebody asked me the question, what's the impact of El Niño on your business? I said in India, in H1, it's likely to be poor in HI. In H2, it's likely to be better. In Indonesia, generally likely to be better. Because Indonesia sits, it gets hotter and rains more. India, it gets hotter but rains less.

Speaker #4: Oh, it's okay. No, I'd already said that somebody asked me the question: What's the impact of El Niño on your business? I said in India, in the first half it's likely to be poor; in H2, in the second half it's likely to be better; and in Indonesia, it's generally likely to be better.

Speaker #4: Because Indonesia sits it gets hotter and rains more. India it gets hotter but rains less. The big impact on business of course the other impact of Elnino which is yet to be seen is the impact of Elnino on palm crop.

Siddhesh Deshmukh: Understood.

Sudhir Sitapati: HI has seen a big impact on business. Of course, the other impact of El Niño which is yet to be seen is the impact of El Niño on palm crop and what happens there.

Speaker #4: And what happens there?

Speaker #5: Understood.

Siddhesh Deshmukh: Understood. Secondly, understanding India margins. I understand that basically the reason why the margin is low is the gross margin pressures. If I have to drill down further into this, is it mainly palm which is the problem area? I know packaging, et cetera, would also have gone up, but given your COGS basket in India, is it palm mainly which is driving it or is it something else?

Speaker #4: Secondly, understanding India margins.

Speaker #5: I understand that, basically, the reason why the margin is low is the gross margin pressure. If I have to drill down further into this, is it mainly palm which is the problem area, or—I mean, I know packaging, etcetera.

Speaker #5: It would also have gone up, but given your COGS basket in India, is it mainly palm that's driving it, or is it something else?

Sudhir Sitapati: No, it is not palm. Palm a little bit. It's certainly not packaging also a little bit. The real three things are that, see, we are the only users in FMCG or the largest users. We are the largest LPG users in FMCG. We are also the largest kerosene user because kerosene goes into household insecticide products, and we are a reasonable, though nowhere close to the largest user of LABSA. If there was a 10%, 15% or 20% inflation, these are not large enough to matter in the overall basket. Each of these had a 3x inflation, so the prices trebled in Q1. LPG too was not even available, and in fact, the government for a period of time had banned it from being used for commercial purposes. These three have hit us really badly.

Speaker #4: A little bit—it's certainly not packaging also a little bit—but the real three things are that, see, we are the only users in FMCG, or the largest users.

Speaker #4: We are the largest LPG users in FMCG. We are also the largest kerosene user because kerosene goes into household insecticide products. And we are a reasonable though not nowhere close to the largest user of LAPSA.

Speaker #4: Now, all these—if there was a 10%, 15%, or 20% inflation—these are not large enough to matter in the overall basket.

Speaker #4: But each of these had a 3X inflation. So the prices trebled in quarter one. LPG though was not even available and in fact the government for a period of time had not even had banned it from being used for commercial purposes.

Speaker #4: So, these three have hit us really badly.

Speaker #5: And on these three what is the current situation versus the average cost that we consumption cost that we saw in Q1? Currently what is the sort of consumption cost and therefore just on these three kind of normalizing without any other factor playing just this one factor sort of changing what kind of sort of margin expansion sequentially can be expected.

Siddhesh Deshmukh: On these three, what is the current situation versus the average consumption cost that we saw in Q1? Currently, what is the sort of consumption cost? Therefore, just on these three kind of normalizing without any other factor playing, just this one factor sort of changing, what kind of margin expansion sequentially can be expected?

Speaker #4: Yeah, I mean Q2 is still not the GOAT because there's a consumption replacement issue. It's only in Q3. But I'll tell you, for example, LPG before the war was ₹60 a kilo.

Sudhir Sitapati: Q2 will still not be good because there's a consumption replacement issue. It's only in Q3, but I'll tell you, for example, LPG, before the war, was INR 60 a kilo. At the peak of the war, it went to INR 190. I think our average consumption was about maybe, I don't know, a little lower than that, and it's now back to INR 90 a kilo. What happens in the war is that even though the crude prices went up only by 50%, there are these middle distillates which are used in jet fuel, et cetera, which trebled, and they trebled for a short period of two, three months. Unfortunately, some of that that we bought continues in Q2 as well. These are now back to 90. Ninety is not a big deal.

