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

[Audio Gap] Godrej Consumer Products Limited Business Update Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Vishal Kedia, Interim Chief Financial Officer. Thank you, and over to you, sir.

Good evening to all. We welcome you to the conference call for Godrej Consumer Products Limited. We have on the call, Aasif Malbari, MD and CEO; and myself, Vishal Kedia, Indirect CFO. We will start with the presentation by Aasif, where he will take you through his thoughts on the business going forward. Post this, we will open the floor for questions. We will also have a in the beginning of the presentation for participants to share their questions throughout the presentation. We will take these questions after the presentation is over. Now I hand over to Aasif.

Thanks, Vishal. Thanks all for joining in. It's a pleasure to kind of connect with you all today. In case you are wondering what is the T-shirt which I'm wearing, we currently have a launch for our Godrej which is currently on the launch, conference is on. I was with the team. And we already know we're launching Godrej in Maharashtra starting today. It's MRP INR 79, a product which most of the products in the market on greese-cutting, viscosity and cigarettes. So for people who are based in Maharashtra, in a few days, you should be able to see and get the product in your neighborhood stores. So that's a little bit of a good news to start off with. Again, that's how the last few weeks have been. I mean, finally, I would have done this call with you earlier on. It's been 3 weeks since we made the shift, and I got appointed in this position. The thought in terms of where are we drifting the strategy, where are we doubling up, where our kind of changing cost, we would have been able to come to you all way before, but it has been business as usual on many fronts. And we also had a new factory opening last week for which one was Just to kind of outline this a little bit more. The announcement of the appointment came on Tuesday, the next 3 days, we had a global MC, where we looked at a very detailed discussion. Where is it that we're doing well? Where is that we are pacing down? And what are the interventions which we need to do at a global level? Post that, we've had multiple engagements within the organization where we deep dive and the leadership team -- the rest of the organization are fully engaged to kind of take the year plans and the long-range planning agenda forward. So we are a business as usual mode on one side while re-hamming and refreshing along the range plan. What I'm going to do today is spend a few minutes actually talking through how the last few years have been and the learnings from there in terms of what we've done well, so that we can double up on that. Where do we believe we haven't kind of hit the ball out of the path and there is a scope to improve so that we can kind of titrate our plans on that and then give you a flavor of what the thinking going forward is. The standard disclaimer. The amenity link, which Vishal mentioned, will have both the options to kind of post something you are, at the same time to kind of ask questions towards the end. Okay. Just starting off as to why did I join GCPL. And it's a simple, I would say, two points, which kind of came to my mind about joining GCPL. First is because it was part of the Godrej Group. It had offered the values of the Godrej Group. It offered an opportunity which was unique. And after I came in, I realized that one is getting the best of both strong, strong values, legacy of being part of Godrej, at the same time, an aspiration to be an outperformer. And -- that -- in, I would say, my career journey, both of these have been equally important to kind of work in an organization which has the highest standards of value. Going -- just as a fun fact, I mean it was great when I kind of saw this letter from Mahatma Gandhi. I also share his birthday. So there is a little bit of an extra emotional connect to this letter. When it comes to being an outperformer, to me, an outperformer is something which I have been obsessed with, in all organizations, all teams which I've worked with. And here I saw an opportunity and a vision which we painted to kind of get there. And being an outperformer is a binary thing. I mean either you are an outperformer or not, there is nothing like almost there. And hence, we keep asking ourselves, are we kind of there? It's not what do we need to get to being there? And I'll make an attempt to answer that today in terms of our thinking to actually live that dream to ensure that GCPL becomes actually a sustained outperformer, where it's pretty much clear that we've kind of got it. In terms of the time which are spent in GCPL, I think three things. Yes, sorry for the -- Yes. Three things have been on the plate. I think first half has been to kind of ensure that we build the right financial guard ways. We've taken a good kind of shot in ensuring that we get sharper on capital allocation. We have moved into a rhythm of dividend payout every quarter. And we've got the health of the business, both from a P&L perspective and the balance sheet much stronger. In terms of Africa, I think we've touched upon it in the past. I think the numbers talk for themselves. I'm not going to kind of speak about it. We've got a structurally reset in the continent. And the third one is about the strategy. I have spent a lot of time in the last 3 years working with the leaders in terms of seeing what is it that we can do structurally, what is it that is sold for us where we should double up our effort, what is it that is an unsolved problem, which we should work to solve for. And we've also kind of worked with multiple people to kind of ensure that the actions to convert the strategy into reality, start falling in place. So I think these have been the three pieces of effort on pretty much an equal allocation of time, which has gone in. And looking forward to now ensuring that the strategy actually plays out as we are kind of thinking from here on. Okay. Our deep time into the last 5 years, and this is what we have kind of called out. It's been 5 years where we've kind of had a good performance, not great. And we have acknowledged that. And again, looking back is more from the perspective of what's worked with. If something's work were, how you doubled up on that? And if something not been working to full potential, how you kind of cost cut? This is a slide which we'll share in December 21. It was a simple strategy, three things which we would kind of grow. Double-digit volume growth. And the thinking was, once we get to double-digit volume growth, automatically, the profits will follow. And in the first few years, we went ahead by kind of making a lot of investments behind getting the volume growth going. It was supposed to be led by category development and funded through simplification. On this scorecard as to where we stand in the last 5 years on this. Double-digit volume growth has been far [ availed ] from here what we deliver. Category development, we've had success, not holistically, but in a few pieces. And I would say we've done a very, very good job in terms of the simplification agenda, where we've simplified the organization to a great extent, and that definitely should be helping us as we go along. So a few things, which I believe have worked really well for us. One is in terms of portfolio transformation. We've begun the journey quite well entering categories of the future. We have a solid 2040 plan, and the first few entries have proven that we can make a fairly strong quick vertical ramp up when we enter into some of these categories of future. So I think it's been a good starting point on portfolio transformation. We've also started thinking and incubating some of the white spaces outside of SPC. The example of that being In terms of globalization, we have actually kind of put building blocks in place. GCPL's global network has now expanded to close to 85 countries. And I'll touch upon it as to where I believe we've come in the journey and how can we accelerate that. But again, a very good starting point on simplifying and creating the globalization agenda. Cost savings and simplification. I think we've done an extremely good job simplifying our operations, especially in the international