Godrej Consumer Products Limited (GODREJCP) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Conference Call with Godrej Consumer on Indonesia business hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Manoj Menon, Head of Research, ICICI Securities. Thank you, and over to you, Mr. Manoj Menon.

Hi, everyone. It's an absolute pleasure representing ICICI to host Godrej Consumer management today. Good morning, good afternoon, good evening, depending on the part of the world you are joining the call. So this call is specific for an Indonesia business update of Godrej Consumer Products Limited. The Company is represented today from 2 senior managers, Mr. Akhil Chandra, Business Head of Indonesia; and Mr. Sameer Shah, CFO and Head, Investor Relations. Now over to the management for the opening remarks. And then post that, we'll open it up for Q&A.

Okay. Sameer, do you want to say something? Or should I start?

You can start, Akhil. Thank you.

Okay. Hi, everybody. A very good afternoon from Jakarta to everybody. And I would like to thank everybody for being with us on the call today. And I hope everybody and your families are all keeping safe at this time. As far as Godrej Indonesia is concerned, the business has been witnessing a gradual recovery post a very tough second wave, which we had and which has impacted a lot of businesses and companies in this country. And, obviously, with a very tough macroeconomic environment. However, we are very actively putting into place numerous building blocks and initiatives, which we are confident will continue to drive sustainable, profitable sales growth in the mid-term. From a category perspective, all of you would be aware that Godrej Indonesia is a leader in all the 4 categories where we are present. Home insecticides is our largest category. And performance in our home insecticides category so far has been steady. And so far, we have been focusing on both a process of democratization, as well as premiumization, where we are looking to gradually occupy a lot of the white spaces that exist in the category. Those white spaces are quite substantial with coil being about 30% salience and with personal repellents being a 10% salience. And our initiatives are basically all geared to try and accelerate some of the switches from those categories to where the market is naturally growing, which is towards aerosol and towards electrical products, where we are, by far, the dominant leader. We are also focused within home insecticides to also try and accelerate plays in the non-mosquito space. Regarding air fresheners, air fresheners, as you're aware, is a somewhat discretionary category. And we can expect a gradual recovery in this category, which we've already witnessed to a good extent in quarter one, and we are seeing in quarter 2 as the COVID headwinds are abating somewhat. This discretionary category is recovering. And we will also continue building on our leadership position in this category. As far as Mitu is concerned, which plays in wet wipes is, we have seen a very significant increase in competitive intensity. And there has been an unabated price [ war ] in the wet wipes business. And we have put into place now a number of tactical initiatives in terms of sizing and pricing and looking at the competitive intensity, including retail price indices to really blunt and mitigate that competitive onslaught. And we are hopeful of gaining back our lost market share in this category in the coming quarter. The hygiene space, where we had been very, very opportunistic in terms of launching a new brand last year, continues to do very well for us, and hygiene is now contributing circa 10% of our portfolio. And we are continuing to further scale up our Saniter brand, where we are moving from typically sort of the non-personal care part of hygiene to the more personal care side with our launches in soap and powder-to-liquid powders, which is an innovation, which Godrej has launched simultaneously across multiple geographies. Equally, our hair care portfolio is also scaling up extremely well, and we are seeing robust growth in hair care. As far as our go-to-market is concerned, we have been focusing on Project RISE, which seeks to dramatically increase our direct distribution, but also within the outlets that we are covering, we are looking to further increase our throughput or our sales into outlets so that we're able to maximize the number of lines sold into outlets. We are also building strongly on reaching the pharmacy outlets using national pharmacy distributors. And we're also driving e-commerce maximization, both in the B2C space, but also number of pilots are in play in the B2B space. And therefore, we remain focused on getting more direct consumers. And this, obviously, will be complemented by the right portfolio strategy to drive our GT portfolio. So net-net, as we are putting these building blocks in place, we are confident about the long-term potential of the cluster, and we are confident that we will be able to drive sustainable, profitable double-digit sales growth as these building blocks get seeded in, and as the macro challenges in the Indonesia economy start to abate a little bit. So that is an overview of the overall business. Of course, from a people point of view, the teams continue to remain very resilient and are coping quite admirably with all the stress and strain being produced with this COVID onslaught. That's the overview from Godrej Indonesia. I will be happy to take any questions from the group as there maybe?

[Operator Instructions] The first question is from the line of Arnab Mitra from Credit Suisse.

