Colgate-Palmolive (India) Limited (500830) Earnings Call Transcript & Summary

Thank you. Good morning and a very warm and healthy welcome to Colgate's first virtual analyst call. To begin with, I hope you, your near and dear ones, are all safe and healthy. Let me begin by stating, as of this morning, all Colgate India employees and their families are also safe and healthy. First, I want to begin by thanking our consumers for their continued trust and faith they put in our brand every single day. I also want to give a shout-out to all our customers, distributors and suppliers for their enduring partnership and their support during this unprecedented time. Last, but certainly not the least, I want to take a moment to thank each and every one of our employees and their families. Their resilience, passion, commitment has been an absolute source of inspiration for me personally, and one can only help feel proud of being part of the Colgate India family. Moving on to today's agenda. Jacob and I will go through a prepared presentation and subsequently open up for a Q&A session, as highlighted, at the end. Under normal circumstances, this would have been a lot more interactive and audiovisual, given the audiovisual nature of the content. But given the nature of the call, I will do my very best to make it as engaging as possible to do justice to the brilliant and phenomenal work that has been accomplished by the entire organization. If you recall when we met about, maybe about 7 or 8 months ago, we spoke about a sharpened focus on 3 core aspects to make sure that we continue to help drive sustainable, profitable long-term growth and value for all our stakeholders. While the COVID-19 pandemic has required us to look -- take the right course-corrective action, we remain committed to these fundamental building blocks around driving sales growth, maximizing earnings and, of course, thought leadership to continue to win. Let me kick it off with the first one, which is about driving sales growth. In the context of driving sales growth, we spoke about 4 critical pillars of success, and success being defined as making sure we excel with every single stakeholder of ours across each and every one of these pillars. It starts with building brands. Strong brands, as we've already seen in the most recent period as well, stand the true test of any and every crisis that is thrown at it. Because when people are anxious, when people are nervous, when people are concerned, they often resort -- more often than not, they will go back to brands that they've known for years and years on end. They go back to brands they trust, they go back to brands that they put their hands of them and their families and they've known it for not just a year or 2, but have known it for many, many years and have grown up with most of these brands. In the context of that, we start our first pillar, as well with making sure that we continue to drive superior brand engagement. At Colgate, we genuinely believe our purpose is about making sure every single person has a future that they can brag about. In essence, we champion optimism. And we believe that, that optimism is bought to life through the power of a smile, or very simply, as we say, smile karo aur shuru ho jao. I'm sure you've seen a lot of material in multiple mediums over the past 6 to 9 months on this front. We typically take stories that represent the evolving conversations in our country and make sure that the brand represents the power of a smile, that even if you take a task of adoption, which perhaps is amongst the most planned and thought through exercise any family undertakes, despite that planning, despite that preparation, when it comes down to that moment of truth, there is still that degree of hesitation, that little bit of anxiousness, those butterflies in the stomach. And we arm our consumer by giving them the positivity, the optimism that a smile can help overcome. In addition to this, we're now looking to make sure that the smile is amplified across multiple touchpoints, including reality shows, thereby making it a part of the natural lexicon. In effect, every time you think about a smile, you're going to think about us or our brand. The third pillar of making sure the equity continues to become stronger and stronger is about championing causes and people. Ultimately, it is people who make a difference. And time and again, we've seen our wonderful country has some absolutely stunning story of resilience, perseverance and overcoming all kinds of hardships, whether it's Anand Arnold, whether it's Sindhutai or whether it's Divyanshu. Each one of them has had a different aspect or a different challenge to deal with. And it's been their optimistic smile that has given them the courage to come out shining. We also make sure that these stories are brought to life across multitude of medium. Whether it's Yashasvi's story on Facebook, whether it's a story on Instagram, we make sure that every one of -- every Indian consumer has an opportunity to interact and actually see these stories being brought to life. We don't limit ourselves just bigger conversation. We also are a brand that is light-hearted. We're also brand that is youthful. To the same point in time, while we talk about the bigger context and the societal change that we ultimately want to drive, we also are about having fun. We're also about making sure there are moments that matter and people enjoy themselves in those moments. A recent example is the work that we've done with TikTok in an attempt to engage with the far younger generations of this country. As you can see, by owning the smile, again, a simple Smile Day challenge garnered more than 2.5 -- almost 2.5 billion eyeballs, a fantastic performance. Another recent accomplishment, and I know each and every one of you is wondering what this picture actually is, and no, it is not a Photoshopped picture. This is live, and I can tell you this because I happened to be there when this event actually happened. It was an absolutely proud moment for us when 26,000 children came together at one venue, which was the Kalinga Institute of Social Sciences and actually brushed their teeth, breaking a world record. Certainly a proud moment for India and, of course, all of us at Colgate India. I also want to again, call out the trust and faith put in our brand by our consumers. A great big thank you to every one of them. For the 9th consecutive year, we are India's Most Trusted Oral Care Brand. Now that's on the core Colgate equity. Given how all of this has delivered in terms of the results, very simply put, as of March 2020, we've had a more than 300 basis point increase in the number of buying households for brand Colgate. Not only that, so not only are we in more homes today than we were, we're also strengthening the resilience in terms of the love our consumers have for the brand, with a 160 basis point increase on the strength of brand love as well during the same period of time. So we're winning hearts, we're winning mind and most importantly, we're winning at the home, where ultimately, the product is put to the final test. While we go about building the equity, we also want to make sure that every single person, no matter who you are and what part of the portfolio you buy, we have something that is meaningful to offer you. In effect, we have a portfolio that caters to just about any and every single person in this country. And we do so with the right aspect and with the right communication and the right experience that one would get from that product. Let me start off by MaxFresh, which is our youthful, our freshness bundle, which is all about energy. How we've translated a simple task of a morning brushing routine and that burst of freshness it gives you is about talking in the context of how it helps give [Foreign Language]. No matter what your previous day has been, no matter how many hits, how many misses you've had the previous day, every morning gives you the opportunity for a fantastic new start. And who better than Ranveer Singh to bring this aspect of an energetic start to every morning. Given his natural charisma, his natural bursting of energy, we find him the best ambassador for our brand and look -- constantly look to amplify his experience across multiple vehicles and mediums, including a rap battle, where we were awarded the biggest digital award, the gold of digital award for Best Use of Instagram. The second aspect we spoke about, if you remember, and I couldn't talk much at that point when the questions asked of me was what are we doing about Vedshakti. And if you recall, I spoke to you about the fact that there is something new and different brewing, and it's about a bigger take on the core of the consumer opportunity versus yet another iodated product. I'm pleased to say that as of Jan, Feb, we've gone live with a more proactive approach that structurally helps to resolve bigger problems for consumers by truly adding value in an area of expertise that we are extremely familiar with, which is the mouth of a consumer. And very, very simply put, it is all about Mooh Swachh Toh Aap Healthy, making a connection between keeping the overall health of your mouth and thereby improving your overall health. So the mouth and the body connection. We've launched this campaign. Interestingly enough, this was done proactively way before COVID and has only heightened and has actually amplified and have seen consumer traction even more given the nature of the pandemic that's hit us. This was done, again, across multiple touchpoints, making sure that we brought it to life across every single opportunity, where