Emami Limited (531162) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Emami Limited Q3 FY '20 Earnings Conference Call hosted by IIFL Securities. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Percy Panthaki from IIFL Securities. Thank you, and over to you.

Hi. Good afternoon, everyone. I take great pleasure in welcoming you to the Q3 FY '22 Conference Call of Emami Limited. I have with me from the management, Mr. Mohan Goenka, Director; Mr. Rajesh Sharma, President, Finance and IR; Mr. Vivek Dhir, CEO, International Business; Mr. Vinod Rao, President, Sales; and Mr. Gul Raj Bhatia, President, Healthcare division. Without further ado, I'd like to hand over the call to Mr. Goenka for his initial remarks. . Over to you, sir.

Thank you, Percy. A very good afternoon, friends. I welcome you all to this conference call on Emami's result for the third quarter and 9 months ended 31st December 21. The beginning of this year is not what we had expected to be, owing to the onset of the third wave of the pandemic. But I hope that all of you and your loved ones are safe and keeping good health. As by now, you must be aware of the Board restructuring that has been announced today. While both Harsha and I have been responsible for day-to-day running of the organizations for many years now, our new roles with additional responsibilities define the new leadership of Emami Limited, which we -- we respectfully accept. However, we humbly and sincerely seek your support, blessings and partnership as we move forward. Coming to our quarterly performance. This quarter, we characterized by high inflationary levels, leading to a deceleration in consumer demand. Despite this demand moderation, coupled with high base of 15% growth in previous year. Our consolidated revenues at INR 972 crores, grew by 4% over previous year and at a 2-year CAGR of 9%. Since the last 6 quarters post the pandemic, we have mostly delivered 2-year CAGR growth of around 6% to 9%, and our quarter 3 performance is also in line with the same. During the quarter, our India business grew by 3% with flat volume growth. This performance is over a high base of 14% growth in previous year, which translates into a 2-year CAGR of 9%. On a domestic level, BoroPlus range grew by 2% due to sales phasing and preloading in September. However, considering sales of last 4 months, that is from September to December, BoroPlus range grew by 9% over previous year. Other brands like Pain Management range grew by 7%. Navratna grew by 11% and 7 Oils in One grew by 5% during this quarter. Kesh King was more or less flat, while Male Grooming range declined marginally by 3%. Healthcare range also declined by 6%. It grew by 2%, excluding the immunity range. On a 2-year CAGR basis, both BoroPlus and Pain Management range grew by 10%, respectively. Healthcare range grew by 14%; Kesh King by 7%; 7 Oils in One by 18%; and Male Grooming range by 1%; however, Navratna was flat on a 2-year CAGR basis. During the quarter, modern trade grew by 14% and e-commerce continued its robust run growing by 75% over previous year. I'm happy to share that we are now capturing more than 14% of our domestic revenues through these new wave channels, which is 310 basis points higher than the previous year. CSD revenues grew by 16% during the quarter. Our distribution initiatives continue to progress with additional 5,800 rural towns being added in the last 9 months through Project Khoj. Our revenues and presence in stand-alone modern trade outlets have also increased with our coverage expanding 40 cities in more than 3,400 outlets. We have also activated more than 26,000 additional outlets for our health care products by focusing on Ayurvedic bhandars and chemist outlets. Coming to our international business. I'm happy to share that sales have grown by 7% during the quarter, which translates into a 2-year CAGR of 16%. If we exclude sales from hygiene and immunity range, international business grew by 14% during the quarter. Growth in the international business was led by key geographies like Bangladesh and Sri Lanka, whereas MENA posted flat growth and CIS declined on account of high base of hygiene sales in previous years. If I look at profitability this quarter, I believe we have performed well despite strong inflationary pressure and a high base of previous year. Gross margins at 67.4% contracted by 300 basis points over previous year due to steep inflation in key raw material prices. Our EBITDA at INR 342 crores was flat over last year but grew by 14% on a 2-year CAGR basis despite these challenges. The raw material inflation seems to have peaked and we do not foresee any major gross margin pressure in Q4. PAT at INR 220 crores, grew by 5% over previous year and PAT margins at 22.6% expanded by 20 basis points. On a 2-year CAGR, PAT grew by 23%. Similarly, cash profit at INR 304 crores were flat over previous year but grew by -- grew at a 2-year CAGR of 15%. For the first 9 months of the year, our consolidated revenues at INR 2,422 crores grew by 13%. EBITDA at INR 788 crores grew by 9%. PAT at INR 483 crores, grew by 31%. And cash profit, at INR 734 crores, grew by 13%. In view of availability of net cash of over INR 700 crores and our stock price is being traded at a significant discount compared to overall FMCG market, which we believe is not the true representation of the company's market value, the Board of Directors has approved a buyback of shares up to a value of 10% of our share capital and free reserve at a price not exceeding INR 550 per share. This step also demonstrates our confidence in the company's fundamental strength and its future prospects. Further, I'm also pleased to inform that the Board of Directors have declared a second interim dividend of 400%. That is INR 4 per share for FY '22. The business environment for the last 2 years, unfortunately, hasn't been too conducive as we all know. The pandemic and its ever-changing variants, personal losses, high cost of raw materials, loss of jobs, sluggish rural demand, reduction in discretionary spending, et cetera, has affected business across. There have been many learnings, too. Ability to adapt to newer ways of doing business, opening up of newer channels, booming e-com, birth of D2C brands, are some of the positives that we have to test and will focus in the coming days. Digitization will continue to play a large role in the business in every sphere. We will take every step and invest wherever required to fuel the engine of growth and charter a new growth trajectory. With this brief, I now open the floor for Q&A. Thank you.