operations and kind of ensuring that we release costs and release again, bandwidth of the resources. Africa -- which he's spoken about. And on people and planet, again, we have moved multiple steps up, becoming the #1 global organization when it came to DJSI in the personal products category, becoming a balanced organization when it comes to overall and moving up in terms of white collar when it comes to diversity. So -- yes, these pieces, we have started the journey well. In some of them, we've kind of moved significantly up. Having said that, macros have been volatile, commodity prices have been fairly volatile and have been inflated in nature. Currencies have been volatile, significantly, and we do have a sizable international business. At the same time, the business context and competition has been evolving. The competition, the sector, the market is very different to what it was, say, a decade back. Modes are changing, new edge competition is in. The distribution models are changing. Media is changing. So there is multiple changes which are happening in the business environment. All of these three pretty much kind of took us broadly off plan to what we were aspiring to deliver. And -- but having said that, I think as things stand, I don't see the next decade, any of these actually kind of moving back -- I mean, I don't expect commodities to be less volatile. I don't expect currencies to be less volatile, nor do I expect the business environment not to be off, become more and more complex as we go. And I think it's clear as the leadership team that our job is to deliver while accepting the business environment and the change in the external environment. And that's what we would kind of attempt to do. Okay. This is really where we stacked up in terms of numbers. We've delivered an organic UVG of 4% in India and stand-alone and at a consolidated level. The US has been 7% and 6% and EBITDA has been 6%. We have definitely kind of some significant change below where we want it to be. And -- yes, the idea would be how do we now sequentially step up the inputs, which results in the output metric is kind of stepping up so that we can win and become a sustained outperformance. Some of the things where we could have done a better job. I think the first biggest one is on the core category. Our core category revenue growth has been actually flattish with profits actually kind of being under pressure. That has been one of the biggest, I would say, concerns in terms of, I think, our performance. The second one has been in terms of the sliding down of the average profitability in India, Indonesia, which us remaining on low profitability on LatAm and others as a cluster, which has put pressure on us to kind of invest into some of the growth engines of the future. The third would be, while we have made improvements on digital capabilities when it comes to media. We are not in top percentile. We are definitely on a percentile when it comes to the FMCG category spend. But when it comes to digital capabilities and being on the top in the terms of reach, there is definitely a distance to cover. And I think what we've seen in the last couple of months is that people are doing it better than us and there is a huge opportunity to kind of quickly ramp up capabilities in this area. The fourth one would be on execution rigor and this execution rigor is on two fronts. One is operational excellence in terms of decor excellence, doing it right, really bottoms up, be it in the area of sales, be it in the area of PSO, be it in the area of planning, be it in the area of operations. The second one is ensuring that we execute strategy into action much better. And the thing about strategies, most of the companies do have a great strategy. It's converting the strategy into action, where things fail and it's never a linear journey. You need to kind of understand what things are not working and redefine the pathway to ensure you get to where you get to. Yes, I think these would be the four places, which, again, when we deep dive as a leadership team,at a global MC and at extended leadership team came to our mind. Yes. So from here on, and again, I think you will see less of looking back going forward, but it was important for us to kind of take the learnings from there. I believe where do we stand today. We are a significantly stronger organization. We have built a lot of muscle. We have simplified in more ways than one. We've got a lot of our pilots proven and hence, it's now a good time for us to use these building blocks to move towards our performance. Let me start off with our Goodness Manifesto, yes. We have been sharing our Goodness Manifesto over a period of time. Last many connected face-to-face in May, we had made two big changes to the Goodness Manifesto. The first one was on our values in line with the journey with the Godrej Industry's group was having, where we had kind of come out with a Godrej Way for the Godrej Industries Group. We have brought in Inspire Trust, reader and be bold as the three values, which we will kind of as a group built on as a foundation element. We have kind of added that to the Goodness Manifesto. And we had added drive portfolio transformation to the Goodness Manifesto. I'm making certain tweaks in the manifesto, and I'll kind of talk you through what's the thinking behind them. I'll also kind of mention that the broad direction of the strategy remains the same. That's really not changing. We're just doubling up and we are kind of adding a few elements which we believe will allow us to kind of get to a better performance going forward. So let me kind of talk through on the earlier elements which have been a core to our strategy and the new elements as to how do I see it play out in the next few years. Let's start with category development. Our core categories have all the rights to end. I think two big elements where I believe we can kind of ensure that we can have category development or market development on the core player much, much better than what has played out in the recent past. The first one being bringing in innovation park back into our core. And this has always historically been GCPL's strength. I mean if you go back in history and whatever point of time, GCPL has been built on the back of a very, very strong innovation, I would say, foundation. And that's something which we have kind of used to kind of build on multiple category and brand journeys. I think what could happen is that because we had moved on to doing a lot more, we did have to kind of prioritize some of the new entries. And hence, our core portfolio did not get the full benefit of what we could do in terms of R&D and innovation on to them. What we are doing now, and this will be up and running in a couple of months if not a few quarters is doubling down onto our R&D capability. We are actually setting up a state-of-art new R&D center, which will double up the total capacity, which we have as R&D. We believe the DCP is strength. And it's just important that we kind of ensure that we kind of create the bandwidth to ensure that we can give the best to our core. At the same time, continue to the strong momentum, which we want to have one portfolio transformation. So -- yes, it's a big investment of around close to INR 150 crores, which we're putting in setting up this new state of our R&D facility. And if -- this was and always has been GCPL's strength, we won't want to kind of take it further. I spoke about execution, both again on operational elements and on converting strategy into action. I think there have been multiple elements where the strategy to grow the core have been clear or sharp and is quite there. We did fail to kind of converted and it's more about resistance to convert the strategy rather than I would say -- strengthen of come out in terms of strategy. So we will play both these very decisively on top And I believe that with these two actions, or these two umbrella of actions, we definitely should start seeing an uplift on to the performance of the core. While that's more at a higher level, let me just step into each these categories and touch upon what the thinking is. So most of you know that actually, the first 6 categories, which we kind of called out here makes up close to 90% of our revenue. And it's super important if we have to get to our performance that the core has to