I had 2 broad questions. One was on the new categories that you have focused on, hygiene being one of them. Once COVID is behind us, do you see this as a long-term initiative now from your side? What are the kind of categories that you would have? And -- or do you expect the revenues that you've created to kind of deplete before you start rebuilding there? And also a related question to that is, we've seen visible enter some of the home care segments in India, like dish wash and floor cleaners and things like that. So is that also something that you are doing in Indonesia?

Okay. Regarding the Saniter brand, actually, I think it's been quite remarkable that we were able to get into market with a completely new brand in a 30-day period. And really, Saniter is now contributing close to 10% of our portfolio. So with a very healthy gross margin and actually, strong positive [ NC ] in year 1 itself. Basically, our approach has been to very much use this reassessment of consumer choices because it is not very often that consumers get a chance to really reassess brands. So it is -- what has happened in this entire space was that there was a big need for, of course, sanitization products that need was [ sprays ], both not only in the home but out-of-the-home. And we were able to very nicely leverage our core competence in a number of areas, particularly in the area of aerosol and launch into multiple categories within the Saniter brand. But we find that, of course, that is -- it is -- those core categories are extremely sensitive to COVID. But in the last 6 months, we have been focusing on building parts of the portfolio, especially for care of Saniter in the personal wash segment, which is soap, powder-to-liquid, liquid hand wash. And those parts of the portfolio are going to be much more enduring. So our strategy all along has been to ride the momentum and the massive needs that the consumer presented by introducing them to a strong brand, and that brand having gained the trust of consumers in Indonesia and already establish itself as a very substantial player, we are now in a position, and we've already initiated those launches to, therefore, move into the personal wash part, which then gets us to play in segments which are less dependent on COVID. So I'm confident that strategy, which we're already seeing early interest of success is going to help us mitigate to a very large extent if COVID most -- completely disappear next year, which, again, remains to be seen. But we are future-proofing our presence in this hygiene category by playing in a much bigger way in personal wash. On the second part in terms of floor and dish, at this point of time, we have not launched in those segments. It could well be part of what we are evaluating. We don't have immediate active plans to do so because we think there are some trade-offs for the brand as you go from personal wash into floor or, in some cases, you might even look at toilet, for example, Lizol as a brand has a very different equity. So we have benchmarked some of those. But at this point of time, we are not really going -- we're not actively pursuing an entry into floor. But we remain open-minded depending on what success has happened across other categories within the Godrej portfolio globally.

Sure. And my second and last question, after that I'll go back into the queue is in distribution. So I think 3 years back, I think you had mentioned you were at about 100,000 direct distribution and plans were to kind of more than double that. So if you could give us an update on where you are? And also, in the context of e-commerce becoming a lot bigger in Indonesia, now both B2B, B2C, do you see the need to expand distribution significantly anymore? Or there are other ways to now make up for that, let's say, distribution?

Sure. So Arnab, there were about 100,000 direct earlier. And what we have put into place is actually 2 types of initiatives. One is very structured a bit where we are sort of covering those as active outlet part of the one. So those we have moved from about 100,000 to 160,000. And on top of that, we have also put into place using these [ traders ] where we go directly into outlets, which we still monitor for database, where we are covering about between 40,000 to 50,000 outlets. So we were trying to understand really what is the cost-to-serve for somebody's outlets, is that a viable business is or not? We still believe that, as we are looking to cover those 40,000, 50,000 through traders, we are finding that the cost is a little bit higher. So we are still trying to optimize our coverage. We believe, for a market like Indonesia, 200,000 direct pockets, which we are now at about 160,000-ish is the right number. After that, we believe that the cost-to-serve and the cost economics fall off very, very dramatically. It is even when I benchmark a company like Nestle. Nestle covers about 250,000 directly, and they are maybe about 6x on the 5%. We also know that for Unilever, they're covering about 900,000 directly. But more than 50% of the outlets give them 5% -- the bottom 50% give them 5% of sales. So basically, we are almost at the level where we think we are correct in terms of the total direct reach, but we have a number of initiatives in place to see how we can be much more effective in our indirect coverage. And that is looking at both active wholesale. We are looking at some traders -- some targets with traders. We are looking an active wholesaler those who actually got their own sales team because sometimes these people are able to operate very cost effectively using multiple principles. We're also evaluating the efficacy of some dealers. And lastly, we have a couple of pilots running with -- one with Bukalapak and then there is another company called [ Warung Pintar ]. So these are, again, dedicated B2B players. So we're again trying to work out the relative efficacy or efficiency of enhancing distribution without precession going directly.

Next question is from the line of Abneesh Roy from Edelweiss.