[Operator Instructions] The first question is from the line of Abneesh from Edelweiss.

My first question is on the e-commerce marketing. You've given good examples of what you are doing. So I wanted to understand this Pharmeasy barter deal. What kind of response you have seen? And have you tried these kind of media barter deals earlier? And similarly, in Nykaa for example, the Kesh King onion range promotion, et cetera. So in both these sites and maybe even on Amazon, what kind of portfolio are you getting a good scale up versus the GP in terms of consumer response?

Abneesh, Vinod is here. Vinod will be able to answer this.

Right. So the media barter, I'll just take that first, the media barter is -- essentially, what we do is we tie up with the account. And in lieu of our reach, so what they test is they look at the reach what we would gain out of any of our print communication. And you do some kind of an exclusive arrangement with either the Flipkarts or Amazon, and it's an exchange of logo in lieu of the reach Flipkart gains, on the back of our brands through print media, they give us requisite equivalent slots on their e-com pages, and that helps us participate into events. So it kind of brings our cost down -- cost of visibility and a cost down in participating with an account. And one, it's mutually satisfying because it gives them reach; two, it helps us bring our cost down, visibility and makes us participate in larger and larger events, and that helps us drive consumptions for our brand. And we've seen success in all the initiatives we've taken, whether it is Fair and Handsome or whether it is onion oil or lately, we did a tie-up with the Zovo. So -- and we see multiples of 4x, 5x numbers during these periods. Which are even sometimes nonevent led, which is a larger event like Republic Day, et cetera. And that gives us -- helps us drive growth. In fact, strategically, we are looking at that as a revenue stream to drive visibility on e-com portals when -- as we move forward. And with regard to portfolio and e-com. We've seen the mix, the core growing. We see -- we've gotten into combo operations and the right kind of composition with the right kind of value per unit. That is driving growth for us. And we've seen a complete portfolio growth, whether it is seasonal, driven through lotions and the entire hair care range, Onion range and the new digital brand. We've seen tremendous traction around that. And our entire portfolio is aligning to what the e-com customer wants in terms of value per unit as well as the latest trends, and that's the entire endeavor to grow in e-commerce.

Sure. My second question is on Chyawanprash. So it is hardly 8% penetration category. But when I see you, Dabur, et cetera, keep launching differentiated products, you have come out with jaggery Chyawanprash and Dabur has got Avaleha, Kesar Prash, Ratnaprash and all that. So for the 8% penetration CapEx will be -- why is it needed? Is it because when COVID waves die down, then to make the customer buy these kind of innovations are needed? So is that the main reason because fantasies very low.

Gul Raj?

Can you hear me well?

Yes, yes, we can hear you, Gul Raj.