come to, I would say, industry level growth, if not beyond. And then with the category expansion, we're able to get to a double-digit kind of growth zone. Let me talk to each one of them and give my thoughts at a high level as to how do we see the journey forward on this. Let me start off with although insecticides. I think, firstly, on HI, how the industry has shaped up over the last 10 years is actually pretty excited and I would say really interesting for us, being market to other household into sites. I mean, penetration moving up from close to 65% to 80% and volumes slowing at a CAGR of trend in the last few years is actually really good news because it just means that the need for a consumer for this category is there. The category is very vibrant, and now as marketers our role to ensure that we kind of play this well. From a market construct, again, the penetration and category is 80%, obviously, significant scope to ensure that the usage goes up beyond the penetration levels of beyond -- I mean, enough same households beyond where it currently is. But there is also a very, very big opportunity for our blades. Given that 2/3 of the business, still the category is still in really low-cost burning formats on the access format, while only 1/3 is in the premium format. And that's really on the mosquito side. But on the other path, it's a massive untapped opportunity. The real level of penetration spend are at extremely low levels even when we compare it with other developing countries. So very, very exciting in terms of how the category has shaped up, how the growth is happening in terms of penetration and the current construct is significantly a better construct having a category which was kind of growing. I think in terms of our jobs to be done, I think it's simple three jobs. One, ensure that we have strong share gains in the burning format. We have the mix. We have the product. We have a broad track record, the momentum is with us, and this is something which we'll sustain and build on I mean that's something which is I would say, both gone really well for us in the last couple of quarters, and we will sustain that. I think when it comes to premium mosquito format, again -- if you see the history of this category and see the issue of what we've done, we have ensured that we have driven upgrades by innovating at the right price points and ensuring that we execute well to kind of reach consumers both in terms of and physical reach. We have plans which are extremely strong. And I'm super confident that with the right interventions, we should be able to start the upgrade journey to ensure that a significant amount of consumption moves through these formats. And you should start seeing a lot more from us in the next couple of quarters and years to come on this. So I'm saying unfortunately, we are unable to kind of talk to the thinking in terms of product plans. But definitely, there will be a lot, which will start rolling from our front. And you will start seeing a significantly better execution also on the plans as they come out. I think that the other portfolio in terms of the small portfolio beyond mosquitoes. This is a many decades opportunity. You've seen that we've proven ourselves under Roach. We've actually entered onto online with the ad repellent. Again, good initial success. This is something which we should be able to build in a real strong growth over, I would say, multi digits from hereon. So I think good category contract, good direction in terms of where it's moved in the last 3 years, last 10 years. I think as market leader, this is, I would say, again, India is premiumizing. There is no premiumization not happening, as market leader is our job to kind of ensure that we are able to premiumize an update. And definitely, we will do that. Moving on to the next category, which is Air Care. I think this I would say is again, a very, very strong TAM opportunity from an opportunity for the next multiple decades. EMEA is still extremely low when it comes to spend per capita. It's very, very low when it comes to even urban penetration as of now in this category. These are large categories as the country develops and evolves. And towards that, we've had, again, a superb track record on innovating at a regular interval on ensuring that we scale up post innovating and we execute well, both being those mixes. [indiscernible] track record of building this category. We will continue to sustain that both in terms of innovation and in terms of growth. I'll cover Home Care Liquids a little bit later when I talk about portfolio transformation. So let me move to skin cleansing. When it comes to skin cleansing, the slide actually, again, is a slide which gives so much of confidence to be and to our team there. GCPL for like a decade, I've shown that it can win decisively in the soaps market. We have gained market share year-on-year for a longish period of time. We used to, I would say, out execute, out market completion and gain ruthlessly at -- in each market. The last 3 years, we've seen our shares stabilize. But this is part of our DNA. That's part of our legacy in terms of Godrej soaps, being made into Godrej consumer products. This is something which we know how to win in and you will start seeing actions as to how do we get there. I think I will call out two big things there. I think one is on the product. I think there has been a significant shift in terms of the larger market, in terms of product offerings, in terms of human acceptance, in terms of product offerings, et cetera. What we need to do is go down into each consumption sector, each state, each segment in a state and ensure that we have the right product price market fitment which then ensures that our mines keep gaining market share on a sustainable basis at the right profitability. This is something which we need to kind of recalibrate and rebalance. We've started mining this journey, and this is something which we should be able to kind of complete in a few quarters, post which I'm sure that we should get back to that share gain slide on a sustained basis. I think the next one I would call out here is concurring at a micro market level. Again, some of these businesses like soaps and detergents, our businesses which run at a micro market level, it's about data executing well, it's about outbeating the available other products, and doing it on a daily, weekly, monthly basis with hyperlocal activations, yes. So the right product price, market fitment with the right execution in each market is something which we've done for the case. As a company, we know very well how to do it. I'm hoping that we get there hopefully very soon. I think the next big strategic play is to look at skin cleansing as the larger space beyond soaps. This is a journey in which we have begun a while back. It started off with Handwash. And over the last 1.5 years, we moved multiple steps forward in terms of acquisition of Muscat, on Face Wash and foam body wash. When we look at the total skin cleansing space, again, it's a very interesting space because skin cleansing and large growth at high single digit over a period of time and is expected to kind of grow at high single digits for the next couple of years or for the year or more. We've made good starts here. We will have to complete the journey on filling these white spaces. We will do it in a sensible manner, where we've proven ourselves or we've grown the ability to kind of make some of these entries, but we'll complete filling the white spaces and over a period of time, take more than our fair share, which we have in soaps in these other segments. Moving to hair color. Again, starting off with the market construct, I broadly have three segments in hair color. What is the additional format? Almost 2/3 of consumers still use the traditional format. The modern formats, which is broadly cream and Shampoo and color, a sort of the consumers are there, and that is premium hair color, which is a small segment, but again, a huge opportunity from a long-term play to kind of growth. So that's the market construct. I think in terms of our strategy, it's going to be a three-pronged strategy. The first one is upgrading consumers from traditional format to modern format. Here We've done, I would say, a really good in the way we've driven our business over the last couple of years. We will continue