a consumer has a chance to interact with our brand across the entire buying process. The results -- before I jump into the results, we also had a mega sampling program going across the 400-plus towns across the country and a massive 70 million samples in order to maximize trial opportunity. I think the results speak for themselves. We've seen excellent positive traction, plus 15% in terms of awareness, almost 10x new trials and a 2x increase in household penetration [ per patron ]. The second pillar of growth is innovation. Again, when we spoke to you earlier, we said you will see an amplified series of initiatives from us. We continue to stay true to that intent and the name. It begins with the relaunch of our flagship variant, which is Colgate Strong Teeth. Again, an innovation that was born in India, for India, first in India and has now actually been taken all over the world. It's absolutely revolutionary in terms of how it works because the research has been going on for a bit with over 18,000 people participating in what we've been able to build for our flagship business. The power of the solution lies in the structure of the formula. It literally is like a smart formula, where it feeds the good bacteria in your mouth while weakening the bad one and, ultimately, giving you 4x strengthening power for your teeth. I can confidently tell you, no other toothpaste can strengthen your teeth more than Colgate Strong Teeth. We brought this to life again through a multitude of medium, making sure that whether you were in the smallest villages of rural India and could only spend INR 10 on a toothpaste, we still made sure that the best formula was in the INR 10 product as well, not compromising a single opportunity to improve overall oral health of our consumers in this country. The flip side to it, completely very different, largely urban, largely metro, largely modern trade-driven, is maximizing on the charcoal opportunity. We launched this product about 4 months ago, and it's seen some phenomenal traction despite even the COVID pandemic that's hit us. Again, largely urban and modern-trade-oriented, the focus here is about amplifying a current rage and trend around charcoal ingredient. Believe it or not, it's actually a black toothpaste. And it's the first black toothpaste not just in India, but anywhere in the world. We make sure that different facets in different consumer groups of ours also build meaningful businesses. Kids and most recently, the concern that mothers have with all the kinds of additives that are typically found in a lot of children's products. Our new line of Colgate Kids products at a premium price make sure that we have 0 artificial color, 0 artificial preservatives, 0 flavors and 0 sweeteners. Again, this is largely focused on modern trade and urban India. We don't stop just on the toothpaste front. From a toothbrushes side, we're looking to amplify not just the charcoal phenomenon, but the broader natural-ingredient trend with the launch of Colgate Zig Zag Neem, along with Super Flexi Charcoal and Zig Zag Charcoal brushes as well. I'm also extremely excited to launch our first-ever Colgate Bamboo brush. Again, this comes with a bamboo handle, completely recyclable, 0 plastic packaging and the bristles themselves, once again, infused with bamboo charcoal. On the electric or the power side, we continue to amplify our portfolio slowly but surely by powering up the brushing experience with the launch of our battery brushes, which allow for a very meaningful and powerful brushing experience at an affordable price as well. For those consumers who want to make that transition from a manual brush into the world of battery and electrical, this offers the first stepping stone into that new and different world. Our innovation efforts have not stopped in oral care. We've broadened our entire Palmolive franchise with the launch of Luminous Oils. Originally began with just shower gels, we've now extended that from body wash into shampoos and more importantly, into liquid hand washes as well. The newest addition to our family, Palmolive sanitizers, are literally conceptualized, built and shipped in a record time of less than 2 weeks, all done in April. It's already in-market. Hopefully, when the markets do open up and you have an opportunity to step out, you will go up and pick this up. I've been using it, and I can guarantee you, it's a fantastic product, not just in terms of how it works, in terms of its 99% germ kill, but more importantly, it brings the Palmolive brand to life by caring for your hands and giving you a very pleasant fragrance experience as well. The third pillar is about winning in emerging REs. There's always been conversations on how are we seeing growth opportunities across the RE and whether are we too wholesale-focused or not. Let me reassure you that we believe in fishing where the fish are, and make sure that our go-to-market strategies are representative of where growth and where the consumers are actually shopping. I'll kick it off with e-commerce. I'm pleased to say that we've got a dedicated e-commerce team in place. Within just 60 days in the last week -- in the last month -- couple of months of 2019, we kicked off a young dynamic team as a separate business unit, dedicated exclusively to our e-com business. We've got a great portfolio made for e-com and our customer engagement platforms and partnerships are well underway. I think the results speak for themselves, not just in terms of the 3-, 4-year of history but, even if I take a closer look as per first quarter, you can see our market shares, performances in e-com are already up 200 bps versus our history. Not only that, despite the COVID situation and many platforms being challenged on labor and delivery issues, we've continued to see strong double-digit growth in the YTD period so far this year in the calendar year. The second emerging RE is modern trade. Again, we've sharpened our focus in terms of our portfolio. So our portfolio, and you've seen some of these products, very distinctive, very different, very meaningful for a consumer who is looking for different things. Obviously, priced differently. Obviously, packaged differently and even sized differently. Because our learnings continue to indicate that shoppers in this area are looking for very different things from what they would classically purchase in their own kirana store. Second, demand-generation models here require us to be different. Not only is it about in-store visibility. It is about becoming irresistible as a brand and making sure that the entire experience is brought to life at that point of purchase. Again, here, the results speak for themselves, more than a 2x growth in the overall business over the years. But again, more importantly, even if we take a nearer-term outlook to it, our market shares are up 160 basis points in overall modern trade India as of the first quarter this year itself. The fourth pillar is about our -- continuing strength. We've all spoken about this many, many times. While we continue to make sure that we win in the emerging REs, we can never forget the core of our business, which is the distributor. They remain the backbone of our operations. They remain the key as to how we're able to cover the phenomenal number of stores that we do cover, and make sure that Colgate is amongst the most well-distributed brands in the country. In the last survey that was done amongst distributors, Colgate, as an organization, did exceedingly well, not just coming in as the most preferred partner to work by a sizable distance -- advantage, but also when you put it up against some of other peer-group companies who have a much wider range of categories, this certainly is a moment of pride for every one of us. In the context of making sure that we are protecting the core of our business, we've also introduced multiple mechanisms, multiple vehicles and solutions that cater to the wholesale channel again, once again, with an amplified focus on building the brand, its loyalty both -- not just with the final consumer, but also with the retailer themselves. The third aspect of our go-to-market is a continued effort to digitize and amplify our transformation on this front, whether it's technology simplification and handheld devices to our salesmen, whether it's communication between our distributors and our organization and whether it's simple analytical dashboards that allow people on the ground to make the right decisions every single day, real-time, all our efforts on the technological front are amplified towards getting our productivity right and making sure that they're empowering our people to take the right decision based on what data is applicable to them. Interestingly enough, COVID also gave us an opportunity to try new things. So over the last couple of months, we've had multiple partnerships with so-called last milers or even other delivery partners, where despite some of -- where sometimes our own distributors have been challenged in terms of labor, we've been able to work with Lynks, LoadShare, Dunzos and Swiggys, Ubers and Zomatos to help with deliveries, whether it's from our distributors to the store or in some cases, even from our distributors directly to our consumer. Last but certainly not the least, we're also looking at contactless distribution solutions, whether these are through app or through leveraging the power of WhatsApp, making sure that, again, in a post-COVID era, we come out first and ready for what could be a very new and different distribution model. With that, I now hand over to Jacob to take you through the next part of the presentation.

