Bajaj Consumer Care Limited (533229) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q3 and 9 Months FY '25 Results Conference Call of Bajaj Consumer, hosted by ICICI Securities Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Karan Bhuwania from ICICI Securities.

Thank you, Larika. Good evening, everyone. It's our pleasure at ICICI Securities to host Q3 FY '25 results conference call of Bajaj Consumer call. From the management, we have Mr. Jaideep Nandi, Managing Director; Mr. Dilip Kumar Maloo, Chief Financial Officer; and Mr. Richard Dsouza, AVP Finance. I'll hand over the call to management for the opening remarks, post which we can open for Q&A. Thank you, sir.

So thank you, Karan, and good afternoon, everyone, and thank you for participating in this Q3 FY '25 earnings call. First, let me apologize for this delay of half an hour. Actually, the Board meeting got a little delayed because the Board was deliberating on a special matter, and I'll cover this in the later part of my opening remarks. So before that, let me take you through the company's performance for the third quarter and the 9 months ended December 31, 2024, before we open the floor for questions. The consolidated sales for the company stood at INR 230.7 crores for the third quarter and INR 703 crores for the 9 months ended FY '25. Consolidated sales declined by 2.4% in the quarter and 4.2% for the 9 months. Gross margin for Q3 FY '24 on a stand-alone basis stood at 51.8%, lower by 150 basis points year-on-year, while on 9 months, the margin stood at 53.2%, lower by 97 basis points. The contraction in gross margin was partially on account of lower margins in coconut oil portfolio. While we took a price increase in Q3 in coconut oil portfolio of about 5%, it could not completely offset the steeper copra price inflation during the quarter. Subsequently, we have taken another round of price increase in high-single-digits in the portfolio in January '25 to mitigate the cost inflation and we plan to take further price increase to cross the inflation that has been seen in the copra prices. Also higher saliency of coconut oil also resulted in a little bit of gross margin dilution. The stand-alone EBITDA for the quarter stood at INR 29.3 crores, while for the 9 months, EBITDA stood at INR 102 crores -- INR 102.5 crores with margins of 13% and 15% respectively. The EBITDA margin for the quarter was impacted year-on-year on account of combination of specific factors like gross margin dilution, as explained above, investments in Project Aarohan for improving our representation reach and ways of working in GT channel, one-time investment in IT infrastructure in Q3 for improving our technology and enablement and increase in number of ISRs to increase the retail coverage. The stand-alone profit after tax stood at INR 27.5 crores for Q3 FY '25 and INR 98.7 crores for 9 months FY '25. GT channel registered a single-digit decline in Q3 FY '25 and 9 month FY '25. On a sequential basis, secondary sales grew by 4%, driven by marginal growth in retail and double-digit growth in wholesale channel and we see wholesale stabilizing now as a result. Initiatives was taken to reduce inventory levels also of distributors by 4 days in the quarter to improve ROI. The secondary sales for the quarter was higher than primary by INR 7 crores. Our retail loyalty program registered a growth of 27% for Q3 FY '25 and 35% for 9 months FY '25. The program contribution now stands at 11% for Q3 and 9 months FY '25 and this will continue to remain a focus area for the company. We have been streamlining our distribution network to improve efficiency and reach. Our van network during COVID period, which was crucial for reaching remote rural markets is now being optimized to also optimize costs. High throughput vans have been converted into direct coverage to sub-sockets based on Project Aarohan recommendations. Further rationalization vans are expected to be done in Phase 2 of Project Aarohan, which would lead to further optimization of costs. While brand rationalization has resulted in some temporary disruption business, we expect the rural sub-sockets business to streamline and deliver strong performance going forward with rationalized cost to sales. In relation to improving quality of distributor channel, we have automated the appointment and separation process via new workflow and through technology enablement where we have incurred the IT cost. The RTM revamp Project Aarohan has made significant progress as of December '24 and is now operational across the entire states of UP and MP. Representation changes have been identified in terms of sub-DB to direct DB, WAN and satellite coverage to sub-DB. Nearly 90% of these identified changes have already been actioned upon in both states of UP and MP. Similarly, a large number of previously unrepresented towns have been brought under coverage. Direct reach has also expanded substantially with UP coverage increasing from 42,400 to about 58,600 outlets, which is about 1.4x and MP from 15,000 to 24,000 outlets, which is about an increase of 1.6x. These changes are expected to increase sales significantly in the near to medium-term. In the Phase 2 of Project Aarohan, we plan to cover all major -- other major states in India over the next 4 years -- 4 quarters. Our geo tagging initiative has been significant -- has made significant progress with all 3.3 lakh urban outlets now geo tagged and geo fenced. This initiative will help us to enhance sales force efficiency and optimize cost to sales in coming quarters. The organized trade business continues to register a robust growth of 22% year-on-year in Q3 and 14% for 9 months FY '25. Modern trade channels registered a growth of 10% led by Diwali activations with ADHO achieving an impressive 18% growth in that channel. While value-added hair oils in Dmart saw a decline, Bajaj was the only brand to record growth, gaining 300 basis points share. The launch of 525 ml SKU of Bajaj 100% Pure Coconut in Apollo resulted in 44% growth in Q3 FY '25. Modern trade B2B posted a 40% growth driven by addition of 175 new stores in metro fashion sales. E-commerce channel continued to witness robust growth of 39% in Q3 year-on-year and 28% in 9 months FY '25. Quick commerce, which has been a focus area for the company, grew by 72% year-on-year, contributing to 10% of the business compared to 7% last year with Swiggy and Zepto recording their highest ever secondary sales. Bajaj 100% Pure Coconut registered a growth of 40% year-on-year. AD Lion achieved its highest secondary sales in Q3 FY '25. Myntra recorded its highest ever offtake in Q3, driven by ADHO and NPDs. CPC and CSD institution sales grew by 25% in the quarter. Growth in institution was enhanced by cross-category consumer promotion activation. International business on a consolidated basis registered a growth of 23% in the quarter and 19% for 9 months FY '25 year-on-year. Bangladesh doubled its top-line in Q3 year-on-year, registered 49% growth for 9 months '25 despite political challenges in the country. Digital engagement activities generated significant reach with 7 million engagements and 13.7 million impressions in Q3 FY '25. Steady growth was witnessed in GCC & Africa, UAE and Lower Gulf saw a healthy growth of 31% for 9 months, opening of new markets in Iraq, Pakistan and Angola aided this growth. We launched our first ever ATL campaign in UAE to raise awareness about hair fall reduction