to sustain that and to continue to ensure that the retain journey from on consumers moving to this happens, where the mist of the Crem renovation or relaunch. So quite excited where it's kind of a hitting this journey forward in a more, I would say, aggressive way from here on. We will be entering the premium hair colors market, and I'll talk about it in the later slides. We're launching Godrej It's a very, very unique product, and I'll touch upon it. We'll build our portfolio in premium hair colors as we go along. Professionally the place where we've entered a couple of years back, we've now kind of stabilized the business. This is a place where, again, we should be able to see strong growth going forward. Moving on to hair fashion. Again, this is a business where we've structurally sold a couple of things that we've touched upon this in the past. We've got the portfolio strategy right. We moved now one step forward where we kind of got in a concept called where we've now kind of got countries that have local regional level incubating within guardrails. And once we get to a certain scale, then we kind of really explore the mix across the continent. We've moved the media model to social and influencers and really dial down the television spends, and we're kind of seeing the benefit of that playing out in sales, significant simplification of operations and move the entire on to offtake. So we've kind of done the suture sales, we should be able to now sustain broad-based profitable growth across the continent for a while. Coming to perfumes and deos. I'll touch it one on the call, which we had 2.5 weeks back. Fragrances is a huge opportunity. This is one of the big categories when it comes to 2040. We like the two brands which we acquired. We like the category a lot. Where we're really very happy with the potential it offers. We definitely had -- wouldn't have -- we didn't get the execution right when it came to acquiring PAS and integrating it. Over the next few quarters, we will solve for that. But we remain super excited about the potential of this category. So that was a bet in terms of the category development and the thinking. Let me move on to portfolio transformation. I think portfolio transformation is broadly broken in two past portfolio transformation in India and portfolio transformation globally. In India, I would actually kind of divide in three parts. One is new category entries. Again, the last 2040 opportunities, how do we enter it and decide simply kind of build scale and win. The second one is what we're calling internally as This is a new thinking. It's a futuristic thinking, and I'll just start based upon it. The third one is white space beyond HPC. How do we kind of start and in an entrepreneur way build business beyond SPC. And fourth is how when we come to international business. How do we ensure that we can multiply the speed. Let me talk through each one of these individually. So then coming to new categories. The opportunity -- yes, sorry, Yes. The opportunity on to new categories is large. Some of these are very, very large opportunities. We've shared with this to you earlier on mean example of liquid detergents where currently, it's $0.5 billion expected to kind of grow at 15% CAGR or 10% CAGR or 12% CAGR that we don't know but definitely likely to kind of get to a INR 3 billion to INR 4 billion opportunity in terms of market over the next 15 years. That's a trajectory which we've seen in multiple countries. So as the washing machine usage comes in as urbanization happens, the people enter more and more into the workspace, definitely, the need for these products is going to be there, and homecare just want to example. These are categories where we believe we have a strong mode. Again, there are two key callouts, which I would do from a more perspective. We have a unique advantage of the Godrej master brand. When we launched products under the Godrej master brand, the acceptance and the time for acceptance is significantly better. We're able to get conversions much, much faster because of the trust associated when it comes to the Godrej brand. Our own capabilities from an R&D perspective and not only as a company, but at a group level, we are India's largest chemicals manufacturer at a group level. And working collaboratively at a group level does give us the ability to come out with products, which are leading market leading products. We've done that for the three products which we launched. unique in terms of how it's formulated, spikes unique in terms of the 550 production. Production it gives us risk, which we're actually hitting to the market in terms of primary today, as we speak, is unique in terms of the greese-cutting ability, amongst other things. So we have a good track record. We have a strong pipeline in Home Care liquids and beyond, and we will ensure that we will decisively build a very, very large business when it comes to the new category creation. It's pretty obvious that when you do this at scale, the first few years means it's an investment. We are committed to make those investments. It does put an extra pressure in terms of the short term and slightly medium-term profit delivery. But the size of the price and what we can create in this is -- and the payoffs that you get from a value creation in the medium to long run is extremely large. What we are ensuring that we get a set unit economics -- so we are creating businesses which, as they scale up and become large, will kind of get to healthy EBITDA level. But yes, it will mean investing behind these mixes at an EBITDA level for a few more years. So again, 3 weeks back, we've kind of spoken about risk. Today, we want to share one more launch, which is going out in the next few days. We are launching Godrej Zap. Godrej Zap is a stain remover. It's an online launch. It's a digital-only launch to start off with. The category is interesting. It's growing strong. It's a small category, but a high-growth category. This mix is a mix which we had in Indonesia. It's a mix, which is a strong mix under which we had in Indonesia, the learnings of that we brought in and launching a really good product online. We are quite excited by one more entry, which we are coming with to ensure that the Indian dream of fabulous homes gets met in a more comprehensive manner. So again, this will be available online in a few days. I'm sure you will kind of be able to buying that. Moving to the next concept, which I spoke about, which is DLABS. DLABS is -- it's more like a company within our company. It's important that we disrupt ourselves when we are thinking of the next wave of growth. The idea is to kind of ensure that as we spot the new opportunities with consumers, we are able to quickly take them back into the R&D lab ensure that we create top end products, which are on the back of strong science-led products. And crunch the time the effort and the cost of taking them back to consumers. And this is about replicating. I think some of the successes with some few entrepreneurs have had. And model it's going to be more entrepreneur. It's going to be in order, which is going to be backed and based on, I would say, a lower resources, but strong ambition and aspiration. Agile teams working with end to end, I would say, authority to kind of cost correct. And this again, it's super important, not from a year perspective. But when it comes to the medium term, this actually will become a big funnel, for the GCPL, I would say, core business or the main business because suddenly, we will be having the funnel of proven mixes with DLABS will kind of have would have taken it in a digital way, and then start feeding in and do the larger business. So again, we are really super excited with the way we are going to be creating GLAB and kind of accelerating it. We will have this as really, I would say, a separate board or a separate company within the company, so nonemiting separate legal entity, but a very, very exciting space where you'll see a very different share of GCP. As part of this, we are kind of launching our first product, I touch upon it. This is a premium hair coloring product, is going to be only available from a B2C perspective. It's a patented formulation. It's a super product. It's a single step, easy application, no blocks, no mixing. So some of the shampoo hair colors, which we kind of find in the