Speaker #4: At the peak of the war, it went to ₹190. I think our average consumption was about, maybe, I don't know, lower than that.

Speaker #4: And it's now back to 90 rupees a kilo. So what happens in the war is that even though the crude prices went up only by 50 percent, there are these middle distillates which are used in jet fuel, etc.

Speaker #4: which went trebled. And they trebled for a short period of two, three months. Unfortunately, some of that that we've bought continues in Q2 as well.

Speaker #4: But these are now back to 90. Ninety is not a big deal. That is because LPG, in the larger scheme of things, is not like palm oil or anything for us.

Sudhir Sitapati: That is because LPG in the larger scheme of things is not like palm oil or anything for us. It's not that kind of salience. We'll be able to manage between pricing and other things, 50% inflation quite easily. Just to let you understand the kind of inflation that we faced in LPG, LABSA. All these three went up, trebled.

Speaker #4: It's not that kind of salience. So we'll be able to manage between pricing and other things—50% inflation—quite easily. But that's the... but just to let you understand the kind of inflation that we faced in LPG, LAPSA, all these three went up, trebled.

Speaker #5: Understood, understood. So basically, on pricing, you have 5 percent India-to-India business. Now, assuming that this is time-weighted, that you've not taken everything on 1st of April.

Siddhesh Deshmukh: Understood. Basically, on pricing, you have 5% India business. Now, assuming that this is time-weighted, that you've not taken everything on 1 April, we would have a higher pricing in Q2, right? Secondly, one is the time waiting, and secondly, have you taken any further price increases after the end of the quarter?

Speaker #5: We would have a higher pricing in Q2, right? And secondly, one is the time waiting, and secondly, have you taken any further price increases after the end of the quarter?

Speaker #4: No, I mean, Percy, we may get a similar kind of price increase in Q2 as well, because you have to remember that last year also, from Q2 to Q1, you always take up a one to one and a half percent price increase.

Sudhir Sitapati: Firstly, we may get a similar kind of price increase in Q2 as well, because you have to remember that last year also Q2 to Q1, you always take up 1%, 1.5% price increase. While we've taken up sequential price increase, that will be the same thing for last year's price increase as well. I think we've kind of held on to price because you remember what's happened to crude, right? Because ultimately, see, what happens is all these commodities are crude linked. It may take 3, 4 weeks after crude prices to cool. Because crude went 200, then it came back all the way down to almost 70. Now Brent seems to be at 84. The prices are so volatile. I can say that if Brent remains in this 80 to 85 range, we have broadly priced for it.

Speaker #4: So, while we've taken up sequential price increases, that will be the same thing for last year's price increase as well. I think we've kind of held on to price, because you remember what's happened to crude, right?

Speaker #4: Ultimately, what happens is all these commodities are crude-linked. They may take three to four weeks after crude prices change to cool off. Because crude went to $100, then it came back all the way down to almost $70.

Speaker #4: Now Brent seems to be at $84, so the prices are very volatile. But I can say that if Brent remains in this $80 to $85 range, we have broadly priced for it.

Speaker #5: Understood. I understand HI might be a problem for Q2 as well, but in the second half of the year, can we expect the India volume to move up from 7 percent to maybe something like 9 percent?

Siddhesh Deshmukh: Understood. Coming to your India volume, I understand HI might be a problem for Q2 as well. In the H2 of the year, can we expect the India volume to move up from 7% to maybe something like 9%?

Speaker #4: I mean I don't know about that but as I told you that this is the see India has a volume every quarter we want to take up 100 bips.

Sudhir Sitapati: I don't know about that. As I told you, see, India is a volume. Every quarter, we want to take up 100 basis points. This is certainly a quarter that has been on the lower end of the range because of poor HI season and extremely poor fill rates as well. Many of these LPG-driven categories, we had fill rates which fell by 20%, 25%. I would say this is broadly on the lower end of the spectrum on India that we will get. I do feel like India is maybe an 8 kind of volume business.

Speaker #4: This is certainly a quarter that has been on the lower end of the range, because of a poor HI season and extremely poor fill rates as well.

Speaker #4: So, many of these LPG-driven rates fell by 20–25 percent. So this isn’t the— I would say this is broadly on the lower end of the spectrum on India that we will get.