My first question is on the cost inflation and pricing. Last 1 year, we have seen cost inflation in most countries. So if you could discuss, apart from raw material, the media inflation and the salary inflation also? And given the macro has been tough and demand recovery is quite tough, have you been able to take price hike across [indiscernible]?

So Abneesh, Indonesia actually has been seeing much more pressure on overall FMCG growth. So if you were to compare what Nielsen is showing in terms of FMCG, our overall -- even prior to cover, FMCG growth rates were in the low-single digits, and post also, we are seeing significant pressure continuing on overall FMCG across 65 categories. So where India is seeing 15%, 17%, 18% type of growth, we are not seeing anything close to that, even in terms of bouncing back. We've also seen some situations where, with the COVID crisis, and I think because category penetration are much higher in Indonesia as compared to India, the pain that has been felt has been somewhat greater because if you take, say, let's take, a category like air freshener, air fresheners have almost a 30% type of penetration in Indonesia, whereas India, it is sort of high-single-digit penetration for air fresheners. And therefore, the -- with this COVID pandemic, with the unemployment and also the impact that has happened due to citizens, also the reduced work hours, we have seen 2 trends happens here. Number one is that consumers have either down traded in terms of the pack sizes or they have down traded in terms of their brand, moving from more premium brands to sort of more the discounters or sometimes even to the home -- the private label brands, right? So in that context, overall, we are seeing somewhat limited opportunities to take price. But, of course, we look at it in quite an opportunistic way. So far, we have foreseen the impact coming through in terms of commodity, some of the commodities that we operate in, for example, for tin cans, we have seen quite a spike in iron ore prices. Iron ore prices have come down dramatically, but China being a very large producer, has actually cut production also very dramatically. So they have managed to keep prices up a little bit artificially. And some of those impacts have then flown into us. We're also seeing some trends in terms of cost inflation in terms of LPG. But other commodities, which have spiked, for example, on the wipes side, we use a lot of [indiscernible], which is also use for PP and other products. Those prices spiked last year and now are beginning to -- they are almost back to the pre-COVID levels. Fortunately, for us, Indonesian rupiah currency remains strong, and we are now in a position where we see some currency tailwind coming through. So that said, there is, obviously, some margin pressure that we are seeing. And we are very conscious about that. Looking at how to manage the margin pressure, something, obviously, which we are looking at and that we have the equivalent of what India has for the 5, we've got projects, where we look at various these initiatives. We're also very, very focused on our -- on the mix. So in terms of really looking at driving those parts of our portfolio, which have a better mix. GT, by the way, is significantly is about 1,000 basis points accretive to the bottom page. So we continue to drive GT. We also have a much better margin for e-commerce, surprisingly, unlike India, where a lot of e-commerce businesses tend to be margin decretive, e-commerce in Indonesia is as margin accretive and we are continuing to drive that quite hard. So last year, our e-commerce business grew 4.5x. This year, we are running between 2x to 3x overall in terms of last year. So we are building that business quite nicely. So those are areas where we expect some elements of the mix to help us. And, of course, collectively, where possible, we are taking some limited price increases. But it is -- those price increases are relatively modest, where these kind of can manage without -- and where the opportunity to downgrade is somewhat limited. So in certain areas, where that's possible, we will look and take it. So at some point, we might consider -- again, looking at the categories that we are playing in, and particularly the formats also, where there is less switching opportunities are those where we are looking to take selective limited price increases. So net-net, there is margin pressure. We are looking at our -- in the short-term, our overhead lines, we've looked at those very, very closely. And therefore, we will try and see how we make sure that we broadly maintain our margin profile as we look to build our business into the future.

Right. And on the media inflation?

So see, media intention in this country is -- we have agreed -- actually, 2 years back, we had a history of really significantly reducing our media cost. So we've had 2 rounds of media pictures. And the first round, we actually reduced our CPRPs to about 30%, 35%, in the second round of about 10% -- about 15%. So net-net, this is something that we are quite focused on. We tend to do CPRP deals with our media houses. So if you take the largest media station in this country, it's called RCTI. With RCTI, basically, it's part of the pitch that we have done with [ Havas ], where we agree on a CPRP base, and we give them what the position in -- what is the Tier 1 channels we should buy, what is the Tier 2, what is the position in break? How much is prime time? How much is non-prime time? And then it is up to the station, once they resign those deals, to then deliver to the CPRP. So if they are not -- if the spots are such that the GRPs are not delivered. It is up to the station to make good by giving us bonus spots. So we tend to be quite well protected there. It's an area we have leveraged very, very strongly. I would say, we are punching very much over and above our weight regarding the negotiation side.