reaching about 2.3 million consumers with VTRs of 65% across YouTube and Meta platform. The rest of world registered a growth of 12% year-on-year and 26% on 9 months. This was broad-based across countries with top 5 countries, Australia, Canada, Malaysia, Tibet and U.S. constituting 73% of the business, growing at 35% year-on-year. Nepal grew by 5% in Q3 year-on-year and 28% for 9 months supported by launch of NPDs outdoor visibility and in-store promotion of CNO, Virgin CNO and serum. The digital influencer engagement for Virgin CNO achieved a reach of 5 lakh with 7% engagement. During the quarter, we launched our new ADHO campaign featuring Kiara Advani. The launch campaign delivered 840 GRPs with a 21% share of voice in the HSM market for Q3 FY '25. This comes on the backdrop of overall lower TV spend by hair oil companies in the quarter. In digital, we reached a reach of about 2.5 crores on key OTT platforms. ASP was increased 190% sequentially on account of the new TV media ad. ADHO witnessed a single-digit decline year-on-year, while on a sequential basis, it remained flat. Large and mid-packs continued to perform better than the small packs. New consumer offers resulted in good traction in large packs Indian markets. This quarter, we also introduced a 24 ml pack of INR 10, which is -- with an improved value proposition and size perception for consumers. This will help in recruitment of new consumers for ADHO. The AD hair and skin range is scaling up well, registered a strong growth of 50% in the quarter and 39% growth for 9 months FY '25, led by growth across major platforms. Regime kits introduced for AD shampoo and conditioners saw positive momentum from activation in large e-commerce players during the festive season. AD body lotion sales on e-commerce were boosted by a new pack launch and influencer marketing campaign. AD soaps grew by 14% in OT and brand is performing well on Flipkart. AD serum saw a high-single-digit growth in Q3 and 16% overall. Bajaj 100% Pure Oil registered a growth of 8% in Q3, 19% for 9 months FY '25. The product has been scaling up well and has reached an all-India market share of 2%. The brand has attained strong close to double-digit market share in traditional Bajaj stronghold states of Punjab, Rajasthan and MP. Maharashtra has also been seeing growth in market share. We also launched, as we have mentioned, 525 ml in Apollo, which has boosted offtake by about 25%. Moving on to input costs. LLP continued its downward trend in Q3 due to reduced demand and lower crude oil prices. However, it is getting offset by refined mustard oil, which has increased due to higher import duties on edible oils. The global edible oil also saw price increases. Copra price has increased substantially over the past 2 quarters. The company is taking steps to improve gross margins and profitability structurally. While we have taken rounds of price increases in CNO, including in this quarter, we'll keep taking further price increases for the same proactively going forward. Also, we are planning to take graded price increases in ADHO in the coming quarters to further improve margins on the same. Structurally, we are also rationalizing our trade inputs and incentive structure as well to make them optimal. These measures will improve our overall profitability going forward. Multiple initiatives have also been taken to reduce material costs structurally, which will give us sustained benefit in the long-term. The initiatives taken during the year have resulted in a saving of INR 3.3 crores in the first 9 months of the financial year. Our focus on increasing productivity through smart manufacturing, use of technology has resulted in improvement in productivity by about 5% in Guwahati plant and about 13% in Paonta. Our CSR activity also continues to do well with 12,000 families impacted over 600 villages. As part of our ESG commitment, we are on track to meet the short and long-term -- short and mid-term targets in all the key resources, both from the demand and supply side. Rainwater harvesting has been done for the last few quarters, resulting in replenishment of groundwater to the extent of 500% of our water. We are confident that our investment in expanding and rationalizing our distribution network through Project Aarohan continued thrust and diversifying our portfolio and scaling up of organized trade and international business will be strong growth levers for the organization for sustainable growth for the near to mid-term. So while urban demand remains sluggish, rural demand has been showing some improvement. The recent union budget tax relief for middle class is expected to increase disposable income, leading to higher consumption -- consumer spending on essentials and discretionary products. Focus on rural development for agriculture with enhanced productivity is also expected to improve rural income, which augurs well for the industry as well as for Bajaj Consumer Care. Now to share some exciting development. We have just signed a share purchase cum shareholders agreement, which is SPSHA, with a 100% stake in Vishal Personal Care Private Limited, a leading personal care company with presence in all Southern states of India, having their flagship brand, Banjara's. The company was established in 1991 is a trusted brand with strong presence in natural space in the hair and skin care range in South India. The brand offers a wide range of high-quality products which is built on strong business fundamentals and consumer liking. Banjara's has demonstrated a strong performance with 14% revenue CAGR over the past 4 years, coupled with high gross margin, healthy EBITDA margins and a debt free balance sheet with positive cash flow. Now let me take you through the rationale of this acquisition. Firstly, the market of natural products in the BPC product space is significant and is expanding rapidly. Natural BPC products make up about 40% of the total BPC market and is growing 1.5x faster than the overall market. This bodes well with BCCL's traditional and Indian heritage brand credential. Secondly, Banjara's general trade distribution reach through cosmetic stores, pharmacies and groceries all across 5 Southern states substantially adds to BCCL current distribution in Southern states, thereby increasing our distribution to near 3-fold for our existing brands as well. Thirdly, with a wider portfolio offering from Banjara's, we'll be also able to exploit BCCL's wide distribution in HSM markets for the same. And finally, another potential revenue upside will be leveraging BCCL's expertise with Banjara's products in the organized trade as well as in international market. In both of them, Banjara's do not have any significant presence of any kind. So now let me move on to the deal structure. The purchase condition or consideration for the deal is estimated at about INR 120 crores at a pre-money enterprise value of INR 108 crores, which is a multiple of 2x on a trailing 12-month revenue basis -- on a yearly basis. So it's a multiple of 2x on the revenue. In the first tranche, we'll be acquiring 49% stake in the company. The balance 51% will be acquired in the next -- in the coming 3, 4 months, subject to completion of the closing conditions. So we are delighted and very happy to welcome Banjara's within the BCCL family and are excited to unlock the next phase of growth system. With this, I end the opening remarks and open the session for questions. Thank you.

