Hindustan Unilever Limited (HINDUNILVR) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Hindustan Unilever Limited conference call for the results first quarter and financial year ended 31 March, 2021. [Operator Instructions] Please note that this conference is being recorded. I would now like to hand the conference over to Mr. Amit Sood, Chief Controller and Head of Investor Relations. Thank you, and over to you, sir.

Thank you, Janice. Good evening, everyone, and welcome to the conference call of Hindustan Unilever Limited. We will be covering this evening the results for the quarter and financial year ended 31st March, 2021. On the call with me from HUL end is Mr. Sanjiv Mehta, Chairman and Managing Director; Mr. Srinivas Phatak, Chief Financial Officer; and CFO designate, Mr. Ritesh Tiwari. We hope that you are staying safe and healthy. As is customary, we will start the presentation with Sanjiv sharing his perspective on the market and an overview how we are navigating the current environment. Then Srinivas will share with you our performance for the quarter and financial year with category highlights and our outlook for the future. Before we get started with the presentation, I would like to draw your attention to safe harbor statement included in the presentation for good order's sake. I request all of you to play (sic) [ pay ] close attention to Sanjiv's and Srinivas' message over the next 30 minutes. We will be addressing upfront a lot of questions which are likely to be top of mind for analysts and investor community. With that, over to you, Sanjiv.

Good evening, everyone, and thank you for joining us on the call today. I do hope that you and your loved ones are safe and keeping well in these exceptionally trying times. I, on behalf of Hindustan Unilever, would like to express a heartfelt condolences to those who have lost loved ones. We wish a speedy recovery to those who are battling this virus, and immense gratitude to all the people who are standing up against the adversities and are fighting tirelessly to help keep others safe, especially our frontline heroes. I would also like to thank every member of Hindustan Unilever for their relentless commitment and dedication in these difficult circumstances. Adversity, they say, is the true test of character, and I'm absolutely certain the country will come out stronger. Turning to our results. It is gratifying to bring down the curtains to full year '21 with a solid set of numbers, both on the top line and the bottom line. Our reported turnover grew by 34%, and profit after tax increased by 41%. Health Hygiene and nutrition forming, which is approximately 80% of our business, continues to perform well for us and grew in high double digits. Discretionary and the out-of-home portfolio mounted a strong recovery in this quarter. This has enabled the business to accelerate momentum sequentially. Our sharp focus on driving volume-led competitive growth has yielded good results as we are gaining relative penetration, 87% of our business. Basis in the Kantar Worldpanel on last 3-month basis, 82% of our business, is gaining volume share. This quarter also wraps up our financial year. As I look back on our performance over the year, I'm very pleased with the results. On a full year basis, we have reported a turnover growth of 18% and profit after tax growth of 18%. It is heartening to note that we have crossed the INR 45,000 crore turnover mark. And once again, I would like to thank my team at HUL for the contribution in achieving this feat. Merger of HUL and GSK, as I always say, is a marriage made in heaven. This month marks the first anniversary of nutrition integration with HUL and what an incredible work this has been. This is one of the biggest mergers in FMC, the industry in India and also in Unilever in recent times. To give you the magnitude, we have onboarded about 3,500 people to create one big HUL family, aligned more than 150 processes, transition several applications and move to SAP ERP platform across 40 sites. All these transitions have happened seamlessly during the last 1 year while we were working in a virtual world away from our offices. On portfolio front, we have expanded our proposition to include the immunity boosting benefits of zinc and Horlicks and have also made strategic intervention into the high sciences category of adult nutrition with a relaunch of plus range from the house of Horlicks. We are putting this proportionate focus behind growing category penetration with the launch of INR 2 sachet and pouch packs, which are 20% cheaper than the earlier packing formats, to make our products more accessible. We also expanded Boost footprint nationally. While we expanded the portfolio offering, we maintained a laser-sharp focus on driving margin synergies through efficient media buying and deployment, savings in overheads and supply chain procurement and from nonmaterial costs. Consequently, our year 1 EBITDA margins at 31.8% are ahead of the acquisition business case. On a like-to-like basis, excluding one-off, we have expanded