Thank you, Ram, and good morning, everybody. So our financial strategy, no change to that. Drive top line, drive gross margins, take nonvariable overheads down, invest behind advertising and drive operating profit up. So the Q4 results, you had a look last year, we were tracking quite well until the last couple of weeks into March. So net sales was down 7.4%. Gross margin at a healthy 64.4%. Advertising, 14.6%, a steep increase versus prior year trends. EBITDA, close to 25% and profit after tax up 3.3%. If you look at a full year basis, net sales was up 1.2%. Gross margin at 65%, which was 20 bps up. Advertising at 14% is the highest we have ever been, and we've been upping our brand engagement and communicating the innovation that Ram talked about. EBITDA, at healthy levels, 26.8%; and profit after tax, up 5.3%. Net sales. CAGR of 9% over the last 10 years, while gross margin continues to be a good story despite the fact that we do get a good part of our business from the smaller packs, the LUP packs mainly for urban, rural. We've also been upgrading our formulation. Ram mentioned the Amino Shakti relaunch. So that's been an on-cost on margins, and we've done a couple of other big upgrades in formulations over the last couple of years. So we are focused on bringing the best total-care products to this country. Moving on. Advertising, as I mentioned, at record levels to up the level of engagement and communicate all the innovation that's going into the product. EBITDA continues to be healthy, around the 27% level. Profit after tax, a CAGR of 7% over 10 years, INR 816 crores in the more recent period. EPS, up to INR 30 per share, again a CAGR in line with the profit. So dividend per share, again, our commitment to returning money to shareholders, that we don't need to keep in cash form. So also signifies the level of confidence we have in the company that during this period also, we upped our dividend as per the trend of the last few years. So during this period, things that we normally focus on, but even more focused in this period. So receivables, we've been very sharp on monitoring it and blocking customers if there is any delinquency. Suppliers, we continue to pay on time because we understand a lot of them need the cash to keep the business running during this time. And we also have an active vendor finance program with very competitive rates if they want to be paid in advance. Inventory coverage, it's a dynamic situation. We are conscious of the possibility that one warehouse may need to shut down sometimes or one area will be contained. So we are just trying to have that flexibility, while maintaining working capital levels. And of course, the cost focus will continue to be a big thing across line. So that's all I had on the financial piece. I'll now hand it over back to Ram.

Sir, can we open the call for a Q&A session now?

No, there is a bit more left, so...

Sure. Over to you, sir.

Ram? Can you give the controls to Ram?

He already has the controls, sir.

Okay.