[Operator Instructions] The first question comes from the line of Rachana from SiMPL.

Sir, in our previous calls of FY '23 and FY '24, we have mentioned to achieve high-single-digit to double-digit growth in the near-term, but that's not visible. So can you explain us in detail what challenges we have faced and what is stopping us to generate good sales growth? Second is, other expenses are increasing even though the sales [indiscernible] so what are those expenses? And you also mentioned we have been taking some cost reduction. So please explain that in detail what measures are we taking? Third is with respect to the Banjara acquisition.

Two questions, please. So just prioritize the 2 questions that you want, please.

Okay. Please tell us about the low sales growth and why the other expenses are high? And what cost reduction measures we'll be taking?

So as far as the sales growth is concerned, very clearly, as you have seen the hair oil industry, especially the value-added hair oil segment, if you read the commentaries of other companies as well, while the only product that has been growing in the hair oil category is the coconut category. All other hair oils, if you see commentaries from other companies also, have been under stress. Almond Drops is a premium hair oil in the value-added hair oil category, so obviously has faced headwinds. We have taken enough corrective measures. We are further taking corrective measures in terms of increasing our advertising spend from the brand, et cetera, while we'll also take some price increases and rationalize our cost to ensure that our EBITDA margins are protected. So this is a step that we are taking. The other thing that we have already done, as you will be hearing, is in terms of Project Aarohan. We have been continuously working to ensure that our entire RTM for general trade, because all the pressure that is there is only on general trade. We have corrected the wholesale. The wholesale is slowly coming back. We had seen -- now these are changes that take some time to adopt. It cannot happen overnight. So we wanted to ensure that the large wholesalers are controlled. I think a lot of good hygiene work has happened. Now we are seeing both in terms of number of wholesalers as well as in terms of wholesale itself coming back. It does take time, but now it is already on track. Similarly, for -- in terms of retail presence, we had already had an aim that we wanted to take it. Now we are structurally partnered with a consultant, which we'll be doing for the next 4 quarters as well. And there is already some positive signs we are seeing in UP and MP and now we are going to extend it to 13-odd states. Coming to your cost structures, yes, you're absolutely right. Certain costs have gone up, especially if you look at -- if you break it up in certain areas, the cost will look the same. One is in terms of employee cost because there has been no increase in terms of employees, et cetera. It's just that there is a bit of higher percentage fill as far as employees are concerned, which is making a little bit of a difference. But the bigger difference is obviously a deleveraging where the sales has not grown and the employee cost has had an annual increment. That is what has taken a blip at this current moment. This will get corrected as the sales naturalize and come back in the next few quarters. The other area you will see is in the other expenses, admin expenses, especially. So as I had mentioned, so 2 things are going on. One is a continuous thing where Project Aarohan is going on. So there are some additional investments as far as Project Aarohan is concerned. So this will continue for some more 2, 3 quarters more. Specifically, a one-time investment has been made in IT, certain things like e-invoicing and e-way bill, cloud application protection, geofencing, central managed and detection response and higher BMS support. All of this we have done in this way. We had to do these corrections. We have done it in this quarter. We could have it -- across quarters, we have taken this. This has also resulted in. This will normalize in the next quarter and we'll see this coming back.