market, they have actually a partition in between when it's pressed it comes up, people take it in gaps, mix it and then use it. This is actually doesn't require all of that. Is taking hair coloring and for ease of our application to a very many different level. So all of us are super excited as to the journey which hair color can have with this product. So yes, again, this is our first product coming in from And we both build our organization muscle on and the product pipeline in terms of getting many, many more unique innovative products like this to consumers in a faster and a quicker manner. Coming to the white spaces. I think, again, when we touched upon it last time, we did mention that it's been a tough journey. It is a category outside of HPC. There were a lot of learnings which we had -- as we look at the business now, it's got an ARR of around INR 10 crores. So the annual run rate of the business INR 10 crores. We have from the stage where we feel confident now about the product market fitment, product market and price fitment of the mix. We are also kind of have worked through in the last few months in terms of the new mix, which is moving beyond In the next 6 months to 9 months, we will now scale up this business, be more entered in the way we scale it up with a business which was starting in downscaling to save will scale up nationally. We do feel that we can take the ARRs of this business grew close to INR 50 crores by the end of this financial year, and we do stay committed to scaling this business to a INR 500 crore business somewhere by FY '30, we may get a 1 or 2 year and later, but we definitely feel that we've kind of got the product. We bought the unit. We've made the learnings whatever we needed to. And we will kind of be the MDR. We would ensure that we also scale it up in a manner in which it can be done with less, of course, and lesser resources. Moving to the global portfolio transformation model. This is something which we have spoken to you all about. In the past, there was a strategy in terms of 3x3. We always have the aspiration to kind of ensure that we kind of win at a global level with on some of the categories. In the last 5 years, and if I had to kind of see where we were, I think our fundamentals in quite a few of these markets was broken. We were struggling in terms of operations. We are struggling in terms of profitability. Our businesses were complex. We had multiple kind of products, multiple kind of factories and resources were limited because a lot of time and effort was going on in managing the legacy businesses. I think we are at a very, very exciting milestone as we speak now. Fundamentals have been fixed across, I would say, the entire Africa continent, the Middle East content, I mean, the Middle East region, the entire Americas region, Latin and North America. And we created over and above that before the mortgage International a segue into many more countries than which we have operations. So I think a lot of the hard work in terms of getting to where we are today has been done and it's been difficult hard work. But yes, I think we've created and now what we see as the tunnel to the world. The tunnel is ready. Now it's our job to kind of ensure that we have now put the funnel on to this, and that's what we will kind of attempt to do. We've also proven the tunnel with We've taken into countries, we've kind of piloted it. We've seen initial consumer feedback. It's been a good initial, I would say, 400 journey in where we've got to as of now. So as we go along in the next few years, this is something which we've been driving with fashion and energy not seen before. We will scale up Air care, HI, hair color and a few more winning mixes, which currently we have as part of our portfolio and new mixes, which we kind of come out with. And -- yes, you definitely should be seeing a step up onto our international business performance as a result of both sustained profitable growth on our core legacy portfolio, but a significant step up on lower portfolio transportation. Before I kind of -- yes, so let me -- I think again, some of these don't happen unless you kind of put in the right investment, put in the right resources. And this needs to be kind of invested a little bit ahead of time. I spoke about R&D. We are making INR 120 crore investment on R&D. We are building significantly the GTM across the world. This is in multiple countries where we're kind of building a strong sales team to ensure that our mixes can be kind of taken forward. We've done a little bit of the trials in the last few quarters. We've got no initial success. We've perfected the model. So in the next few quarters, we've significantly stepped up our international GTM. And the third one is in terms of digital marketing, we'll scale this up in terms of resourcing and investment, 10x in terms of resourcing and then you start seeing investments in terms of that and really reallocation of the fund also happening. All of this put together just from a investment of costs and resources is likely to be close to INR 200 crores per annum in the fullness of time, which is likely to be around 12 months, we should be able to continue the journey. So we're talking of fairly sizable investments which we are putting on to this journey. If I had to -- before moving on, the other areas to kind of just summarize that all out, which are some of the star priorities for me. I think on category development, ensuring that we kind of went on the larger HI journey by ensuring that we kind of get the renovation part and execute better definitely start personal priority, ensuring that we get this portfolio transformation done in a big, big way globally is a second start priority, creating GLABS so that we are ready for the next wave of growth, and we've transformed ourselves as a new age FMCG company, it is the third start priority. I think the fourth one which we've kind of now got a track record in a few places, which is say Air India, Africa outperformance. So we know that we have sort of sustained our performance to ensure that the sustained outperformers stay that way. I would call it as our fourth priority. Obviously, some priorities mean that the others are also equally important and we will kind of as a team what we need to do. The additional plus one will be on culture and values. We've had a good, I would say, handling deep dives FGDs over the last 2.5 weeks, both as a leadership level and as a and we believe that we can significantly step up, I mean, tender collaboration, we to deliver strategic outcomes and consumer sensitivity in the organization. And as we do that, that definitely will have a lift up on performance, both top line and bottom line. So just a little bit in terms of summarizing what I've spoken til now. In terms of capabilities, embedding AI is something which we all of us. We are embedding AI with really open arms and in areas which are our core business areas, be it operational areas like demand forecasting or be it core areas like planning media, looking at pricing models, all of those are ones which we believe AI can become great tools to bring us from a particular level, which is A2B, and then we come in as teams to then define it and taking forward. And it's trying to use the right combination of AI tools and management expertise to make an impact in that. So we'll use that approach to drive AI in the organization, starting off with large business areas and then moving on to others. We continue the journey of simplification. I think we are around 70%, 80% there. There is still work to be done in a few places. I believe that in 1.5 years or 2 from now, we should be able to complete our actions in terms of simplification, getting to simpler processes use of tech and digital on that, getting to a significantly higher productivity. We've made all the investments in terms of new automated lines and factories, we need to now kind of ensure that they can be raised the utilization of those assets, getting to fewer operations where we've kind of covered a lot of the sun, but there is still a little bit more to be done. So we'll complete this journey in the next 2 years. Coming to the culture, this is again a reasonable shift from where we talked about. We had an old operating philosophy. We believe the culture is a better articulation of the culture you want to build in the