Sure. My second and last question is, do you need a bolt-on acquisition in the next 2 years to ramp up? And on the macro, you mentioned Indonesia has been challenging. When do you see Indonesia FMCG growth faster than India FMCG for the industry? I'm not commenting on GCPL, but any insights you have? And what's required for that?

Okay. So regarding a bolt-on acquisition, where we've been looking for the last 2 or 3 years, and I think it's a question of being able to find an opportunity that would really be suitable because clearly, there's a playbook in place. And Sameer, you might want to jump in here and say something about the acquisition side. But we are definitely always in the lookout. It's a question of finding [ companies ]. But over to you, Sameer, if you can comment to that?

No. Abneesh, I think we will be open in terms of evaluating a strategic kind of asset, right? The objective is to [ benefit ] organically drive double-digit sales growth. And we do feel that a little bit of macro favor, I mean, in medium-term, and a lot of building blocks, which we are putting in place, we should be kind of close to the double-digit growth aspiration, which we have. To very short-term, I mean, nothing [ anything ] to call out here in terms of [indiscernible] from an M&A in Indonesia. But medium, long-term, we will be open in terms of potential assets, which strategically makes sense for us and also past tracks overall kind of growth ambition there.

Yes. So the second part of your question, Abneesh, I think, was really on when do we expect sort of FMCG growth rates in Indonesia to grow faster than India? So that's a bit of a tough call. Obviously, I wouldn't want to warrant on what the India trajectory would be vis-a-vis the Indonesia trajectory into the future. If we kind of look back at Indonesia and you try and understand what really started the maximum growth rate at FMCG, actually, there was a point in 2011, 2012 when minimum wages were hiked by 25%, right? And suddenly, there was a huge rush of cash, which is going into the working classes, combined with somewhat cheap advertising and the growth in modern trade. Now that was when Indonesia FMCG was growing at 18%, 20%. Whether those macroeconomic conditions will come back, really, I doubt it. But in terms of where we are today, definitely, I would imagine that, look, this is a country which is now undertaken very significant reform. So the omnibus bill that they have put into place and some of those corrections that they are doing regarding the economic policies and also ease of doing business has been the entire focus of the Jokowi government. And the type of reform that has put into place regarding job creation, the type of focus to try and get the relocation of global supply chain away from China and all the pressure that is being put into this world, this country is actually very nicely positioned to benefit from some of those longer-term macroeconomic sense. And we're already seeing a country and a government, which is quite responsive to taking very bold moves regarding this type of reform. So I would think that the medium-term after the COVID headwinds are beginning to wear off, which I think is probably next one to 2 years is where I would see the impact of COVID getting milder and milder is when I would expect to see much stronger FMCG growth because that's also roughly when some of these reductions and bigger changes should start kicking in. So that's probably what I would warrant as a guess at this point of time, Abneesh.

The next question is from the line of Percy Panthaki from IIFL Securities.

Sir, very surprised to note this one statistic that you gave that the hygiene category under the Saniter brand is now around 10% of your overall sales. If you can give some idea on the total category size, and therefore, if we can derive some kind of market share that the brand is currently tracking? And this market share gain has been at the cost of any of the large players? Or is it the small unorganized guys which are seeding the market share? And what have you done right to sort of ramp this brand up so meaningfully in just 1 year? What do you mean sort of learnings and what was the key success factor or factors which led to this?