The next question comes from the line of Vaibhav Badjatya from Honest and Integrity Investment.

Congratulations for the new acquisition. I hope it works out well. So I have a question on -- so if we look at FY '20, you had EBITDA of around INR 200 crores and now we are on run rate of around INR 140 crores, INR 150. So there is a delta of INR 50 crores. Now if I want to look at it that way that between almond and the new -- and non-almond portfolio, do you think that it is majorly contributed by decline in profitability of the almond portfolio or if you can just broadly give us a break-up, this INR 50 crores decline that has happened, is it because of the almond oil decline in profitability or due to other products?

Fair question. So if you look at -- in terms of structurally, if you are investing in a consumer product, if you're looking at either a new product range or an acquisition or into newer markets or modern trade, international wherever, where you are investing, you will typically go through a 4, 5-year cycle before they start yielding results. So these are the investments that have been made. So there are 2 parts of your -- to answer -- 2-part answer to your question. The first part is investments for growth that we had made. And if you would have seen, we have made significant progress in all the growth levers that we had pushed, whether be it in product diversification, be it in channel diversification or whether be it in international markets, wherever -- all of these places, we have invested for growth and now the growth have slowly come in. Some of the products like coconut, et cetera, have been doing very well. I mean, now it's just a question of, as the business bulks up, then we have a little better pricing power as well, which already we are seeing a bit of it. Only thing is we need to be a little smarter in taking the price increases on time as the commodity prices keep growing because this is a commodity product, we need to just be a little more smarter. That's about it as far as the products are concerned. So some bit of investment has gone into that. So there has been a dilution as far as this. But this was a planned thing. If you really want to make it a company from a single product to a multi-category, multi-channel, multi-country product, this is where it was. So this acquisition is also fitted exactly in that sense where you wanted to get into a market which is under-represented as far as we are concerned. Earlier, we never had a product range which could really cater to the South market. Now we have enough products, including another good brand that we have established, which will go through the Southern market. With our eco that we have in the market is about 27,000, 28,000 in the entire 5 states of South. With this, it will straight away up to 80,000-odd. So straight away we have an advantage of having a far larger distribution network to sell our products. So clearly, so those actions have happened. As far as AGHO is concerned, yes, you're absolutely right. But if you look at the trends as far as the last 5 years is concerned, the value-added hair oil category has faced headwinds. So there has been a lot of blood bath in the marketplace in terms of -- in this value-added hair oil category, and you would see that from commentary of most companies as well. So hence, we being a single product dominated in that hair oil category, obviously, our margins looks directly flows into our P&L directly like that. If there was companies where there are multi-brands, multi-categories, this part of portfolio gets a little hidden. But if you were to cut it out and look at this thing, none of them would be faring any better. So yes, we were in the downward cycle of demand as far as this product is concerned. But now as we feel that the cycles are slowly starting to turn, maybe not yet, but with the government budgets, et cetera, as we see turning, all these investments that we have made, we'll now be able to see. And also, we'll be able to see the results slowly coming out. And also, we -- as I had also mentioned during my presentation that we are also looking at some structural corrections as far as Almond Drops is concerned in terms of pricing increase and investment back into the business. So that is also the other strategic direction we'll take.

Yes, yes. So I understand that you have invested and a part of the decline in EBITDA in absolute terms would be because of that. But I was just trying to get a sense on the fact that how much -- is it majority because of the almond decline in gross margin of the almond portfolio or EBITDA?

Almond Drops portfolio would have declined a bit, not really much. It is more the investments for the future.

The next question comes from the line of Kaushik Poddar from KB Capital Markets Private Limited.

When can you get back to that 15% to 17% margin that you have spoken about in the previous con calls?