Let me kick off the last and equally important section in terms of our ability on how we lead to win. We focus this around 3 key critical things: Our impact on people, our impact in terms of our own performance and, of course, our overall contributions towards a sustainable and healthy planet in the future. In terms of our people, it's only obvious that I kick off with what's probably top of mind for just about everybody right now, which is what has been our response plan on COVID. First and foremost, I'm pleased to state that we made sizable contributions to make sure that we've given ration kits, oral health pack focused towards all the underprivileged or challenged communities during the last 6 to 8 weeks. In addition to that, I'm sure you've already read the news that included our name as part of one of the key players working with the government on the entire Suraksha Stores initiative, which is all about making sure that hygiene and social distancing standards are followed, not just in modern-trade environments, but across every single store in this country. Third, a project that we are very, very excited about. As you can imagine, the dentist community or the dental professionals are amongst the highest-risk communities and most dental practitioners -- almost all dental practitioners have been forced to shut their respective practices over the last 8 weeks or so. Working with them, what Colgate has been able to do is actually introduce a Dentists for Me, a virtual initiative that allows that apps to be usually free of cost to any consumer, anywhere in this country, who can simply reach out and can get a virtual or whether it's a visual or an audio conversation or even a chat with a dental professional and give you advice on how you can immediately deal with some of your oral care concerns or issues that you may have. We've tied up with more than 250 dentists and within an extremely short period, we've had quite a stellar response with more than 5,000-plus people already targeting or already reaching out to these dentists itself. In addition to this, we're extremely mindful of making sure that they are maintaining the highest hygiene, sanitation and social-distancing norms across every single one of our own facilities, whether it's our factories, including the way they work, the way they're picked up, or our warehouse teams and the full gear that one -- full PPE gear that they actually use when working in any one of our warehouses. And including our own sales team, that when they're interacting, whether it's a distributor or whether it's a store owner or a customer of ours, they themselves are practicing all required hygiene and social-distancing norms. In terms of our continued efforts on the broader side of improving oral health and defining an oral-health strategy and a shift towards an improved oral-health approach in this country, we're proud of our flagship BSBF program. I'm pleased to say, since its inception, we're now at almost about 170 million children reached through this program. In addition to that, making sure that we remain sustainable in our approach to all our production capabilities, whether it's the utilization of water in our plants, whether it's self-generated power, whether it's LEED certification, we're making sure that we remain at the cutting-edge of all sustainability efforts and ahead of the curve, both in terms of the norm as well as what industry standards require us to be at. From a planet point of view, water remains a critical priority, as you can well imagine. There's a large part of India that still struggles with basic decent drinking water. We partnered with organizations such as Water for People. This is an initiative that we want to take in Maharashtra and looking to supply water in the region of Amravati District. We're also partnering with likes of Pratham, with the likes of ShikshaDaan and Seva Mandir, with women self-help groups and also our continuing efforts to empower children with education across different aspects. So with that, Jacob and I come to our -- the conclusion of our prepared remarks. We will now hand over to the operator once again to help with any Q&As that you may have for us. Before I end, I will once again say to every one of you, wish you and your respective families a safe and healthy week, day, month ahead, smile karo aur shuru ho jao.

[Operator Instructions] We take the first question from the line of Abneesh Roy of Edelweiss.

My first question is on the Palmolive part of the business. So historically, Colgate India has been quite cautious on this with very little mass media spend until now. You are already a dominant leader in toothpaste and now competition will go up further with the HUL handling the GSK Sensodyne part of the business also. So in this channel, clearly, competition will increase. Plus because of the COVID, clearly, you have also launched new products in Palmolive and hygiene will bring that much more important for the customer. So in that context, because of the new leadership, which Ram has provided, and because of all the reasons which I mentioned, will Palmolive see higher ad spend and higher focus than earlier?

Abneesh, thank you for the question. I would say, I think we're cautiously optimistic about our efforts on Palmolive. The advantage we have is Palmolive has a wonderful residual -- positive residual memory in India, which is advantageous to us. If you recall, when we last met as well, we spoke about a strategy that will slowly but surely see us bring the right portfolios in the right categories on the Palmolive brand. We don't want to end up being just yet another player in the segment, but we want to make sure that the brand has a meaningful presence in terms of its distinctiveness, one. Second, in terms of its choices of categories and products. And three, in terms of the overall brand experience. With that in mind, yes, we will continue to make sure that the investments are placed correctly against the consumer audiences that we are going up against. So if it requires us to be metro-focused, it will be metro-focused. But if there are opportunities that are broader-based, we will accordingly make sure that we engage with the right touchpoint and invest accordingly.

My second question is on the broader strategy. When we had met Ram 6 months back, and today's presentation also, you have said the volume growth and the margin expansion, both are important. Now when I see FY '20, the gross margins are fairly stable, which is still not bad. But if you see EBITDA margin, there is a dip of [ 90 bps ], and ad spend has gone up by 130 bps. So why in FY '20, this broader strategy in terms of margin expansion? And volume growth also has been fairly limited in FY '20. Yes, the COVID impacted last 2 weeks, but the entire year should have been okay. So in FY '21, seeing the current scenario, do you see volume growth and margin expansion both possible?

So there was quite a few questions in there, Abneesh, but let me try and tackle a couple of them, and I'll let Jacob jump in on the margin and the EBITDA one, specifically. Let's talk about growth first. I think even when we met last time, we spoke about a balance between volume and pricing. Very difficult to gauge and predict what's going to be the consumer full playout of COVID. As you can well imagine, we were already starting to see certain categories or category decline specifically in rural, even the last 3 trailing quarters. So COVID just accelerated that. So I think the full impact of COVID will genuinely be felt only in the next perhaps 2 quarters, with Q2 and Q3 -- calendar year Q2 and Q3. Having said that, I think our portfolio, and you'll see choices we continue to make, will look to make sure that we bring a portfolio of products that very simply put will offer different people, different things. So irrespective of who you are and where you are and what your purchase capacity is, we will have -- fundamentally look to have a solution for you. I think that structurally will give us an advantage in terms of striking the right balance between volume and pricing growth. Jacob, do you want to tackle the question on margin and EBITDA?

Yes. So on margin, Abneesh, our focus would be to drive gross margins, gross profit up. So that will continue to be a focus. The EBITDA margin, to the extent it's because of changes in advertising, that would be something -- we will really need to calibrate the advertising required to put all the communication through and when some of the other stuff that's doing. So I would say gross margin, yes, it needs to go up. EBITDA, to the extent it's impacted by advertising changes, we would be a bit more flexible.