Okay. Percy, absolutely. I think as far as Indonesia is concerned, really Saniter has been really quite a savior because otherwise, our results would have been -- I think not too dissimilar from what you would have seen for Unilever, right? So if you see Unilever results, H1, they have led very, very significantly. Overall, sort of high-single-digit decline on top line with home and personal care showing double-digit decline. And overall EBITDA coming down also in the mid-teens, right, across the business. So it is, I think, just the Saniter is -- and it's almost worked a little bit of a key study. And I've been speaking to the University of Indonesia business school and I'm working with students because in a way, this example, this exemplifies the multi-local operating model that Godrej held because you spot an opportunity, you'll have the empowerment to move at speed and the agility to exploit it. And then that's really a [indiscernible] then circumvent what would have been a much more significant impact and decline more in line with our FMCG peers. Now as far as the business is concerned, roughly, we have used the Saniter brand to enter a number of kind of different categories, which we call hygiene. So hygiene, there is more sort of definition of what is hygiene. But when we have used the Saniter brand, I mean, we were the first -- more than 50% of our sales, close to -- slightly more than half our payment fees comes from the aerosol product. And the aerosol product is largely into surface and air sanitation. It is primarily used by surface, but we also say it can be used for air sanitation. And it is the aerosol pressurized products that went in. It was really very actively making the way for people had to kind of -- there was a fear that can I open the door, what happens at the doorknobs, hotels, if somebody comes into the house, if somebody delivers a parcel, how I disinfect that? When I step into the car, the drivers happen it or what do I do? So this product was really one of the key anchors for the Saniter brand. And it's -- in that category, of course, we were far ahead of any other brand, including Dettol or any of the local players. We hold, at this point of time, approximately -- of course, at one stage, we are the equalizers market share, a number of other companies have followed suit. But we hold approximately 50% market share for the last 6 months, being stable, with the last COVID wave that market share went up. And -- but it's more or less stable at about 45% to 50%. So that is one piece. We also play in hand sanitizing gels and spray. We are playing in other non-aerosol disinfectants. We are playing in fabric disinfectants. We are playing in wipes. We withstand with our wipes portfolio to recent launch of disinfectant wipes. And therefore, those -- the cadences of those categories and, of course, the shop and liquid hand wash, as well as the power liquid. So those are all kind of different parts of the hygiene segment that we are playing in. But the most dominant share tends to be -- even in fabric, Unilever launched the 2 brands. We have another brand under Stella, which is our fabric spray. Between Levers and us, we are about -- there are about 60-ish market share, the 40-ish market share across the 2 brands. In the hand sanitizing gel, when we last practiced a few months ago, we were the #2 player, ahead of both Lifebuoy and Dettol. And -- but lower than a local brand called Antis, which was the dominant #1 player. So it has basically been a phase here where the multinationals focus much more on the established portfolio and the emerging needs where the consumer felt for hygiene outside the bathroom, was something that was not that clearly felt and therefore, products are not available to meet that need. By our launch of Saniter, we were able to very quickly exploit that opportunity and therefore, occupy quite a dominant position. And I'm quite pleased to say that our brand is very, very visible and strong. We were doing some -- when you go into retail outlets, we have a very dominant presence there. And even if you can go to some of the malls, some of the individual shops that I was surprised the other day when I walked into a Louis Vuitton, they're stocking up for us. You can go to any other premium malls and they are stocking the Saniter brand. I think it's just the fact that, again, the packaging that we worked on has very actively focused on developing a very clinical, reassuring medicinal-type of image, which sort of gives you the assurance of [ this year ] for us, which you will see in the hygiene category. So basically, that's a overview on Saniter.

Right, sir. My second question is, if you can give some flavor on the evolution of GCPL in a couple of parameters? So let's say, today versus 3 years ago, some numbers on things like what is the evolution of your category split, your evolution of your channel split, GT and [ TE ] e-commerce? And also, I know you will not be able to give any numbers, but any kind of directional flavor as to, let's say, if I look at 3 years from now, how these things will look both in terms of the category split and channel split?