Speaker #4: So, I do feel like India is, I mean, yeah, maybe an 8x kind of volume business.

Siddhesh Deshmukh: Understood. That's all from me. Thanks a lot.

Speaker #5: Understood. That was a new tank and all of it.

Speaker #1: The next question comes from the line of Nihal Jan with HSBC Bank. Please go ahead.

Operator 4: The next question comes from the line of Nihal Jham with HSBC Bank. Please go ahead.

Speaker #5: Yes, sir. Good evening, management. I had just one clarification on the margin bit. If I heard right, we saw a blended cost inflation of 6% and we took a blended price hike of 5%.

Operator 3: Yes, sir. Good evening, management. I had just one clarification on the margin bit. If I heard right, we saw a blended cost inflation of 6% and we took a blended price hike of 5%. I think the India gross margins are more than a 300 basis points contraction. Just to understand, was it more timing based that this kind of a differential got created?

Speaker #5: But I think the India gross margin showed more than a 300 basis points contraction. So, just to understand, was it more timing-based that this kind of a differential got created?

Speaker #4: Oh no, see, we got a 6% cost increase over what we had already planned. So we had already planned a 2–3% price increase.

Sudhir Sitapati: Oh, no. See, we got a 6% cost increase over what we had already planned. We had already planned 2%, 3% price increase. We took another 2%, 3% because every year you anyway plan for 2%, 3%, right? This 6% was over and above the cost that had anyway gone up. These were the war-linked costs, not the total costs.

Speaker #4: So we had to— we took another 2–3 percent, because every year you anyway plan for 2–3 percent, right? So this 6 percent was over and above the cost that had anyway gone up.

Speaker #4: These were the war-linked costs, not the total costs. You get what I'm saying? This six was the delta over the natural cost increase that you had anyway built in, on the price increase you built in.

Operator 3: Got it.

Sudhir Sitapati: You get what I'm saying? This is 6 was the delta over the natural cost increase that you anyway built in and the price increase you built in. The overall cost increase would have been closer to 9%.

Speaker #4: So, the overall cost increase would have been closer to 9%.

Speaker #5: Overall. 9 percent. Understood.

Operator 3: Overall 9%. Understood.

Speaker #4: Over and above our planning exercise, 9 to 10 percent—of which 6 was unforeseen. The other 3 or 4, we foresee and price for.

Sudhir Sitapati: Over and above our planning exercise, 9% to 10%, of which 6 was unforeseen. The other 3, 4 we foreseen for and priced for.

Speaker #5: That is very clear, Sudeep. And Sudeep, just one clarification—I know historically, whenever we've spoken of India margins, you've always mentioned about 24 to 26.

Operator 3: That is very clear, Sudhir. Sudhir, there's 1 clarification. I know historically, whenever you've spoken of India margin, you've always mentioned about 24 to 26. I know you just mentioned about 22 to 26, but is this just re-hashing because of the volatility that-

Speaker #5: I know you just mentioned about 22 to 26, but is this just reassigning because of the volatility?

Sudhir Sitapati: Yeah. As well as volatility, unfortunately, we've had two H1s, the H1 of this year and H1 of last year, both of which went below normative. Last year we had massive fluctuation in palm oil prices. This year we've had massive fluctuation in crude oil prices. This kind of 24% to 26% on a yearly basis, quarters may vary a little bit because depending on the weight of soaps, et cetera, that is what we are aiming for, and even this year we'll see how we can get close to that.

Speaker #4: Yeah, it was volatility. Unfortunately, we've had two first halves—the first half of this year and the first half of last year—both of which went below normative.

Speaker #4: Last year, we had massive fluctuation in palm oil prices. This year, we've had massive fluctuation in crude oil prices. But this kind of 24 to 26, on a yearly basis—quarters may vary a little bit, depending on the weight of soaps, etc.

Speaker #4: That is what we're aiming for, and even this year, we'll see how we can get close to that.

Speaker #5: Understood. One final question: Now, in Guam, what is the ballpark share of the SMCG business?

Operator 3: Understood. One final question. Now in GoM, what is the ballpark share of the FMCG business?

Speaker #1: Asif.

Sudhir Sitapati: Asif?