So the 15% to 17% margin was just an aberration in this quarter itself. In last quarter, you would have seen that consistently we have delivered 15% to 16%. I don't think this was just an aberration. You should be -- as I said, we had made -- it was in a downward cycle for both in terms of the corrections that we have made, some of the results coming in has slowly started to trickling in, whether be it the wholesale corrections, whether the investments in terms of feet on ground that we have increased, whether the rationalization of fans, which are now being converted into subsidies. So cost structurally, we have done all these corrections. So the results will obviously slowly flowing in the next quarter or 2. But these are the investments. Plus we made those one-time investments as far as the IT requirement and other event, et cetera is concerned. So this is a blip that has happened. You will see this coming back quickly. So that should not...

So we should be around 15% from this quarter onwards and progressing further. That's what you are suggesting?

I won't like to give any forward guidance on that, but you can assume from the structural direction that we have taken that is where we should be looking at even more going forward.

Okay. And this value-added hair oil being a substantial part of your portfolio and that category having not done well for the last few quarters. Do you see the challenge there? Is the market landscape changing for this value-added hair oil?

See, if you look at -- in the last few quarters -- I mean, slowly, we are seeing the demand cycle slowly coming back. While it was quite under stress last year, slowly we are seeing the hair oil category itself coming back in terms of growth as far as numbers are concerned. Obviously, it is still led very much by coconut, but we can also see value-added coconut slowly touching back. And given that this kind of announcement has happened from the budget where we feel that there will be more participation as far as discretionary spends are concerned, we feel we are quite buoyant that Almond Drop also should be able to see a benefit out of the demand cycle reversal.

And what is the time line for this new acquisition being consolidated in your accounts?

So this acquisition, as I said, 49% will go with the first tranche this quarter itself. And by the next quarter, I mean, we have announced next financial, but we'll aim to finish it by 3 to 4 months the entire acquisition.

The next question comes from the line of Gaurav Gandhi from Glorytail Capital Management.

Just one question. Sir, on this new acquisition of Banjara's, which is more into Southern market, what are your plans to take it Pan India? How are you looking it to grow?

So as I said, there will be 4 prong to the strategy. The first and foremost is where we see synergies coming in as far as our company is concerned. We feel that we ourselves can substantially add value to the Banjara's, we can make it much larger in terms of just -- in terms of share, let's say, all the other back-end benefits that we can provide as a much larger company to the company. So in Banjara's itself, we feel that from the INR 50 crores, INR 55 crores of annual revenue that they do in the next 2 years, that can be scaled up substantially. Banjara -- in Banjara Southern market. The second benefit we see clearly is where the Bajaj brands that are today available can go into the far Southern states where our distribution scale-up can straight away go to about 3x. I mean, that is the kind of numbers that are looking at. And clearly, there are some products which can go into that market. So that clearly is the second growth lever that we see. The third growth lever, obviously, as we see is that in terms of modern trade and e-commerce, I just told you that we are now at 30% salience as far as modern trade is everything, which was about 5%, 6% about 5 years back. This is exactly where Banjara's are or even lower. And that clearly, we have the expertise now in modern trade e-commerce with our full team. And Banjara's are also -- they are also very excited that we can add value to their product range in that market, because as you are aware, South is a large modern trade salient market and e-commerce large players sit out of Bangalore. So a lot of benefit can come out of modern trade and e-commerce as well as the international markets, we see there is some scope as far as the Banjara's product is. The last and -- is where your question is specifically, we also see some of the products like multani mitti, et cetera, these are products which are face packs, et cetera. These are basically Northern products, more suited for the Northern markets, which are now going into the Banjara's. We are also looking at how that can be scaled up in the Northern market. So a 4-pronged strategy. We see there's a large opportunity for growth upside as far as all these are concerned.

[Operator Instructions] The next question comes from the line of Rachana from SiMPL.

So, the acquisition that we have made, the Banjara acquisition, what gross margin level is it operating at? And how are the ad spends compared to our ad spend? If you please quantify it.

Yes, yes. Okay. So the gross margin that this company has consistently operated for the last 4 years is about 60%. So it has remained between 59.5% or 59%-ish to about 60.5%-ish. So they have consistently maintained that. They have a large range of product categories that they operate and all of them operate at these kind of -- so they have a face pack range, they have rose waters, they have other skin care products, they have black henna, natural henna and other hair care products. That is roughly where it is. And all of them are between, let's say, 15% to 25% kind of a margin. So very well distributed and very well controlled cost. So coming to the ATL cost, so we had -- this company had made large ATL investments in FY '22. And after that, they have scaled it down. So now they operate with a mix of ATL and BTL where the ATL is substantially lower, but BTL is much more. They also -- you have to also remember, they have beauty advisers at their places. So a lot of it is also sold at the beauty -- the way the beauty advisers sell; at the shop, at the point of purchase conversion. So they are extremely adept at that and they are also very, very efficient in terms of churn of the new products. So they -- with their beauty advisers, they are able to monitor what kind of trends are happening as far as the new products and new -- in the various categories and they are able to churn out newer products and also scale-up the older products. The other great advantage of this company is this is a completely secondary sales-focused company. So only when the distributor -- so they only do replenishment of stocks of distributors. So in that manner, they are actually even better than a company like Bajaj where this is a very well-managed, efficient company in terms of stocks, et cetera. So they have a complete channel management in that sense to ensure that there is no -- not too much of, let's say, bad stocks that -- or obsolete stocks that happen. So great NPD work and as well as great inventory management.