organization, so we're kind of changing the operating philosophical and added culture. I will touch upon each one of them very quickly. So I think the first one is about value and valuation. And this is something which is core to the group. The way we've spoken about values and valuation at a GID group level. And again, it's core to how we would win. Valuation is important. We will definitely kind of ensure that we create the right business impact, but we do it, ensuring that we build under the Godrej values. The strategy and execution, again, is super important. I think it's important for any company. You can outsource creating a strategy. You can kind of have great strategies in place. But if you don't convert the strategy into action, really, it's a task only 20% done. So ensuring that both work hand in hand, as a management team, as leaders, as a larger organization, we put in zeal on outcomes. We put in zeal to ensure that the strategic outcomes fall in place. And if things are not happening, retile strategy to get there and ensure that we kind of build this -- I would say, the flywheel to get set is something which we will do. Again, there are multiple examples where we've kind of done a great job on We've done a great job in terms of ensuring that we convert the same strategy. At the same time, there are examples, which we've not done to me, we exactly know the team, what's worked, what are the missing sauce, how do we kind of bring the placing sauce. And at least ran some of these is from possibly a level of X to Y, and continues to keep raising the bar on this. Today and tomorrow, again, is important. And I think when we take actions, the actions should benefit not only to move forward, but also today, I mean the environment keeps changing. There is a culture, which we need to build. At the same time, I mean, it's not that we're going to compromise anything about tomorrow and sometimes certain things do come with a cost. Some of the pieces that I've spoken about strategy are significant costs and a significant investment in terms of margin for us, but we will do it without blinking an eye-led because we know they are the right thing to do for tomorrow. But when it comes to certain operational elements, when it comes to running businesses, getting efficiencies out, it's important that we do today and tomorrow. And that's the fine balance which we'll keep. and profit again. I think it's important that we kind of deliver both. And it's easy to deliver on and the cost of the other, but that's not really our performance. Again, I mean everybody understands that in FMCG, the best way or the best model to grow is ensuring that it is volume-based growth, which then drives the profits to come in. There is no other way to kind of get profit growth in FMCG. It has to be on the back of volumes volume, results in revenue, revenue gives us not only leverage but then profits. While you do that, you ensure that you also play the right efficiencies you pay the right kind of mix gain. So we will kind of drive both for a new Yes. I mean, we definitely are super excited on both. Excited on the core because the core is again, in places where we have a very, very dominant position. We have a strong mode. We have had historically a very, very strong track record and hence to kind of ensure that the core delivers and become an outperformer. While at the same time, we ensure that we build the new both in India and overseas, and we build a portfolio transformation. So I think it's both wherever we feel that we are unable to kind of meet both the pieces, we are happy to kind of ensure that we scale up the resources to kind of ensure that both these objectives get their fair share of results. India and international, again, we are at a stage where we believe that both these businesses are at a good inflection point in terms of growth. We have struggled overseas, but now we've kind of got the standard. We've kind of changed the base fundamentals in place. So we will kind of continue to kind of focus on both. And ensuring that people and planet, including sustainability, safety, health, along with profits, is where we get to leading it. We've done that in the last 2 years and beyond, yes, we will continue to do like. Coming to measures. Again, we had spoken about double-digit and profit 5 years back, I shared to you December 21, I think as we move on because of the changing market context, we kind of then move to calling out saying that we'll get to market beating, UVG and profit growth. We then kind of talked about saying that in India, we get to high single-digit UVG and we will kind of move through that journey. I'm putting my neck out there and saying that we can actually -- the one thing which we kind of define us being an outperformer is a double-digit profit, yes. If we have to aspire to get to being an outperformance. This is really what is the measure of that is the simplest and the cleanest measure to kind of show that we are an outperformer. And this is not a simple number for our call out. We have structured plans. We're making the investments. I'm reasonably confident that we will get to being an outperformer by delivering double-digit and profit. The question will be when and not if. In terms of summarizing it, in terms of an ambition I have talked about it. I mean as we get to delivering a 5-digit, I mean we should definitely get to revenue growth and that follows with the gains profit growth. The question is when, rather than weather -- we will work our way through gradual scale up and sequential improvement to get to our ambition. When it comes to FY '27, and we've touched FY '27 a few times in the last couple of months. We've given the guidance in May '26 and that we will deliver a high single-digit unit for -- on stand-alone. And on a consolidated basis, we will deliver double-digit that was really what we have kind of said as planned for this year, for FY '27. We are committed to ensuring that we kind of meet this guidance and in a few places, like revenue you may not exceed them. What we're also calling out is that we will do this while sharpening the trade inventory in India. Our total trade inventory in India is higher than what we would want it to be. We will correct around close to INR 125 crores to INR 150 crores of trade inventory with with distributors over the next 3 quarters. So you will see that correction happened, which broadly kind of translates to close to 1.5% and in some quarters may be 2% in terms of direction of inventory. We will do that in a manner in which we kind of hold the guidance and we don't kind of -- we deliver this guidance. This correction is required because things are significantly more evolved now. We can operate with better We can operate with better planning. And the way the channels are evolving in terms of the OT channels -- and the growth in OD being higher than that in GT, we believe it's important to correct dealer ROI. And that's good for the medium- to long-term health of the business. We have to go through the short-term pain and we will kind of take and corrected in FY '27. In terms of capital allocation, we've spoken about the dividend policy. We committed to it. We will pay a minimum of 15% broadly on any year in terms of PAD. As of now, we've been paying 10%, unless there is a large M&A, we will continue to possibly pay 100% for a while. On M&A, we are open to M&As. We'll acquire if it is a high conviction idea our primary local M&A will be in India, unless it's a very, very tempting M&A outside India, we will kind of focus energy on M&A in India. Look at something which is strategic in nature, look at the unit economics in terms of profitability and do it if there is a multiplier expect. We're unlikely to kind of take on something which is going to be a 10%, 15% growth that's something which doesn't really excite us. If it is a multiplier way we can kind of acquire an asset and make it 3x, 4x in a defined period of time, we would be more than happy to kind of pick it up, except as a strategic category for us. And if you cannot give us a breakeven soon. On CapEx, we finished the big CapEx cycle and most of them will get completed in this year. Post FY '28, we'll get into mananapEx where CapEx should kind of come down with the delivers of depreciation, which we have. So that's all I have to share. Open to kind of take on questions.