And last question, and in fact, it's a follow-up only. On the new products launched in the last 6, 7 months, could you give us some clarity on the performance and the numbers? And on the naturals versus last 1 year, how much has the percentage moved up?

I'm going to jump in. So I think 3 big -- if I say -- let me start toothpaste first, then I can jump into all the other categories. So toothpaste, obviously the biggest relaunch has been the flagship, Strong Teeth. So strong performance kicked through going into the back half of last year. We continue to see that trend. And frankly speaking, given the preference and given the sheer distribution and availability that CDC has, we think there's just going to be an organic advantage of being India's single-largest toothpaste. And we're already seeing it, if you look at our recent data as well, there's just been a natural tendency from a consumer point of view to go back to CDC. So I think that's the first one. And if you look at -- sorry, let me build a couple of more points there. Even if I look at some of our structural -- very, very core structural indicators of performance, which is household penetration, health of a brand, again, on both those fronts, we're seeing good momentum on CDC. And I think that's always a good indicator. That's on CDC. The second one is on charcoal. Charcoal has been on a very interesting journey. Hopefully, Abneesh, you've tried it by now. I remember giving it to you as well. And hopefully, you are enjoying it and have become a loyal user to it. But it was launched literally December, Jan, with a very aggressive modern-trade strategy and a metro-focus and obviously a very digitally oriented advertising platform. It was off to a flying start in a -- and despite COVID, despite all the challenges of COVID, it's actually, on a national-urban basis, hit a 1% share in modern trade within just 3 months. To us, that's very encouraging, not only in terms of its uniqueness as a bundle, but I think given the fact that it was a -- it's INR 100 toothpaste, and despite all of this, it's doing well. The third one on Palmolive. Again, Luminous Oil is doing well in the market and in the stores that we have it in. On liquid hand wash and on sanitizers, we've literally just launched them in the market. I mean hand sanitizers, it's not even been about 5 weeks, I guess, 5.5 weeks or so. And hand wash has been about 1.5 months, maybe 2 months. So -- and obviously these are seeing good demand simply because of the conditions. So it's hard to gauge if it's the absoluteness of the performance, independent of the circumstances. That's all.

[Operator Instructions] Next question is from the line of Latika Chopra from JPMorgan.

If you could just walk us through your growth profile, how it changed between Jan, Feb then to March? And what you're recently noticing post-March? And in that context, what is the current scale-up that you've seen across your manufacturing and distribution channels?

Latika, I'll kick it off. And then Jacob, if you feel I missed something, please add any additional color that you think would be necessary. So let me just start with the growth profile. I think Jacob touched upon a little bit. Heading -- pre-COVID, I think we were having a stellar quarter. We were tracking extremely well on just about every internal metric that we would have liked to. Unfortunately, the last 10 days of March impacted the entire quarter simply because -- not because I think the brand isn't in demand. I think it was a simple function of a consumer's physical inability to go and buy a product. And similarly, our challenge in terms of making sure that the product was available. So let me start off with -- but that gives you a sense of where we were on the quarter prior to COVID hitting us. Subsequently, once COVID hit, I think I'll break it down into 3 periods of time, right, which is, let's say, from the lockdown, around March 23, give or take, until about April 10, then the back half of April and then how May is looking. And the reason I'm breaking this down because, as each of you probably know way better than I do, in each of these phases, there are different, larger macroeconomic factors at play, including all the practical challenges one has in dealing with any crisis of this sort. So during the lockdown, I think the first -- I would say, the first week was particularly challenging simply because there was a lot of -- there's not enough clarity on what essentials were, were not, how would people shop or who can operate, who cannot operate, so on and so forth. So it was pretty much a period of settling in. I think once that got clarified, things started to move in the back half of April. Simply put, in the back half of April, the problem shifted to something a little different, which was more operational in nature, which is a, number one, labor coming back to work, whether it was in our plants, whether it was in our warehouses or whether it was even our distributor operation or even our customer operations. So even a lot of our direct customers had a lot of their stores shut. As a result, the opportunity -- the physical number of stores in which one can supply product was quite dramatically reduced. So I think that was the context leading into the back half of April as well, a labor challenge. And the labor challenge that got amplified specifically, at least, at our factories, not because of the labor's desire to come or not come, which was one part of the problem, but beyond that, as you can well imagine, even if we have a plant, our Sricity plants, for example, technically is in AP, but our associates come from not just the district of AP where the plant is, but the neighboring district and as well as some of them also come across from Tamil Nadu. You can well imagine the challenges we faced in terms of the -- not just the interstate, but also the intradistrict movements that was allowed or not. So I think the back half of April really was about more operational in nature. But again, I would say that we saw things coming back, and we were able to get our operation kicked off quite successfully. The third part of it is, which is, let's say, from an April 20 onwards, all the way through to May, our single-minded focus really has been on stock availability at store. The encouraging piece of news, for us at least, is the resilience and the strength of the brand has come through in shining colors. We've seen a continued demand for brand Colgate, which is fantastic and, again, a shout-out to our consumers for their continued trust in us. I think we've seen that demand continue to exist. So our real focus has been about stock availability. We are managing this on a very, very granular basis. This is done in the context of literally 730 political districts of the country defined by their zonal colors and then how our particular operations are geared towards making sure we have product available. Our plants are up and running with somewhere between 70%, 80% capacity output over the last -- in the recent periods. That, you can imagine, that was significantly lower in April. A callout to our customer service and logistics team. Actually, our warehouses went into effect way earlier than anybody else's did. And despite having tremendous challenges, whether it was limited working hours, availability of trucks, availability of labor, what we were able to manage to do, and I think Jacob touched upon it, is we intelligently managed to hold the right inventory of the right SKU at the right location. That helped us tremendously in continuing to cater to demand that existed. Jacob, I don't know if there's anything else you want to add?