Aasif Malbari: Yeah, I think it's best to kind of see that on an annual basis. Let me put it this way. I think we get broadly 75% of our growth kind of should come from FMCG. As a starting point, Athalians was broadly half.

Speaker #3: Yeah, I think it's best to kind of see that on an annual basis. But let me put it this way: I think broadly 75 percent of our growth should come from SMCG.

Speaker #3: And as a starting point, salience was broadly half and half.

Speaker #5: So, if I heard you right, you said in FY26 you were at a 50/50 split between SMCG and the dry hair portfolio.

Operator 3: If I heard you right, you said FY26 you were at a 50-50 split between FMCG and the dry hair portfolio.

Speaker #3: That's right.

Aasif Malbari: That's right.

Speaker #5: Okay, sure. That's helpful. Thank you so much.

Operator 3: Okay, sure. That's it. Thank you so much.

Speaker #1: The next question comes from the line of Avnish Roy with Nuwama Wealth Management. Please go ahead.

Operator 4: The next question comes from the line of Abneesh Roy with Nuvama Wealth Management. Please go ahead.

Speaker #4: Yeah, my question is on the last two first halves. We have seen that your India margins have been below your normative. In that same time frame, we have seen the market leader also reduce their EBITDA margin guidance by 100 bps.

Abneesh Roy: Yeah. My question is on the last two H1, we have seen that your India margins have been below your normative. In that same timeframe, we have seen the market leader also reduce their EBITDA margin guidance by 100 basis points. Is there any linkage to that? Because see, every year nowadays it's a VUCA world, right? Every year commodity is volatile, and in an FMCG branded business, that is the beauty of the business. Is there any linkage that in soaps structurally because market leader has reduced their aspiration, so it's a genuine bottleneck for you also.

Speaker #4: Is there any linkage to that? Because, see, every year nowadays, it's a VUCA world, right? Every year, commodity is volatile. And in an FMCG branded business, that is the beauty of the business.

Speaker #4: Is there any linkage in soaps structurally? Because the market leader has reduced their aspiration, so it's a genuine bottleneck for you also. No, if that was the case, in the second half also we would have had low margins, right?

Sudhir Sitapati: No. If that was the case, in H2 also, we would have had low margins, right? We were able to recover H2 of last year to normative margins.

Speaker #4: We were able to recover the second half of last year in normative margins. But, right? The mix will be different in the second half versus the previous year.

Abneesh Roy: This quarter will be different, right? This will be different in H2.

Sudhir Sitapati: Versus the previous year. See, if you take our EBITDA growth in H2 in India, it was close to 17% and 18%, no. The margins adjusting for seasonality in H2 were fine. You're right. It looks like there are two consecutive years. It's unlikely to have a third year now where Just say, for example, palm oil went up a little bit. That's not been the main cause of our margin dilution. It's just this LPG and kerosene, which low salience, but incredible increases in prices. It's not like we just got hit by packaging, et cetera. It is unlikely that this kind of cost hit will happen to us because a lot of the margin hits that we've had in this quarter, actually, our soap margin, for example, is at our normative levels. That's not where we've taken a margin hit.

Speaker #4: I'm just saying, see, if you take our EBITDA growth in the second half in India, it was close to 17-18%. So, the margins, adjusting for seasonality in the second half, were fine.

Speaker #4: It is, I mean, I mean you're right. It looks like there are two consecutive years, but these have been—it's unlikely to have a third year now where—see, this year for example, palm oil went up a little bit.

Speaker #4: That's not been the main cause of our margin dilution. It's mainly been, and it's just this LPG and kerosene, which are low salience but have seen incredible increases in prices.

Speaker #4: So, it's not like we just got hit by packaging, etc. So, it is unlikely that this kind of cost hit will happen to us because, you know, a lot of the margin hits that we've had in this quarter—actually, our soap margin, for example, is at our normative levels.

Speaker #4: That's not where we've taken the margin hit. We've taken the margin hit in PAKS, in air care, and in laundry. These are the categories that—in household insecticide, actually—we've taken a big margin hit. These are the categories that have been hit.

Sudhir Sitapati: We've taken a margin hit in PAKs, in air care, in laundry. In household insecticide, actually, we've taken a big margin hit. These are the categories that have been hit. Last year we were hit in soap margins.