Okay. So how are these products are positioned as compared to Bajaj?

So they are not comparable to Bajaj in sense because that's not a category we are really into. But if you look at, they are more in the Himalaya range of kind of pricing. It's just a little lower, but considered to be, let's say, premium, not a super premium, but just a little higher than the local ranges, et cetera. So that's where they are. That's why they earn a 60% gross margin.

[Operator Instructions] The next question comes from the line of Karan Bhuwania from ICICI Securities.

So firstly, I wanted to ask on Project Aarohan. So we have already implemented in a couple of states, UP and MP, right? So just wanted to understand what are the green shoots we're seeing in terms of, say -- I understand we have expanded distribution in presence, et cetera. But what are the green shoots are we seeing in terms of sales as to how has that depended over the last couple of quarters, if that could -- if you could share that, that would be helpful?

So good question, Karan. I mean, I think we started the Project Aarohan quite some time back and we implemented in a phased manner in both UP and MP. We did not take full UP and MP in the beginning because we wanted to ensure that all of it is monitored. So we have a Project Aarohan team of our own and there is a steering co there as well as well as we have a project manager of Project Aarohan, while PWC's own people are also fully involved. So now the entire states of UP and MP are covered. The objective was to ensure that we ensure that everything that is required as far as the improvement in the route to market is put in place. So in terms of rationalization of distributors, in terms of conversions of sub-DBs to direct DBs, satellites to sub-DBs, rationalizing of vans, which we knew that would result in reduction of sales or cost to sales will improve. Neither will happen immediately, but all of them will -- over time, as you convert, rationalize the vans and add them into the sub-DB network, as it stabilizes, it will give you advantages. So all of these actions as far as both UP and MP is now about 90% completed. 90% as in what was identified as Project Aarohan and not agreed by Bajaj. Project Aarohan [Foreign Language] and which we had presented and we saw and then finally said, okay, these are something that we'll take up. 90% of those have been now already implemented. So just to give you certain numbers, let's say, the number of unrepresented towns, et cetera, 475 has gone into 658 towns that we have now taken into coverage. As far as UP is concerned, from 90 to about 112 as far as Madhya Pradesh is concerned. I talked about coverage expansion of direct reach of UP and MP. UP went from 42.4 outlets to 58.6 outlets. That's about 1.4x. And AP from 15 outlets -- 15,000 outlets to about 24,000 outlets. So we see great progress that is happening. Obviously, numbers will not immediately show up because these are all in the stabilization process. So now all the investments are happening. So we have put feet on ground -- foot on ground because to service this larger number of towns and this thing, et cetera, you will require more people. But as they stabilize and as they see -- you will start seeing the numbers slowly and strongly flowing in. And given this, as we see and as we are so confident that this has been a successful path going forward, we are now extending it to 5 more states now, 8 more states now and a few more we'll add at the end of the third quarter. So for the next 4 quarters, we will aggressively push this so that then this entire attempt where we were trying to ensure our retailing initiatives become stronger, whereby we are program outlets, et cetera, that programs, retail loyalty programs, et cetera, now we are structuring it within our own with a project managed by a consultant. So we wanted more on-ground execution project rather than a strategy product, because I think as a company, we required this intervention more than a strategy project. And I think we have had fantastic results coming out of this. And going forward, we feel that as it scales up in the other states, we'll see very good results.

The next question comes from the line of Raaj from Arjav Partners.

Sir, how much growth are we expecting for the full year FY '26 and FY '27 looking at the initiatives which we have done?

2 things. One is, first and foremost, I wouldn't be able to give you forward statements like this. But I can tell you, all the growth that we have posted and the kind of interventions further we are taking -- see, if you look at the overall picture, because of the market conditions, et cetera, the main area where -- and obviously, that is not only the main area, that's where the large fall has happened is basically ADHO in general trade. Other than that, every other lever that we have pushed is working well, including ADHO in the modern trade, e-commerce as well as in international markets. So one of the biggest focus now we have is to ensure that the core becomes far stronger. One is -- so one exercise is ensuring that the wholesale destabilization that was there is slowly taken up. We knew 3 quarters back itself that it will have a long -- little mid-term-ish pain area. So 2, 3 quarters, we'll have to suffer before wholesale slowly starts coming back. It was not unknown to us. But you have to make that intervention to ensure that in the long-term the company benefits. So now that has happened, and that's why you have seen this Q2 to Q3, wholesale has already had a double-digit growth. On the other side, retail, which has been not a very strong area for the company, we have been taking initiatives at the company level itself and a lot of work has happened, but we have really not ever done it to a structural manner. It was more internally done. So structurally, this was identified and that is what has been going on. So we feel that is also going to be a good level. So as far as GT is concerned, a lot of good work is happening. ADHO itself, we are looking at intervention in terms of increase our investments as far as ADHO is concerned. How we will fund it, maybe we'll have to take price increases in ADHO a little more rapidly to ensure that we are able to fund it. That's the path we are planning to take going forward. So as a result, you will see ADHO and general trade, and obviously, you will require some kind of a turn as far as the demand conditions are concerned. As long as that is concerned -- that happens and all the other growth levers are pushed, I think we are in for a good. I cannot obviously promise any number or I can't even give any forward guidance, but clearly, '26, '27, we should be seeing some good numbers.