Yes. So the other piece also, on the manufacturing side, we're focusing on the few really fast-moving SKUs. So there's a brutal prioritization going on in terms of manufacturing side. So that's been another big focus for us.

Just the second question was, how are you thinking about the disruption on the wholesale channel? Your sales in the channel is on the higher side. So how are you thinking about that? Does it get disrupted for long? How could you mitigate that, particularly feeding into the rural areas?

So I think, honestly, we see it as an opportunity and as a strength, Latika. And the reason I say it is on 2 fronts. So let me step back first and talk about the bigger picture, and then I'll come back specifically to how we're seeing wholesale. So on the bigger picture, like I said, there's been a demand for the product and our brand. As a result of that, just like water, ultimately, even our products will find their way. So what we were able to intelligently do was make sure that we channeled our capabilities from a go-to-market point of view, whether it was through direct coverage, whether it was through leveraging of cash-and-carries or whether it was even about talking to some of our, what we call our [ beat ] wholesalers versus the wholesale mandi. I think channeling our distribution toward doors allowed us to make sure that the product remains available across the supply chain. I think that's the macro piece of it. From a specific area of focus on wholesale. The good thing about the wholesale channel is that there is [ limits ], number one. The second good thing is, at least, from our point of view, is that, typically a wholesaler will only stock products that have tremendously high velocity. Because even they're equally uncertain, and do not want to lock up their liquidity on something that's going to be stuck with them. So when it comes to that, since we said a lot of our -- quite a few of our SKUs are cash because the speed at which or the velocity with which they can flow through the system, it allows a wholesaler to accept a little bit more risk with us. The second part of it, which is perhaps the more challenging one, even for us because it's a little bit of unknown, is the -- how -- when will the entire mandi or a wholesale mandi function at 100% operational level. And like I said, while we remain conscious and keep a close monitoring and an outlook as to when that is going to happen, we are compensating that with all our other go-to-market efforts as to whether it's a direct coverage, whether it's a [ beat ] wholesaler or whether it's a cash-and-carry.

We take the next question from the line of Vivek Maheshwari from Jefferies.

Am I audible?

Yes, Vivek.

Very interesting presentation, I must compliment you for that. But I was hoping to see some market share slides, something that you have usually presented. So can you just talk about oral market share as well as market share in the natural segment, how it has trended, let's say -- leave aside 2020, but let's say until 2019, what was the trend that you were seeing? That's question number one.

Okay. So market shares remained stable in 2019, slightly down. Volume was healthy and comfortable. I think 2020 or the first 3, 4 months that we're seeing so far have seen us pick up share consecutively for most -- depending on which retail environment, we continue to be heading in the right direction. And we're monitoring -- we're -- obviously there's going to be a delay even in Nielsen data coming into us. But having said that, the flow will be monitoring us, can shares as well, which is the data that we directly get from our customers. And I can tell you that pretty much 3, 4 months consecutively on a run, we've been seeing share growth and momentum. So I think that's good news heading on that front. Even March, despite all the noise and news that happened everywhere, our overall shares are up 80 bps on a national basis. For a brand like us to grow 80 bps in a month, on a national basis, is commendable. So I think that hopefully talks to the point on broader market shares. On naturals, early days, but very, very encouraging. From an overall share point of view, we're up about, I think, 20 or 30 bps. I think overall, it's about 3 share points, close to 3 share points of the overall Vedshakti franchise. Our new platform and the new positioning that we've undertaken has literally kicked off only about 3 months ago. So I don't have broader national numbers as yet or enough data points to have a sense of how successful it's been so far. What we do have are, again, early indicators from some of our modern-trade customers. And I can't reveal those numbers because they're, unfortunately, confidential, but I can tell you this much, that momentum has been significant. And that -- is that an indicator of what could be national performance? I think we're on the right track. Obviously, we have to continue to make sure that we keep the pedal to the metal because you can imagine, we're going to have competitors who will be coming after us on that front.

Sure. Sure. And the second thing is slightly long term. So not -- I know 2020 is going to be a tough one. And this is a question I have asked in the past years of Colgate as well. One of the worries that investment world has -- is about the higher penetration level, both in urban as well as rural, which is where per capita becomes more important so -- but as a urban consumer, I haven't come across any social media ads, be it YouTube, Facebook, Twitter where you're urging your consumers to actually brush twice a day given such a low penetration of night brushing. So what are your thoughts on that piece? Because historically, I've never got a clear answer from the management, to be honest.

Okay. I think you answered the question as well, Vivek. I think first and foremost, are we aligned with you that per-capita consumption is a big opportunity? Absolutely. No question about that. Are we doing something about it? I think if you remember, that's why I started off with the BSBF program. If I take a historical outlook towards BSBF, yes, you're absolutely right, it was largely rural-oriented. And even there, we focused our efforts mainly in those states where per-capita consumption and even penetration was significantly lower than national averages. So it's like comparing TN, Maharashtra against a UP, Bihar. And obviously, we were channeling our efforts there. What we've done now is we've repurposed our visits, and we ran 2 pilots actually in Delhi and Mumbai. So going, exactly to your point, these 2 were put into place in the back half of last year, specifically going after urban India initiative. And so if I remember my numbers correctly, I think we are about 4.5 million or 5 million contacts just in these 2 cities. Early results were again positive from an early indications point of view. We're now framing those 2 pilots into a more sustainable strategy. They're very close to doing a few things and signing a couple of deals. I can't talk about them right now. But I think we're very aligned with your -- with the thinking that per-capita consumption remains a massive opportunity for us. Now -- and the category itself. Now having said that, I think the unpredictability for us and for anyone, I guess, is where will the fallout of the pandemic end up? Will it impact rural consumption? Will it hurt liquidity? We don't know that as yet. But we do believe that the urban shift -- or the urban amplification, more than the shift, I shouldn't say shift because we're going to continue with our rural BSBF as well. So I think the urban amplification is the right thing to do and perhaps the lower hanging fruit, if I take a longer-term perspective to it.