Yes. So I think you raised a very valid point as to whether with the lower penetration, does it make sense to have variants which are sort of multipurpose variance. Yes, while the penetration might be low, but as a category, it's a fairly large category in overall terms. So it's a category which is around -- currently around INR 1,200 crores as a category at company sales price. So in that sense, what has happened in terms of the broad variants which have been launched over the last few years, is that there are many people who have a sugar problem here, diabetes. Many people may not be aware, but Chyawanprash contains about 60% to 70% sugar as part of its composition. So we launched Chyawanprash about 5, 6 years back, we've got a very good response. In fact, in related market share terms, we are much more over-indexed in terms of this category versus the regular Chyawanprash. And then we launched jaggery Chyawanprash about 1 year back. We've got a fantastic response with that also. So in a sense, both at the consumer level, where there is need for sugar-free products or products which don't have refined sugar and at the category expansion or a market share growth level, some of these variants do mix in. Yes, in the past, there have been variants launched by some of the market leaders where they have not done well, maybe Chyawanprash for children, Chyawanprash containing chocolate, etc. But what we are focusing on is very clearly in a large market, which has done very well over the last couple of years ago for the last 6, 7 months, it's not performing because of the high base. We want to obviously grow our market share and offer to consumers a differentiated value. And we were the first organization to launch the jaggery Chyawanprash and it's become a surefire winner in terms of consumer's acceptance. So the idea is to see how we can offer differentiated offerings which make sense. And obviously, to work on growing the penetration also for the overall category. So penetration has gone up by about 15%, 16% over the last 2 years. Earlier, the penetration was about 5%. Now it's gone up to 8%. And we do see this continuing with overall interest in [indiscernible] increasing in the coming months and years.

That's helpful. My last quick question on Bangladesh. Your competitor, Marico has come out with cooling hair oil. How does this impact you? And what would be the plan for Bangladesh? .

So as far as we are concerned, our Navratna is growing very rapidly in Bangladesh, and we have not got any hit from their actions or their activities at the moment. They are very marginal distribution at this stage and even, I think, impact is very, very miniscule. But we are very watchful and continuing with our activities and our promotions for the brand in Bangladesh. So Navratna is going well for us in Bangladesh. No worries over there.

The next question is from the line of Chanchal Khandelwal from Aditya Birla Capital.

And, can you hear me?

Yes, I can hear you.

Mohanji, on this changing role for both you and Harsha, can you define how does it play? And how will it play out going forward? .

So Chanchal, by and large, see the roles are more or less the same, I would say. But definitely, as you get a designation, your responsibility becomes multifold, Mr. S.K. Goenka, who is the Managing Director, now Harsha is taking up the responsibility. And I have also become a whole time this thing. So definitely, it is towards the succession planning, I have been saying that there are other family members also in the team, but 2 of us would be driving from the front seat. So overall responsibility lies on both of us to drive the growth of the company. It's just continuity.

Okay. So just the change in -- on the succession plan Mohanji, it's been time we have been hearing this. I mean I know it's a difficult thing to change -- but I mean, we have been hearing this pre-COVID and it's almost been 2 years now. I mean anything -- any thoughts or any time line you would like to give it to us as to when and why -- whatever steps you're doing to -- if you are to get someone from outside the family office, if at all?

So Chanchal, we have been continuing with the same answer that as of now, this is part of the succession planning that 2 of us have taken a bigger responsibility. And as I said, we are not averse of getting anyone from outside. But when the right time comes, then only we will be appointing somebody from outside.

Sure. But still, I mean, the only reason I'm asking only is that any -- I mean, if you work with a time line or if you have some planning in the back end as to role -- give some role, then give us more clarity to us as an investor. So that was the point I was trying to understand. If you could -- you have a thought in mind, but any time lines or anything which you can publicly share?

There is no particular time line, Chanchal. You would see that we have appointed very, very senior resources. We are moving towards a direction where we want to be very clear what would be the role of the new person who comes in. So definitely, the move is towards that, but there is no clear time line on that.

Sure. Secondly, on the Male Grooming category. I mean the CAGR -- 2-year CAGR of 1%, again, Male Grooming you define the space. Now Myka is entering into the male grooming space. I mean since you have defined this category in the past, you have a bigger right to win, but what are the investments you are doing now? Numbers are not -- you may say 9-month numbers look better, but that's also on a lower base. But 2-year CAGR is still 1%, how do you want to create this male-grooming category, speaking what are the things you're doing here?

So Chanchal, male grooming has been mostly hit due to the pandemic. You would have noticed that all the social events were canceled. All the school colleges were closed. People were not stepping out of their houses. So the male grooming fairness market degrew by almost 40% in Nielsen. So even though we try to maintain our numbers, we try to maintain our market shares -- now once the market opens up completely, I think then we would bring enhanced ad spends into Fair and Handsome. We signed up Salman Khan, we could not do much because of this pandemic. But now we would get very, very aggressive as far as the male grooming is concerned.