Speaker #4: Last year, we were hit in soap margins. Next one? Yeah, go on.

Abneesh Roy: Understood.

Sudhir Sitapati: I don't-

Abneesh Roy: Next follow-up is Yeah, go on. Understood. Next follow-up is on your hair color business and, say, shampoo. If you could comment on how you think outlook is on hair color. Second is shampoo category, even market leader is seeing very strong growth, and even hair oil companies are now seemingly betting big on that. You also have a small niche presence through the Godrej Professional. Any plans for long-term on the mass end of shampoo?

Speaker #1: Understood. Next follow-up is on your hair color business, and say, shampoo. So, it's a good comment on how you think the outlook is on hair color, and the leader is seeing very strong growth, and even hair oil companies are now seemingly betting big on that.

Speaker #1: You also have a small niche presence through Godrej Professional. Any plans for the long term on the mask and end of shampoo?

Speaker #4: No, we don't have any plans on shampoo in the long term, or at least not that we can disclose, or nothing kind of imminent there.

Sudhir Sitapati: No, we don't have any plans on shampoo in the long term, or at least not that we can disclose, or it's nothing kind of imminent there. On hair color, we had a very good quarter. See, in hair color, what has happened is a few years ago, we launched an INR 15 crème. That INR 15 crème, right from the beginning, has had explosive volume growth. It was also doing a little bit of downgrading from the large crème. Now, what has happened is that those curves have intersected, and the large crème is very small, the small crème is very big. As a consequence, we're seeing overall volume and value growth as well coming into hair crème. As I shared, Amish, in the analyst meet, hair color has been one of the fastest-growing categories in terms of penetration.

Speaker #4: On hair color, we had a very good quarter. See, on hair color, what has happened is a few years ago we launched a ₹15 creme. That ₹15 creme, right from the beginning, has had explosive volume growth.

Speaker #4: But it was also doing a little bit of downgrading from the large creme. Now, what has happened is that the curves have intersected and the large creme is very small.

Speaker #4: The small crème is very big. And as a consequence, we're seeing overall volume and value growth as well coming into hair crème. As I shared, Avnish, in the analyst meet, hair color has been one of the fastest growing categories in terms of penetration.

Speaker #1: But Small Creme, isn't it largely for males? Because I don't think males can...

Abneesh Roy: Small crème, isn't it largely for males? Because I don't think women.

Speaker #4: No, no, it's not largely for males. A lot of women use it. It's a massive—it's become a massive rural product. In fact, now, by volume, it's the largest, the widest distributed hair color pack, bigger than the market leader in henna. Over the last four or five years, it's become a really big success.

Sudhir Sitapati: No, it's not largely for males. A lot of women use it. It's become a massive rural product. It's in fact now by volume, the widest distributed hair color pack, bigger than the market leader in henna, and it's, over the last four, five years, become a really big success.

Speaker #1: Okay. The quantity is too small for such a large amount of female hair, I thought.

Abneesh Roy: Okay. Quantity is too small for such a large amount of female hair, I thought.

Speaker #4: Yeah, but people don't always do global coverage. Not everybody has got fully white hair.

Sudhir Sitapati: Yeah, people don't always do global coverage. Not everybody has got white hair fully.

Speaker #1: Understood. Okay, that's all from my side. Thank you.

Abneesh Roy: Understood. Okay. That's all from my side. Thank you.

Speaker #4: Thank you.

Sudhir Sitapati: Thank you.

Speaker #1: Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. Vishal Kedia for the closing remarks.

Operator 4: Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. Vishal Kedia for the closing remarks.

Speaker #5: Thank you for your active participation throughout the call. We hope we have been able to answer all your queries. For any further questions, please reach out to us using our investor relations contact details.

Vishal Kedia (Godrej Consumer Pr: Thank you for the active participation through the call. We hope we have been able to answer all your queries. For any further queries, please reach out to us on our investor relations contact details. Thank you and good evening.

Speaker #5: Thank you and good evening.

Speaker #1: Thank you sir. Ladies and gentlemen on behalf of Godrej Consumer Products that concludes this conference call. Thank you for joining us and you may now disconnect your lines.

Operator 4: Thank you, sir. Ladies and gentlemen, on behalf of Godrej Consumer Products, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.

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