We take the next question from the line of Vicky Punjabi from JM Financial.

This is Richard here. I just wanted your view on your distribution strategy. I mean if you look back at the last few disruptions that we've had in the country, I mean, going back to demonetization, I know you were not there at that time, but I guess you would have looked at the data. [Technical Difficulty] So what I was talking about was with regards to how you typically end up in a disruptive environment. If you go back to demonetization in November 2016, and I know you were not there at that time, but I'm sure you would have looked at the data and also how things panned out for Colgate in this current disruption. Do you think your distribution strategy vis-à-vis the wholesale dependence, which I guess is higher relative to some of your peers, do you think that is something that needs a revisit? And in the light of what has been happening, do you think that you would want to go for a revamp of the whole distribution strategy, direct distribution, wholesale dependence or other such stuff?

Great question, Richard. So let me start by saying a couple of things. I think you're spot on. When we looked at our -- when we did, as a team, as COVID was looming around the corner, we did look at all the learnings that we had as a group and as an organization. And despite my not being there, we've got an unbelievable team that took us through that point in time, right? So their learnings did exist. So 2 things that we learned. I think the first learning was brand sale wins, Richard. Jacob can correct me if I'm wrong, but one of the things we had done during [ Beemon ] was we actually pulled the brand off-air. And I think one of our biggest learnings was that was a mistake. It took us almost about 3 months to regain that failure. This time, we learned that lesson and we did not. So we've continued to advertise and if you -- I don't know if you happen to be watching any or all mediums, you should be hopefully seeing a hell of a lot of advertising from us. I think that's the first thing on the brand because ultimately, everything comes down to demand, right? Only if a consumer is going to create the demand for us, are we going to be able to fulfill it through go-to-market systems. I think that was the first learning is make sure the brand remains salient, one, and just talking about specific solutions towards today's needs. And I think we hit the right chord on both fronts. On the second front, I think the second learning which we had was we knew about the dependence on the wholesale that we had in the past. So what we have already done structurally, going into quarter 1, irrespective of a COVID, was as we had put the growth pillars into place, we were literally looking at each our retail environment as a stand-alone, identifying what would be its growth trajectory, who would be the shoppers, where would that source of business come from and therefore, what should be our portfolio, our plan and our effort on that front. So I spoke about a few of them. So we structurally broke the market down into modern trade, e-com and of course, even in the general store, you've got what we've defined now as an indirect modern trade. So a lot of kirana stores, specifically if you go to the South, you will see a lot of classic kirana stores who, in some form or manner, converted them into an environment where a consumer can walk in and actually interact with the product. So what we are calling indirect modern trade. And then, of course, you have your classic kirana general stores, which are all serviced to the wholesaler. So I think exercise number one, in the learning process, which was more proactive approach to a strategic thing on how we're going to grow the business and the portfolios across these respective REs happened before even COVID even hit. And frankly speaking, some of the numbers you saw that we put up, whether it was e-com, whether it was on modern trade is a result of that. So we repurposed ourselves, both from an organization point of view. I spoke a little bit about it. We literally, dramatically ramped up our e-com organization. I can tell you, it went up 3, 4x in terms of number of people in 60 days between November and December. Thank God, we did that. Despite whatever happened to some of the platform, we're very, very strong in seller, double-digit growth on that platform. Similarly, on modern trade, again, we've got feedback from most of our customers saying we managed the crisis well, and we've been able to put the right things into place at the right time. On the wholesale front, the other part of the comment I will leave you with, is that, remember, while our wholesale dependence on a national average may be slightly higher, and it's not that much of a delta more than others, by the way. It's not like we're at a 100 index and the others are at a 50. It's not that dramatically different. Where it varies really is in the North and the East of the country. Now in the North and the East of the country, that's where the wholesale dependence is a little greater than the national average. And I think there is where the bigger and more longer-term opportunities lie for us. Now North is a little easier than the East, simply because of geography, how the markets are set up and frankly speaking, logistics and availability of quality distributors and distribution mechanism that exists there. So I think that's how we are looking to constantly evolve both our strategy in terms of defining where growth will come from, how will that growth come and then making sure that we have the right portfolio and the right organizational structures in place to go out and address that.

We take the next question from the line of Manoj Menon from ICICI Securities. [Operator Instructions] As there is no response from the current participant, we take the next question from the line of Shirish Pardeshi from Centrum Broking.

Just 2 fundamental questions. I think first, I must congratulate to Ram from bringing in a new thinking, that BSBF program, which was driven towards rural, at least, there is a change in thinking. So I'm sure you will see the good result going forward. So congratulations for that. The second part, which is there is that traditionally, you are seeing that last 5, 6-odd quarters. The toothpaste category growth is under pressure. So fundamentally, if I understand correctly, the category drivers, which has happened 3 years before with the natural segment taking a lead, freshness is growing, why is the whole category struggling to come back? I mean I do understand twice-a-day brushing and the frequency of consumption is the challenge, but somewhere, category growth is not growing. So any insights on that?