[Operator Instructions] The next question is from the line of Harit Kapoor from Investec.

So if you could just give us a little bit of your sense on how you're seeing the rural demand pan out. Obviously, there have been multiple calls where companies have said that there is a slowdown, Nielsen has also pointed it out. But if you could just give a sense, Mohanji, of how things are before you guys? And given your high salience, how are you -- what's the on-ground picture item and outlook going forward?

So Harit, I cannot give a specific time line when the market would revise. even the month of January was subdued, I would say, as far as the rural demand is concerned. So the kind of inflation that we are seeing, we really don't know when it would improve. But now that we would enter into the season of summer, hopefully, once the summer season starts, we will be able to dump some of our Navratna in the market? Let us wait and watch. We have to wait for another, I think, month or so to give you a correct picture.

And Mohanji , for us, how is rural versus urban bid for the quarter? How are those trends?

For us, rural was slightly better than urban. Urban was almost flat. Rural, we grew very marginally.

And from a general trade expansion strategy perspective or better throughput perspective also, is there something that we can do to kind of mitigate some of this demand-led pressure in terms of higher throughput, more outlets? Is there a GT plan there for the next, say, 6 to 12 months, which can kind of partially mitigate this stress?

There is a continuous -- Project Khoj is very aggressive as far as the Project Khoj is concerned, we are investing a lot of money. But see, overall, when markets are so weak. It doesn't move the needle, unfortunately. But these are long-term strategy. We need to continuously invest in our real distribution expansion plans. But they really don't mitigate the kind of slowdown that is there in the market right now.

And the last thing -- actually, 2 things. One was on the digital brand. If you could give some sense on the digital brand that you have a stake in how the kind of movement performance, et cetera, has been? That would be very helpful.

So Harit, we have launched digital brands in almost all our products. To start with, we imported Creme 21 from Germany. We have started rolling it out in Indian markets. Then secondly, we launched Kesh King Onion Oil, that is another digital first brand. We also launched Navratna therapy which is, again, digital. We have launched some salon-specific products in Fair and Handsome which is again digital-first brands. We have just entered this space. Though the uptake is a little slow, I would say, at this point of time, but once the market becomes normal, once everything is -- we would definitely try to spend in this portfolio. But overall, I'm very happy to report that over the last 2, 3 years, the way we have progressed on the modern trade and e-com side, today, that contribution is almost 14% of our domestic business, which is quite remarkable, I would say.

Right. Right, right. And last thing was on the margin side. So obviously, you've done extremely well the first half -- first 9 months of this year at a time where you've seen significant inflation. I just wanted to get your sense on the going forward. Any commodities in your basket where you are seeing incremental pressure, which could see an incremental impact on margin or that's something that you still can maintain in a ban on a Y-o-Y basis?

So as I said in my opening remarks, Harit, is we are not seeing much pressure on Q4 as far as input cost is concerned. That -- only thing to watch out is the crude prices, how they perform post the elections. What is the kind of increase in petroleum prices, we will have to see. But by and large, are not worried too much on the margin front for Q4.

Congratulations on the additional role.

[Operator Instructions] the next question is from the line of Shirish Pardeshi from Centrum Capital.

Congratulations for the new role. 2, 3 questions. The first question comes on mind on the BoroPlus. We did a good job in the start of the quarter, but however, the winter has not panned out the way. I was more interested how the core BAPC has performed. Is there a growth? Or is there a decline? And when you say that the growth has come primarily it is because of the product extension? Or the core has really grown?

So in BoroPlus, Shirish, the antiseptic cream has not grown. Most of the growth has been led by BoroPlus lotion and BoroPlus Vasocare, and some of the other extensions that we did for BoroPlus. So the BoroPlus antiseptic cream is by and large flat, if I'm right, Vinod, or we have degrown by 2%, 3%?

Yes, we have declined by 2%, 3% in this quarter. But if we look at from September to December period, we are almost flat on that.

Thank you, Rajesh. No, the reason why I'm asking that we have now launched 48 grams price point, INR 10. Is it the price correction or is the new SKU, what we have launched?

So that is on the soap side, Shirish.

Sorry?

That is BoroPlus soap, which we have launched the...

No, no, no, I got that. But why do you need a INR 10 SKU? Is it that a penetration-led strategy which we are trying to try drive the generation? Or I mean, not many people have a INR 10 soap and I mean INR 10 soap is not a regular soap which people would use.