Okay. So on that one, Percy, I'll give you some generalities, right? So we will give you the broad trend. Basically, 3 years ago, we were slightly more than 70% in terms of modern trade and GT was kind of less than was around -- maybe around 28%, approximately there. We have now evolved our channel split, where GT has grown by about 200 basis points. NT is down. We -- basically, 3 years ago, we didn't have any play in e-commerce. Our ambition by the next year is to get to approximately about 3%. This year, we are hoping we will be around 2% in terms of e-commerce contribution. So basically, it's gone from nothing to around -- by next year should be around 3% or so. The ambition, of course, if I was to say what is the stretch plan that I did with my team, but I'm saying in 3 years, it should be at least 10%, right? Now, again, on that state, we are actually be driving it, but would also conscious that we don't want e-commerce just to be a price play. And therefore, it's going to be something where we don't want to create too much of disruption in the market. And therefore, we are trying to reach a new set of consumers regarding e-commerce. In terms of category, clearly, by having now about 10% of hygiene, where that did exist, we've seen that the contribution of the other categories have come down. But basically, especially the primary categories used to be -- it used to be almost 40%, used to be home insecticides. Now, home insecticides would be about in the mid-30s. We used to be about 30-odd-percent in -- for air fresheners. And air fresheners, I imagine be around 27%, 28%. I'll have to look at the exact number. So that has come down a little bit. In terms of wipes, as of this year, because of loss of market share, we used to be about -- roughly, I would imagine, it was about 15% is what I remember, right? Or 10% to 12% is what it used to be. And we would see about at least a 400 basis point dilution on the wipes side. So basically, what has declined has been, in meaningful terms, as we have lost market share, has been on the wipe side, and that's been particularly linked to the last 8 to 12 months, very, very vicious competition, price competition coming through. And therefore, the other part, our sales portfolio, largely is more or less static. And we have seen growth coming through on hygiene on top of that. In terms of what we've been trying to do all across, we've been really building the basics of the business in terms of the way we are looking at analytics, the way we are looking at the entire digital disruption across multiple segments or multiple functions. So just, for example, let's take sales. So earlier when it came to, say, GT, we were not using the data as well to segment our different type of outlets. Now, we didn't have a clear idea when I take my grocery outlet, what is the grocery, A, B, C or COD? What is my, call it, frequency? What is my group adherence? What is my call compliance? What is my effective cost? What is the total lines sold? We didn't have MSL. We couldn't track what time the salesman did his first call. We couldn't track whether the salesman was actually at the location when we booked the order or not. Now those are all things that now we are doing and we are able to ensure that we are enhancing our retailer time. And we can do a proper 80/20 approach, where the sales guys spending the time, having a proper aerosol, so he can do proper line -- rain selling. And he's also spending time -- more time with the A & B class retailers, which will give him the response that we need. Again, in modern trade, for example, what we have done is, we have now gone in for a complete image recognition software. So the whole idea of perfect store was something that was very clearly articulated in the past. So now we are saying that, look, it's very clearly linked to on-shelf availability. We have clear metrics over past. We have very clear metrics for visibility for planogram compliance, for price compliance, so FOMO compliance. And we've also now just rolled out in half of Indonesia, a software, which is only being used by [ overseas ] companies, including Unilever, which is image recognition software, which gives you the on-shelf availability straightaway. So by the salesgirl or the merchandiser, just taking the photograph. It's using AI to tell you recognize our pack, recognizes competition pack. And then we can say, this is our own [ stock ]. And movement -- then you have a metric to say, okay, if the next day that is not made or the missing pack is not updated, there's an automatic trigger alert which goes on to the team to then make sure that on-shelf availability is managed, which, of course, is because even now sort of 65% of our business is on modern trade. And therefore, we are trying to make sure that we are executing very, very strongly against the pillar. So strengthening very significantly the quality of our execution has been one of the key pieces of what we are doing. Looking at analytics to drive the pending, the promotion plan is also something that we are doing very, very strongly. So that's just some examples of what we are doing, say, in the sales side. So that's just sort of giving you a broad overview in terms of where we are. In terms of the future, definitely, we expect these categories to be growing in the sense that we see that we are largely not playing in 40% of the HI market. So home insecticides is $5 trillion as a category, and 40% of that is where we have relatively weak presence and where we are not there, right? So coil 30% of the market, personal is 70% of the market. So how we continue a multi-formed approach to accelerate the observation of the consumer to both aerosol and electric and also, how we use our pyramid of products to further steal share from coil is the way we see our opportunity to keep growing in, say, home insecticides. So we expect to be even stronger player there. And, of course, we are looking at other plays which are non-mosquito play. So we already have the roach portfolio, which we are developing. We've also got a rodent portfolio, another brand called Cap Gajah, which we are also done innovatives and further looking to drive. So we do have sort of multi-test plays going on. And similarly, when it comes to the likes of that air fresheners, we are looking at both premiumization and democratization. Air fresheners are only about 30% here in this country, more developed markets tend to be 60% to 70%. We are now focusing on both the premium part of our portfolio, which consists of the matic machine, which is about 40% of our air fresheners, and we are trying to say how we can keep driving penetration there with our seeding approach and a lot of the work that we're doing with different devices and gadgets. But on the democratize side, we are also now getting very focused on getting consumers to upgrade from the naphthalene and the camphor balls, which are used in a very big way in bathrooms. So we are not looking at this penetration in home. We are looking at penetration amongst living spaces. So tracking, okay, what is our home penetration, but if somebody else is buying something for the bathroom, how do we both provide superior solution and shorter-term marketing initiatives to be able to gain a much larger share of a bathroom space, and therefore, get people to switch away from the like of the naphthalene balls or the camphor that they use towards regular air fresheners for bathroom. So that is just an example of what we're trying to do in the air fresheners space. So we see a pretty significant building opportunities in all of our categories. And category growth, of course, we expect to continue in the future.

The next question is from the line of Latika Chopra from JPMorgan.

My first question was regarding the market share dynamics in your core HI and air freshener category. If you could throw some more light on how the dynamics are playing out? And if you could comment on market share trends for Godrej there? And my second question was on the hair care category. You did touch upon that in your opening remarks. If you could talk about some of the initiatives you are taking there? And what is the savings of this portfolio on your overall mix today?