Shirish, let me just clarify one thing. I think I'll go back and say on BSBF, we're making sure we're doing both, Shirish. I think we do not want to give up on the longer-term and all the hard work we put into rural India. At the same point in time, we're making sure that we are starting the efforts with the 2 pilots I spoke about. So it's more about making sure we strike the right balance between urban and rural India because I think there's per-capita consumption opportunities on both ends of the spectrum. On category growth, I think it's been a tale of 2 -- I guess, tale of 2 cities, right? Rural consumption was the one that actually had started seeing the slowdown. And that pretty much has kicked in from the -- from, I would say, Q3 -- calendar Q3 of 2019 itself, and largely driven by liquidity challenges. So it's not a unique thing that was seen on toothpaste alone. I know we were seeing it under multiple categories. It was a broader macro issue more than anything else. Urban consumption actually had not seen that bad of a decline. So it was largely a rural phenomena affecting the entire broader market. And I'm saying this before Q1. Q1 obviously has changed things, and I think you Q2 will only continue to change because Q1 only has March and March only for the last 10 days or so. So I think urban -- the bigger drivers for urban India growth or why urban India growth continue to sustain, at least from our perspective and our hypotheses, was a couple of things. One is a radical shift or big shift that happened in the context of retail environments. I think that change and that structural -- where consumers shop changed had a positive impact on the category simply because when somebody entered a modern-trade environment to shop, the expectations are very different from that of walking into a kirana store. And therefore, the same consumer was often willing to pay a higher price or buy a more premium product at a modern-trade environment. So one witnessed a lot of that value growth coming onto it. Second, I think the customers or the big guys themselves put in a lot of effort to drive traffic, whether it's the big days, whether it's the big events, whether it's their own loyalty programs, you saw a lot of effort being put in on part of the customers themselves. And I think that was -- gave the second impetus, so to speak, to see better category growth in urban. Now where and how life plays out in the next 2 quarters, good question, Shirish. I don't think any one of us will be able to predict what that's going to be like.

Yes. Just a follow-up on that. What is the CY '19 category growth?

Full year?

For oral care. Oral care. Toothpaste.

For toothpaste or for...

Yes, toothpaste.

Sorry, I missed your question, Shirish. What is it you're asking?

I'm asking what is the toothpaste category growth for CY '19 and maybe if you can say Jan, Feb?

Okay. So full year value growth for Nielsen. Full year value growth was about 4%. And quarter 1, if I take quarter 1, about 2%. On value -- on volume was flat for 2019, and quarter 1 is about negative 3%.

Okay. Just one...

So value...

Yes. And my last question is on the toothbrush. I think recently, we have seen that there are a lot of challenges, and we see the regional competition even. A Delhi player has become suddenly active in toothbrush. So would you be able to elaborate what's happening in the toothbrush category because we're saying that we also had the winning proposition in toothbrush, but even the sales is not meeting up the expectations.

So on -- for toothbrush, I would start off by saying it's still work in progress for us, Shirish. I think we've identified it as a bigger challenge for us. We missed the boat on innovation, frankly speaking. You're now seeing -- from us, what you're seeing really is an accelerated efforts to catch up and then ultimately step up to a place to lead that entire process. If you recall back, India invented Super Flexi, India invented Zig Zag, India invented a lot of these things and we just have to keep the momentum back on it. So all the good work that we've done on toothpaste -- or we've started to do on toothpaste, we've got to replicate that on toothbrush as well. So -- and we've got a -- toothbrush has 2 aspects to it, like I said. One is obviously the innovation side. And second, it's got a very big trade play. From a trade point of view, we've got to remain competitive. We've got to make sure that if our brushes have a higher stock rate, then you know you're going to end up winning because quite often, a consumer, specifically in smaller stores and smaller markets, may not be as -- may not remember what brand he or she bought last. So I think innovation and more competitive posture in terms of our trade outlook.

We take the last question from the line of Arnab Mitra from Credit Suisse.

My first question was on the natural segment. If you could give an update on what's happened last year. Has this segment still grown faster than the market? And within the segment, I know Vedshakti, you've taken a lot of actions. But do you think -- what is enough? Do you need to expand the portfolio more here, given that there are some taste profiles and product profiles which you still don't have in your portfolio?

Great question. So I think naturals have grown, and yes, it's certainly grown faster than the rest of the category, given what I just stated on the category numbers. And our business has grown extremely well as well. So I think, like I said, when we met last, Arnab, we spoke about the fact that when we launched the product, I think we've got a fantastic product. Our challenge was a proposition that was uniquely or distinctively ours. In all our consumer work that we've done, the product remains something that consumers actually like and enjoy. And more importantly, families like it and enjoy it, and children like them because they find it at the right level of what one in our world would call spice level. So it has that level of spice that a child or children in a family can manage, while still having that required aftertaste so that after mouthfeel that one expects from a natural bundle. So I think on the product side, I think we always felt good about what we had. Our biggest issue was a proposition that was uniquely Colgate. See, we were very clear that we cannot try to be someone else. And honestly, we don't want to be someone else. There is value in who we are, and our focus has really been about how does one translate our strength, our scale, our credibility into the world of Ayurveda. And I think that's what you're seeing when it talks about -- when you talk about our new campaign and we talk about Mooh Swachh Toh Aap Healthy, which is we are actually fundamentally building the connectivity between having a healthy mouth and the impact it has, ultimately, on the overall health of your body. So I think let me start by saying, we believe we've hit the right consumer call when it comes to the platform that we've gone after. I think that's the first part. Now your second question is, is there more? All I would say is [Foreign Language], watch this space. And I'm sure we'll -- we're in it to win it. So let me put it that way.

Okay. And just my last question was on the value-added toothpaste segment, things like Total, Sensitive, Visible White, we had taken a bit of a beating in the last 2, 3 years. Have you seen any kind of a comeback there? Any efforts from your side which are seeing results there?

So I think charcoal was the first effort on that front. And like I said, what -- I think if I take a bigger, broader step back from a growth opportunity point of view, our overall growth posture is about balancing what we call the core of the business, along with the new innovations or the new platforms of the business. We have to strike that right balance and are constantly tweaking the right-hand side, which is the new platform, looking for opportunities that are meaningful enough, scalable and where we have a genuine advantage. Charcoal is a great example on that front. And the second natural playout of this is as e-com, as modern trade continue to grow in size, scale and overall salience to the market, you'll see us introduce more and more parts of the portfolio, and like we would internally say, horses for courses.

Thank you. Well, ladies and gentlemen, that was the last question for today. On behalf of Colgate-Palmolive (India) Limited, this concludes this conference. Thank you all for joining us. You may now disconnect your lines. Thank you.