Yes. So The idea, Shirish is that the way we are expanding our rural reach, we need a price point where we can enter rural markets, particularly with soaps. Because most of our categories you would see, they don't really penetrate to those outlets. Soao is the entry point. So we launched a INR 10 soap, and here we are getting good results.

So basically, we are targeting a larger audience?

Absolutely.

Because soap is quite -- I mean, hugely penetrated?

Absolutely.

Second question on Pain Management. Although last 4, 5 quarters has been really boomed for Pain Management. But if you can split the growth, how the core general portfolio has done in terms of distribution, penetration? And largely, it has come because of distribution, the efforts what we are doing in rural? Or there is a real volume growth, which has shown this number?

So Zandu has grown by almost 10% for, I think, for the first 9 months, and this is purely to do with the pandemic, I would say. As I have mentioned that we have added more than 45 lakh new consumers into the balm category. Also, the household penetration, per capita consumption of balms, have gone up by almost 15%. So overall, there has been a huge increase in terms of penetration as far as balms are concerned, both for Zandu Balm and for Menthol Plus Stick Balm.

That's exactly my point what Mohanji I was saying because it's a traditional category, it's more of a deep rural category, showing a growth I think something is going really right. So whether this kind of growth will continue...

No we -- Shirish, we have actually capitalized on this pandemic, I would also say because in the last 6 quarters, we have launched more than 5 to 6 new campaigns. So every time the new variant -- and we have addressed the needs of the consumers with our new campaigns. So which has really helped into the penetration into newer households. Per capita consumption, as I said, has also gone up. And honestly, in the month of Jan also, we have seen supernatural growth as far as the balms are concerned. It has really entered into a new households.

Okay. I have 2 more questions. One is on the international business. We have seen in a decent growth in the challenging environment. But when can we see a high strong double-digit growth? Because if I look at your commentary last 4 to 5 quarters, we have seen a lot of challenges in this business. So is the challenges are behind? Because you did mention that, yes, there is some problem of the high base. But I think in terms of penetration and distribution region what we have done in CIS, should -- my sense is that should have started showing into the numbers.

Vivek? Are you there on the line?

Sorry, sorry. I was on mute, I was talking. So when you see the international business, the 7% growth which we delivered this quarter is on a very high base where we have grown by close to around 30% in last year in the same quarter. So that has led to a slightly lower. When I look at 2-year CAGR in this quarter, we have grown by around 15%. Most of the countries we are up on track except GCC where we are still seeing some trouble. And the troubles are over when we see we the January data. And the discounting, which was happening in the market has all been corrected by and large. And now we are back on track, and we should be having a good double-digit growth from now onwards.

Okay. Mohanji, My last question on the margin front. We have seen that you have managed very well the margin. But if you can give me a sense, because what I see that the ad spend is remaining flat, marginally 2% up. But in the context, if the demand is not coming, so what is your position? Are you going to invest more on advertising and keep the brand going up or you will cut the ad spend and maintain the margin?

By and large, Shirish, we would not disappoint on the margin front. As I said that the markets are not very conducive for growth, what looks like. That's what we have seen it in the month of Jan also. So we would be very wise in terms of our spend, we would only spend at the right time.

[Operator Instructions] The next question is from the line of Percy Panthaki from IIFL.

Yes. I just wanted to ask on the pricing that you have taken. I think you've taken a 3% to 4% price growth on a Y-o-Y basis. So 2 parts to this question. One is, with such a small price increase and commodities are inflating 40%, 50%, how is it that you're able to manage with such a small increase? All the other consumer companies have taken a price increase of anywhere between 5% to 8% on a portfolio level. So that is the first part. And the second part of the question is that is there a corollary to this? Is that, therefore, do we have some more headroom for price increases since -- versus the overall sort of FMCG industry, our price increases are less. So even if we were to benchmark versus the industry and take up 2%, 3%, it would be possible without having volume backlash. So is my understanding correct on that?

So Percy, on a 2-year basis, our price increase has been more than 3%. That is very important. We have to be very careful in our price increases because we have to balance between volume and value growth. Also, what has happened is due to the mix of our sales, we are not seeing the kind of margin erosion because some of the brands are -- have very high gross margins which have performed well during the pandemic time. That's why you're not seeing the kind of pressures. So we balance that out. We would not really want to be too aggressive as far as price increase and pass it on to the consumer. And overall, there is so much of inflation. But as I said, we would definitely try to see that our margins are intact. If we see there is tremendous pressure on our margins, we would definitely be aggressive on our price increases. But as of now, I said that quarter 4 seems to be fine. We would wait and watch for an aggressive price increase.