Okay. So let me start off with share overall. So market share, we are -- look at all the -- we look at not just the categories that we play in. We measure market share in the whole market that is including air -- including coil, as well as personal. When we take the whole $5 trillion markets, we are the dominant #1 player. And our shares, if you take the last 3 to 4 years, we have grown approximately 50 to 100 bps on a year-over-year basis last year. So net-net, we have gained market share overall in HI. In terms of the #2 player, which is SC Johnson's Baygon, and Baygon has seen share declines on a longer-term basis in this category -- in HI. As far as the most -- of course, look at our portfolio, the salience of aerosols and liquids is very high in our portfolio. It's 85% plus in the salience there. And our shares in aerosol and liquids tends to be much higher, close to -- for aerosol it's between 45% to 50% tends to be aerosols with at least 3, 4 other players there. So there is SC Johnson's Baygon is #2. But we tend to fight quite significantly in the case of aerosol with them. But we have been gaining share in this space as well. In the area of electric, we have 2-part eco vaporizer and we've got the mat business. Whereas in terms of liquid vaporizers, the sales to Indonesia and for LV and mat is about the same. But in our portfolio, we are much more dominant on mats. So we have close to 90% market share on mat. Whereas in the case of liquid vaporizers, we are more in the 50s type of range. In the mats segment, regarding, there is really more competition for us. And we are -- I think the team was showing you the shares with a running ahead of time in certain channels. And therefore, there is really -- that business is quite stable. But it's not a segment that is growing that rapidly. We have seen LV as a segment, which has seen last 2 years, maybe slightly mid-single-digit to low-double-digit type of growth. And in the past, we have been kind of growing alongside with the market. In the last 12 months, we've seen [ vape from Seminyak ] becoming much more aggressive in the space. And we've seen -- they don't lose significant share, but we've seen some short-term share loss to vape also in one of our channels. And we are taking corrective actions. So in this segment, where there has been -- we have not advertised in liquid vaporizers since 2016, last 5 years. We are now -- we have already started advertising from -- well, 2 days ago, new advertising in local [ retail ] stores. So we are looking to shore up our business, but we also see LV as a strategic play, which can also help us further keep recruiting from coil. So we are advertising, obviously, to further accelerate the growth in the LV segment. So that's the sort of overview. Sorry, I missed your other question? What was the second part?

Yes. So my second question was around your presence in the hair care portfolio, what kind of progress you've made and any initiatives you could share?

Yes. So hair care, actually, a business has done extremely well for us. We were close to about 170 to 180 last year. H1 has also been 150 plus. And we would expect to really grow very significantly this year over last year. The growth really has come on the basis of some of the changes to our strategy that we made last year, we decided that rather than sort of getting into a head-to-head battle with L'oreal and Garnier, which is the #2 player here, which is much more modern trade focused. We felt we should shift our strategy to some of the local players, brands like Miranda and Samantha, which are -- or Miranda as a brand is still the #1 player here, which has largely [indiscernible] portfolio. So we made a switch from focusing on L'oreal to Miranda last year. And therefore, we started going after much more of the [ white ] color market or what we call up the color of segment and also, in terms of driving the business in general trade. So that approach is paying good -- very strong dividends to us. And we've also launched with the shampoo hair color to provide the whole convenience part of the segment, but also to sort of improve some of the herbal-based product. Shampoo hair color is already there, but we have extended our brand from just hair color into shampoo hair color as well. So as a [ pivot ], we expect that to continue doing very well. The shampoo hair color launch is doing extremely well. We are running about a much further ahead in terms of our overall projections and the targets for Neo. So we are beating our record numbers there. In terms of salience, we would expect that to be sort of under -- approximately 3% I would imagine for our business. So the salience of Neo is about 3%. 2.5%, maybe -- between 2% to 3% [indiscernible].

The next question is [indiscernible] from [ HSBC ].

Yes. Akhil, I just wanted to check on this expansion into GT. Would that entail an increase in the mass end of our portfolio? Would you see an expansion because of that as we kind of look to grow into that channel? And if yes, which category would it largely be focused primarily on? Is that where Saniter comes in?