All right. I was just trying to understand, all these initiatives which we are taking, so when all these initiatives will get converted into numbers. So you are saying FY '27 will be the year when we can see some good growth in numbers, right?

So I cannot give any commentary on that because all of these are initiatives which take time. These corrections, maybe you will see results a little more earlier in terms of the initiatives as far as RTM is concerned and some of the others. But in terms of developing brands, et cetera, you have seen coconut already go beyond INR 100 crores, et cetera. So those kind of products will slowly take time and we are in the right path. I mean, if you will see in the last 5 years, there are no products which have been launched by companies which have scaled up to INR 100 crores plus in the personal care space. I mean, obviously, there might some, this is my thing. But I think some work has happened. And I think those we'll have to give it time now. Slowly, time is coming slowly to mature and fructify. We'll keep investing in these. I think we should see results. I mean, international market has been doing very well. This can give us good growth. So in terms of the consol numbers, you should see good numbers coming up. It will require some investment, yes, but I think you should see growth. So I will not say go to FY '27, let's look at even FY '26 positively.

Understood. Because overall, it is a concern for the investors because the sales have been flat for the last couple of years. And if you compare your peers, they have grown well. Only we haven't been able to scale-up. That's why I've been asking about.

As I explained, you'll have to look at it a little more -- cut it into categories and see how the growth are with a multi-category company selling multi-segment -- in multi-category, multi-segment companies versus a single category, single segment, you will have to -- if you want to do a like-to-like comparison, then you will have to look at how this particular brand, which is in a single category, single segment has operated against their peers. And I would like to think overall in that sense, we have done pretty well. Yes, there will be some misses here and there, which is so for the others as well. So that's where we are. It's a fine balance. And I think we are coming out of that balance and now looking at growth getting delivered in the future.

The next question comes from the line of Amit Agicha from Hawa & Company.

Sir, my question was connected to international business. Like what are your top markets? And how do you plan to expand further?

So international market has been, as we have said about 5 years back, that we wanted to take on the international market after we had got into modern trade, e-commerce, newer products, et cetera. So we got into this journey about 3, 3.5 years back. And initially, we had a small operation in Dubai and in Nepal and that's about it. And in Bangladesh, we're doing some exit. We had closed down our operations. We started our operations in Bangladesh. Bangladesh has been scaling up very well. We feel there is a huge potential as Bangladesh is concerned because demographically as well as usage-wise, it's very similar to India. They have a higher preference for coconut for sure. But there is a clear opportunity as far as ethnically, there is a clear opportunity. The Middle East market is another focus market for us. And Middle East is not only just UAE or neither GCC, Middle East is Middle East, which would mean all the other surrounding markets, whether it be I mean extended Middle East of Afghanistan, Africa and parts of, let's say, North Africa, et cetera. So I think that is a market which is a great potential for us. The third market, which I am personally [indiscernible] and we had mentioned it in the last time is the U.S. market itself. That's a large export market, a huge diaspora most of our competitors are. Huge amount of business. We have tied up with one of the largest FMCG distributors in the U.S. in the last quarter or last 1.5 quarters or so. And I think that I personally think is a large opportunity for us. In fact, it has come to a certain stage where now we are looking at using digital advertisement in the U.S. market to ensure that we can create further demand other than organic whatever demand is there. Another market which is of interest to us is Malaysia because that's another market where there is an ethnic Indian population. So they are not Indian, Indian in short sense, but at least there is an Indian diaspora, not diaspora, ethnic Indians out there. So that is a market also of focus, which is what we are also. Quite a few markets and levers we are pushing other than our standard Nepal and all of the world, which are smaller. We clearly think that international, if we play out well for the next 3, 4 years, can easily go to a good low-teens, high-teens even to the 20s percentage of our contribution. But we need to pay it well, it is clearly an opportunity and easily doable this thing, which we have also demonstrated in the last few weeks.

Sir, what is the present contribution of the international business?