Understood. Secondly on Kesh King. I just wanted to check over the last several quarters, Kesh King as a brand has done very well. Even on a 2-year CAGR basis, I think it was the best performing brand in the -- at least the listed companies, the data that we get. But this quarter, there has been some slowdown even if I look at the 2-year CAGR. I mean it's still okay, but there is a slowdown in the 2-year CAGR versus what we have seen earlier. So is there something that you can do to make sure that we remaining -- we remain fast growing? I mean there were several initiatives taken earlier on shampoo, there were several things done in -- you have taken a price cut and volume went up, et cetera. I think in hair oil, you have given the applicator, et cetera. Now those big-ticket initiatives have sort of, I think, been digested and it's because it's been 2, 3 years since we implemented that. There are some smaller initiatives on premiumization like Onion Oil, et cetera, but that will, of course, remain quite small right now. So is there anything else you can do which is material in nature, which will push up the growth of this brand?

So you have summed up, Percy I think by and large, last ticket changes have been done in Kesh King. You are right, over the last 3, 4 months in this slowdown, particularly the rural slowdown, we have seen a dip in the Kesh King numbers also, which continues in the month of Jan. So let us wait and watch, Percy. Honestly, there are not much changes that we are doing right now. We, of course, signed up Shilpa Shetty for -- as a new brand advertiser for Kesh King. Once the markets are good, we would just get more aggressive, that's it.

[Operator Instructions] The next question is from the line of Amnish Aggarwal from Prabhudas Lilladher.

Congrats, Mohanji, on your elevation. I have couple of questions. My first question is regarding the raw material inflation. Can you give us some idea that which are raw materials we are facing in inflation and where now the impact of inflation is actually getting, say, more somber or pulling down?

So 2 of the raw materials, which have really gone up are -- one is the LLP has really gone up, I think, by about 30%, 35%, which has hit our margins. And secondly is the oil, Rajesh ,which is that oil, I'm forgetting.

Rice bran oil.

So rice bran oil, the prices have really gone up significantly over the last 8, 9 months. These 2 raw materials really have disturbed our margins.

Okay. Sir, my second question is regarding the hair oil as a category, and this is regarding the industry itself that when I compare the growth of hair oils across companies. Okay. Then this is one category where there seems to be margin pressure -- sorry, your volume pressure and demand pressure more than some of the other segments. So is there anything inherently wrong with the category? Or why do you think is the category suffering more? That is question part one. And the second is that how much of Kesh King sales are from the rural areas?

So Amnish, you are right that hair oils over the last few quarters have not done so well. But see, for us, Navratna is our biggest contributor as far as hair oils is concerned. 7 Oils in One has done pretty well. Kesh King also has done well. But what was pulling us down was Navratna. And Navratna primarily because of its cooling properties -- and during the pandemic, people were averse of using cooling products because of the fear of getting more cold, and that's why we saw a dip in Navratna oil once this pandemic is over, I'm sure that Navratna would also bounce back.

But, sir, on this low growth for the industry as a whole, because every company which was into hair oils, is reporting a pressure, which is relatively more than other, you can say, personal care or FMCG products.

Not for us, you would see our numbers for 7 Oils in One. We have grown phenomenally well, same is for Kesh King. What has pulled us down is only Navratna, and I told you the reason. And as far as Kesh King rural contribution is concerned, I think it is almost more than 70%.

Okay. And how much of it is selling in small packs?

We don't have small packs, large packs sell in rural areas.

The next question is from the line of Kunal Vora from BNP Paribas.

Sir just wanted to get a sense on the revenue outlook. You mentioned that you managed 6% to 9% CAGR in last few quarters. And while this is better compared to what you've done in the past, are you satisfied with these numbers? Do you think getting to double-digit consistent growth as possible? If not like in the next couple of quarters, but FY '23 '24, how are you thinking about double-digit revenue growth?