EBITDA margins for our nutrition business by approximately 370 bps. Since we are driving margins faster, we are reinvesting to grow and recruit new consumers into the category so that we can get on to a virtuous cycle of growth. At the heart of our compass strategy is the belief that sustainable and purposeful business drives superior long-term performance. That message is more relevant today than ever before. During the year, we responded with speed and agility to protect lives and livelihoods while growing our business. We donated nearly 2 crore soaps and sanitizers to the vulnerable sections of our society and essential workers to help them in the fight against this deadly virus. Our VirusKiKadiTodo campaign reached out to more than 15 crore households in a country to create awareness and strengthen community response towards COVID-19. Through our initiatives, over 14 lac individuals were provided with health care and food support. We also donated several much needed medical equipments to hospitals, 75,000 testing kits and assisted in setting up isolation centers. We are leading a progressive agenda on issues like climate and social inequality. So the HUF and its partners, we have created more than 400 billion liters of water conservation potential in the last year. At the exit of 2020, more than 67% of our plastics footprint is now in recyclable form. In 2020, we also collected and processed nearly 58,000 tonnes of plastics, covering 60% of the total plastics we use, and we plan to achieve 100% plastic waste collection in this calendar year. Our water conservation and increased agriculture production initiatives have helped to create over 2 crore additional percentages of employment. In 2020, 16,000 more shakti entrepreneurs joined us, and we feel privileged that we are getting an opportunity to positively influence their livelihoods. This year has strengthened our commitment to being the leader in sustainable business, and showing that a purpose-led future-fit business model indeed delivers superior performance. Today, more than a year has elapsed since the outbreak of COVID-19 in India, yet the pandemic is far from over. Even as we imagine being done with this crisis, the crisis is surely not done with us. Just when we thought we had sight of the silver lining on the horizon with the vaccination drive, we are faced once again with a resurgence of the virus. In India, we have been clocking over 300,000 cases for several days now, and the government of civic bodies are rightfully resorting to micro containments to restrict the spread of the virus. Mobility is dipping in several cities as people confine themselves to their home. This will result in a period of uncertainty till the time we bring down the infection rate under control. Last year, the country had to go in for a hard lockdown as it needed time to be health infrastructure. This year, while it has taken some time initially because of the surge in intensity, but now the country is coming together and the health infrastructure is being quickly ramped up as much as possible. Howsoever, I do not want to, in any way, belittle the magnitude of the crisis. We cannot throw caution to the winds as Lifebuoy has rightfully captured. Protecting India from coronavirus is in your hand, our hands. Every Indian has a role to play. We need to maintain physical distance, follow safe hygiene practices like wearing a mask, wash hands regularly with a soap and get vaccinated. Vaccination, I believe, will be our biggest weapon in the fight against COVID-19. India is driving the world's largest inoculation program. The capacity to manufacture more vaccine is being ramped up and supplemented with imports. I would urge each one of you to get yourself and your family members vaccinated when you become eligible and as soon as you have access to the vaccine. The pandemic has tested the world in a few ways anticipated. They also tested the resilience of a business, character of a people, agility of operation and the depth of our financial strength. While this has not been an easy year, it has made us a stronger business, which is better prepared for the vagaries of the fast-changing world. Our 5 fundamentals of growth, combined with a clear priority, the 4 clear priorities and the technology muscle that we have built over last few years, positions us very well. Our people will always be our biggest asset, and ensuring the safety and well-being will always remain our most important priority. We are running our factories and sales operation with tiered-operating protocols following strict safety and heightening standards. All of our office-based employees have gone back to work from home. As of today, over 90% of all our eligible employees had been administered at least one dose of vaccine. We will facilitate and, where required, pay for the vaccination of not only employees and the family members, but very importantly, the 300,000 people who are part of our ecosystem and constitute what we call as the outer core. We pivoted to flexible working models last year, ensuring a