Okay. So definitely. So on GT, I think it's [indiscernible], right? So we've got to have absolutely the right portfolio. So we've got to have a GT portfolio to really make an impact on GT. And like in India, you would tend to think that candidates that are the most appropriate ones will be circa everything that is [indiscernible]. So as far as Indonesia is concerned, that gives us really products, which are 2 GT products. But GT, again, in Indonesia is sort of -- you've got a spectrum of GT outline here also. So the very bottom of GT will be not very different from the [indiscernible] outlets that you have in India, whereas the top end of the GT might even be classified as something that is like a decent neighborhood kirana in good apartment localities, which would be -- and there is where you can go in and sub-select. So some of those are also sub-select-type of outlets. So it is a varied picture in terms of GT. We are not really chasing now the [indiscernible] outlets because we have a portfolio, of course, which is at about INR 2,000 for products. For example, our bleach business on the ProClean, we have got some of our products which are the [ Saurabh's and Sanju's ] who operate there. But more and more, that is -- we are really looking to drive that end much through indirect distribution and the wholesale. In terms of the part of GT that we are looking to cover the main push, of course, is coming from bar soap. So it pick up INR 3,000 and INR 2,700, INR 3,000 per piece is where we are -- we have pitched our bar soap. And we've also got our LLP portfolio, which is about a INR 3,000 price point to the Piramida product, which are the 2 lead care. But from our point of view, we are seeing, again, because we are looking to share -- to steal share from coil, we are also now getting increasingly focused on driving some of our other brands into GT in a much more focused way. So even aerosol, with the likes of our 200 ml can, which is, of course, priced at INR 50, but we think there's a big opportunity to drive, especially the A & B class retail, as we call it, grocery outlets, is where we are looking to drive our distribution for aerosol products and also for some parts of our air freshener product. But for the mass GT products which are going across at [ ECD ] those are part of our portfolio, which will be approximately at INR 4,000 and lower. And those are across some of the class I've just outlined, including Saniter and both HIT Magic Paper and HIT Piramida. Those are important parts of the portfolio. And, of course, we have some sell up of ourselves, which go in there.

Okay. So it's primarily HI, a bit of air fresheners and IG Saniter, that is what you mean?

Yes. It will be HI and Saniter and some of the enterprise portfolio as well.

So in that sense, if I kind of see that as the -- would it be fair to say those are the categories that would be the driver for the medium-term target that you indicated? Is that how you kind of envisage grow double-digit kind of going through?

Yes. So we would expect -- so you see, our growth is not just coming from democratization also. Our growth also comes from premiumization. So if you take our -- we would expect some growth to come through even on our mainline aerosol product. So if I take, let's say, aerosols. Now, aerosol, that growth will only come from -- GT, we'd expect that both to come from the new market as well. So it's just that we will be in a very focused way driving, say, penetration amongst [ SCC ] class consumers in that way. That SCC class would not only buy from GT, they can also buy from the modern trade. That's the way Indonesia is structured.

Okay. So -- okay. No, I meant the heavy lifting would be done by this. Is that correct? Or no, that would not be correct?

So yes, GT heavy lifting is definitely going to be done there. So now, if you ask me, 3 years from now, how much will come from that? We would expect there will be an increase in GT salience, for sure. Now, is it going to go -- do I see in 3 years to go from 30% to, say, 50%? That's unlikely. But we are hoping that we get about 200 basis points improvement on a year-on-year basis, would be roughly what we will be hoping for.

Okay. And just a last bit. From a margin standpoint of view, I mean, I understand the near-term pressures, but that notwithstanding, as we move towards GT, while there is a margin that kind of flows through, is that offset by the mix change? Or are they -- how does that work? If you could share us?

So you see margin, obviously, we are not overly concerned about our ability to defend our margin. We will be, of course -- and that [indiscernible] because there is the natural benefit we are getting by moving the business into GT. We are getting a natural benefit by actually also reducing our dependence on hypermarts, which is a declining channel here, as well a little bit on minimart. So unifying and moving towards the modern trade independent because Indonesia, unless you've been here, we've got 17,000 island. There's a lot of modern trade which exists, where the trading terms are not as bad as you would expect, some of the large national chains. So essentially by driving some of our higher GT products and also getting some margin benefit by pushing into MTI, modern trade independent, into GT and e-commerce, we are expecting some benefits to come through on -- essentially on our trade spending. And we are also looking to start perhaps -- and therefore, that will offset any pressure that we're expecting. So -- and something also that we can start driving our advertising life a little bit harder also because that can also go along with the GT push that we are looking to get. So net-net, margin -- the ability to maintain margins is something that we are quite confident of.

Thank you. Ladies and gentlemen, this was the last question for today. I would now like to hand the conference over to Mr. Pratik Dantara, for closing comments.

I would like to thank everyone who joined the call today. With that, we would like to draw this call to an end. If there are any unanswered questions, we would be happy to take them off-line. Stay safe. Stay well. Thank you.

Thank you. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect the lines.