So Kunal, no one is happy with single-digit growth. Everyone aspires to get double-digit growth. And whatever we plan, whatever initiatives we take is to get a double-digit growth. Always, you have seen that our brands are still less penetrated. We want to get into the rural areas with most of our brands taking directly to rural areas. Once the market is good -- presently see, we are in the midst of a slowdown, and we must -- we can't do much in these times. What we can do is only keep on expanding, keep on maintaining our shares and not disturb much equilibrium. So let the new year start. We are, of course, now focusing on our budgets for next year, where we would definitely internally take a double-digit target. But for that, the markets have to slightly bounce back, obviously.

But I'm not talking about say, like last few quarters. Even if I look at like the 5, 6 years, it's been the same story in the mid-single-digit growth, maybe going up to high single-digit growth. I think is it early expect double-digit growth for the category, if now considering that some of them are mature? Or I mean I understand that penetration level is still low, but many of them are niche categories and might not have potential to get to very high level of penetration.

Kunal, I would not see it from that lens. You would see some of the categories, even we have performed extremely well, double-digit growth for a lot of categories. What has really pulled us down is Navratna Oil or some of the categories, unfortunately. You see market [foreign language] we have grown -- balms have grown 7 plus lot of categories, 7 Oils in One, those categories have grown a double-digit growth, Okay? So if -- [foreign language], what can we do?

Okay. Okay. Understood. Second one, you had a strong launch pipeline for Chengdu Health Care products. Can you talk about the response? Have you done the launches? And how is the response? And also if you can update us about the Chengdu Health Care portal? Chengdu portal.

Yes. Gul Raj is there, Gul Raj would be able to answer.

So over the last 1.5 years, we've launched many new product segments such as Health juices, Single-health tablets, Health drops like Tulsi, Haldi. As I mentioned earlier, we've also launched the Chyawanprash jaggery variant . So we are seeing a good scale up happened in the jaggery variant, definitely for Chyawanprash. We are also doing well on the hair juices like aloe vera, amla et cetera. And we've also done a few launches in the last few months, and the Zandu Care direct-to-consumer D2C portal. So in some of the categories such as single-hub tablets, we have seen a high scale up happen on the platform. So we believe we are in the right direction, and we have many more NPD digital-first brands planned in the -- for the next year, which should be launched both at the D2C level and some of them in the retail markets as well. So we are looking at understanding the consumer need gaps and what are the gaps in our portfolio versus what are potential categories in terms of size and growth potential. And we are looking at an omni-channel approach where there will be some which are launched with the right support in GT, some in the modern trade and some in the online spaces.

What has really done well Gul Raj, I think, is the cough syrups...

Yes. Cough syrups has also done extremely well. We had launched it about 2.5...

That would highlight which is picking up now, The last 2, 3 quarters in health care, cough syrup [indiscernible].

Absolutely. So we had launched it about 2.5 years back. And from the middle of 2020, we started investing with the right communication strategy on it. Month-on-month, quarter-on-quarter, it's been doing very well, and we saw all-time high sales happen in the month of January on this. Yes, it could have been...

Sorry, sorry.

I'm sorry part of it could have been the -- the high -- January sales are, of course, helped by the third wave. But we believe that even before the third wave happened, we were doing very well on the plan. We've also launched 1 or 2 variants in Vigorex, which has also done well. So yes, some of the NPDs, which are more focused on the pandemic are linked purely to say, what the level of incidences. But at an overall level, I think -- in terms of the NPD launches, we've done fairly well, and we are gaining market share and traction in some of them. And for the D2C platform, as I said, we've got a host of NPDs plans for the coming months and years. Sorry, you were saying something.

No, I just wanted to update on D2C spectrum only Chengdu Health Care portal. So I think you covered that now.

The next question is from the line of Varun Basrur from [indiscernible].

Is there any update on relocation of pledge on the shares?

Any allocation in the sense, Varun, sorry?

Revoking the pledge on the quarter sale.

So Varun, as in all my calls, I have been continuously saying we are committed to revoke. But once the -- once we sell some of our other assets, then only it would happen. So it is taking some while. But hopefully, you would see something in the next 2, 3 quarters.

So this pledge would be entirely or mostly removed in the next 2, 3 quarters?

Not entirely, but we would definitely reduce it in the next few quarters.

Ladies and gentlemen, that was the last question. I now hand the conference over to the management for closing comments.

Thank you, Percy. Thank you all the participants for joining us today in this -- our quarter 3 financial results conference call.

Thank you, everyone.

Thank you very much.

Thanks. Thank you.

Ladies and gentlemen, on behalf of IIFL Securities, that concludes this conference. We thank you all for joining us, and you may now disconnect your lines.