Thank you very much. I would now like to hand the [indiscernible] Please go ahead.

Yes. So we will start with the online questions that we have received. And post that, we will go to the other questions that people have asked. Aasif, the first question that comes is, I'm merging a few of the questions which are come is, we have recently launched a few years back RF in the HI category. But despite that performance has not really improved. What now changes for us to believe that HI category will improve performance?

No. Good question, and that's something which we kind of ask ourselves pretty much every day. We've been asking that question to ask for a while in generally. And I think the answer to that is pretty simple. We've done a great job in terms of introducing RNF. That's one of the vectors in terms of, I would say, a product-price fitment. There are multiple more levers to kind of recalibrate in terms of taking two consumers from an innovation handle. You will see some of those play out in the next couple of quarters. At the same time, we believe that we definitely can execute much better in terms of the mix which we already placed in the market. It comes on to better communication, better reach and kind of sharing the real impact of what the existing products in the market can deliver. We know the strength of the product. we need to kind of execute that better along with bringing in, as I said, the innovation park to the portfolio.

Second question we have and I'm merging a few questions is, in May, we talked about speed ports. But in this presentation, we have not really spoken about speed ports. Is there a change in thinking on that front?

No, I think I covered that. The thinking has changed to the and culture. We love the mother ship and the speed ports equally the mother ship can go faster than what it has been kind of ceiling at. And we don't want to get constrained into our aspiration either on the mother ship or on the speed ports. We are unlocking the resourcing to ensure that both get this fair share of resourcing, fashion, energy to dial up. We love portfolio transformation. We know that in a lot of places, we have a right to win. We've got a proven track record there. We've got a very strong funnel. So we will do significantly more onto the portfolio transformation. But we remain as energetic as excited about what our core portfolio offers.