It is higher than -- it is close to 7%. And we have taken it up from about 2%, 2.5% to about 7% in this thing and we think that we can really continue to scale-up. The growth of international market was 37% in the last 3 years CAGR. Obviously, CAGRs are not that strongly relevant because the bases are low. But I think this is the direction that we have. But more interestingly, more comfort-wise, I think I would like to say 2 things. One is sequentially as well as in terms of CAGR in terms of -- on a continuous basis, the growth have been very healthy. The other thing is, geographically, the growths are healthy. It is not driven by one geography, but across all the geographies that you see and it's part of the presentation as well. All of them have been doing well. We have been working on each of the geographies, newer products in each of these markets and they have been doing well. So that gives us confidence that going forward international markets can deliver.

And sir, my last question was connected to like is the company coming up with any product innovation in the pipeline like connected to other things other than the personal care?

At this moment, we would like to consolidate our position in personal care. Personal care market itself is so large, we would like to focus on that. And plus with this acquisition of Banjara's, we have a large number of newer products that comes into our portfolio. That is something that we will also like to exploit and explore across the country as well. So there is enough in the pipeline. Yes, we'll continue to -- our R&D function is pretty robust. They'll continue to innovate, continue to look at newer ranges, whether be it in terms of Almond Drops itself, what can we do on Almond Drops itself or some of the other ranges. Yes, that work will happen, but we'll also look to consolidate the kind of products that we have already launched, balance our portfolio, look at the new members that we have gone into our fold now, look at how we can exploit that. So our focus will be more of this and also looking at some opportunities. Innovation work will continue, but focus will be to ensure the existing range is more potent.

The next question comes from the line of Kaushik Poddar from KB Capital Markets Private Limited.

See, you started this con call with the statement that your GT trade has gone down by high-single-digit. When do you think that it will come to the neutral level with all the initiatives you have initiated?

So Kaushik, as I said, I mean, I think you should see that happen. In fact, I mean, in January itself, we have seen good progress happening there. 2 things, as I said, there are 2 -- there are 3 parts of this business. One is obviously the wholesale, which we had said at the first quarter itself that we have taken this correction in wholesale. It's a pain area. It will take time to recover. And now we have already seen the recovery happening as far as wholesale is concerned. So wholesale has already, as I told you, quarter-on-quarter has already grown by about 14%. So -- and the number of wholesalers has gone up, which is a good sign that, that is slowly coming back to normalcy. And it will maybe take another quarter or so and then we see that coming back. As far as the retail is concerned, which is one of the weak areas, urban retail, one of our weak areas is something that work has been going on for the last 2, 3 years. Now structural work is going on in terms of our entire coverage as far as the loyalty outlets are concerned -- loyalty program outlets are concerned, how do we structure them, how do we make it more attractive to them, how do we ensure attractive POS, et cetera. A lot of work is happening on that. So that we feel is going well. And it's the rural markets, which is part of that Project Aarohan as well, which is where all this work that we are talking about has been happening in terms of representation improvement, number of coverage, number of feet on street, et cetera. So I think you will see good numbers coming in the next quarter. I don't want to commit any number, but I think most of this work has already happened. Now we should see benefits flowing.

You said wholesale had grown 14% quarter-on-quarter. This quarter, it is growing?

That is correct, quarter-on-quarter. So over Q2, wholesale has grown by 14% in Q3.

But why didn't it show up in numbers?

Because I said, in Q1 and Q2 -- in numbers, it is showing up. Sequentially, look that it has actually -- by numbers, it has gone up. If you look at against last year, et cetera, still it is coming back because that's where the number -- that's where in Q1 the drop had happened. So slowly, it is recovering. But clearly, between Q1, Q2, Q3, clearly, we are seeing the -- Q1 anyway was a drop, so because that was a correction that was made. Q2, it has still been coming back, not yet completely come back. Q3, we see substantial coming back has happened. Further, it will continue to continuously stabilize.

Ladies and gentlemen, that brings us to the end of the question and answer session. I would now like to hand the conference over to the management for the closing comments.

Thank you so much for attending this call. And once again, apologies for delaying this con call for half an hour, as you are aware, because of this extraordinary item that we had to place. We are extremely happy that we are able to welcome Banjara's to our fold. This is a fantastic valuation that we have been -- we have got from the business. And also more than valuation itself, it is also in terms of fitment to our business, this perfectly fits in because it opens up the Southern market where our distribution has always been weak. It increases our distribution reach by about close to 3x and all the benefits that we feel can accrue will come from that. So from that perspective, it's a great acquisition, we are very, very hopeful that this will give us great positive momentum going forward. On the other side, as far as the business corrections that we have taken, we have taken a lot of these business corrections and slowly some of them are bearing fruit. So I think going forward, both through the Banjara's acquisition as well as our internal work, we see good performances coming up in the coming quarters, both in terms of top-line as well as bottom-line and we'll keep balancing both. So thank you once again for coming and joining on this call, and best of luck and good evening.

Thank you, sir. Ladies and gentlemen, on behalf of ICICI Securities Limited, that concludes this conference. You may now disconnect your lines.