The final question online comes is, what is this sudden inventory correction that we are talking about? Why is it so sudden that we are taking it in the middle of the year?

Yes, I think it needs to be done. Now the question is when do we do it. We believe that the way currently to our practices the ability to kind of re-forecast, et cetera, there is absolutely no need to operate at these levels of inventory. We are broadly operating at 20 days in GT. We think we can operate with 10 days of inventory there by virtue of all the tools and the fact patterns which we have. And hence, it's just better for the long run. It also kind of means that the focus then moves on to dialing up significantly more on to offtakes, not that we currently are focused on primaries. It's been a different organization. But since we can do it, and it needs to be done it just improves the dealer ROI better. We might as well get done with it and have it behind us. It's an unnecessary distraction. We should just close it.. So it is it on short-term pain because yes, INR 150 crores is not small. We'll do it in 3 quarters, but we might still be finish it off and be done.

Those are the online questions. Now we move to the next set of questions.

So -- can you kind of start taking the questions which are coming in on the call?

Certainly. Certainly, sir. [Operator Instructions] Our next -- sorry, our first question comes from Mihir Shah.

Firstly, congratulations. Just on the inventory correction, I just wanted to understand in which geography is this? Is it only in India or also in Indonesia? So that's on the inventory correction. And which category or is it across the category? So that's my first question.

Yes. Thanks, Mihir. So it's very clear. It's only in India. Our global inventory levels across Indonesia, Africa and Americas is at the right level. It's totally in India and is only in And it's across all categories. So yes, it'll kind of putt all the categories. It's in India only. Just to kind of close the end of the intent correction, this is not something that we've kind of added as inventory in a quarter or 2. So just sort of clarify so that we don't kind of get any wrong messaging around. This is not that we've added admittedly in last quarter or in the last 6 months. We have seen -- and so there's nothing which has been kind of added, I would say, in the last year, 1.5 years. We were have been opting over the last couple of quarters that are I believe we can bring it down and then we started.

Understood. And despite the inventory correction, you are maintaining your guidance that you had indicated earlier and you reiterated that guidance, right? I mean...

Yes. No. Mihir, -- sorry, yes, Mihir, we are kind of sticking with the guidance. We will kind of hold the guidance for the year. It just puts a bit more pressure on us. What may happen is that there might be a little bit of an extra pressure on India, given that this direction also kind of impacts bottom line and you lose the full on this without any other plans kind of changing. But yes, we'll kind of parent in some form or the other and ensure that the