people flow to the most value-generating work. Within 3 months, we had moved 3,500 people from business areas that were slowing, such as out-of-home food business, to teams experiencing high demand like those producing personal and home hygiene products or from roles that were not needed during the lockdown, for example, merchandisers and in-store promoters, to order taking and order fulfillment role. Through a flexible working approach, we will adapt to the evolving situation. Our robust talent practices and purposeful founded business model has enabled us to continue to attract the best talent, and we remain the #1 employer of the choice now for 12 years in a row. The last 1 year has been a paradigm shift in the way we operate. It has highlighted agility and resilience of a supply chain. We have debottlenecked our production line, made them more flexible to quickly adapt to the changing requirements should there be a demand first, and have also added new manufacturing partners taking a potential capacity to 1.3x of pre-COVID levels. Our strength in distribution got further enhanced with the innovative model like hub and scope, direct store delivery, et cetera. Shikhar, our e-B2B app, has proven to be a real game changer for us. During lockdowns when a salesman couldn't message retailers to collect orders, the retailers were still able to place the order through Shikhar. Fiscal year itself, we have added 350,000 Shikhar outlets at the rate of more than 1,000 outlets per day, taking a total count to over 5 lakh outlets. Contribution to a turnover from Shikhar outlet has increased by 6x, 6x in March quarter '21 versus the same quarter in the previous year. E-commerce has become the channel of choice for many consumers. A strong focus on building a portfolio fit for this channel, building capabilities and driving everyday great execution resulted in doubling of the growth rate and contribution from this channel on a year-on-year basis. General trade has become more relevant in the current context considering its proximity, and we continue to increase our assortments and coverage, expansive network of nearly 1 lakh 36,000 Shakti entrepreneurs covering 18 straits provides us a distinctive advantage of massive rural reach. With all the strengths in the fold, we are confident of ensuring continuity of supplies for the full range of our portfolio. We have built capabilities to sense consumer demand signals through digital means. This helps us in responding to changing consumer behavior patterns with speed and agility. Based on this signal, we launched more than 150 SKUs in the last 1 year to meet changing demand of consumers. Another key strength we have is our big purposeful brands. When there is a crisis, consumers turn towards big brands, which have deep foundations built on decades of trust. We saw this in full year '21, where the growth rate of our big brand accelerated. This gives us confidence that the strong growth momentum will continue this year. Despite the economic stress due to pandemic, there is a section of the society which is willing to try new products. Our Winning in Many Indias strategy is helping us de-average India and target subsections of consumers, thereby driving premiumization and growing our market development sales as 2x versus rest of the business. We have set up a premium beauty business unit within our Beauty & Personal Care organization to strengthen our play in the mass speed and e-commerce Beauty segment. Our Health Hygiene and nutrition portfolio, which forms 80% of our business, has performed very well by growing at double digit, 12% in the last financial year. This portfolio continues to remain extremely relevant. And through innovation, we'll further enhance it to drive growth. At HUL, we trained ourselves in running a cost-efficient business model. For the last several years, we've had a very aggressive savings agenda, and ambition this year is to drive savings upwards of 8%. We are looking at all lines of P&L, variabilizing cost structure and eliminating costs, which do not offer much value to the consumers to generate more field for growth. We will continue to take judicious and calibrated pricing actions and ride on the signs of pricing to drive net revenue management. Our R&D capabilities provide us armor to flex formulations and create innovative opportunities to reduce costs. While balancing cost and cash, we will continue to look for growth opportunities and invest in the right ROI model. This will enable us to grow the business and strengthen the moats of competitiveness. The true strength of Hindustan Unilever's province in technology and data-driven decision making came to the fore during the pandemic, when digital journeys managed to mitigate many of the challenges faced due to physical restrictions amid strict lockdowns across India. Through a digital transformation journey, reimagining HUL, we are building integrated ecosystems across consumer, customer and operations. In the scenario where traditional consumer surveys were not possible, our people data center continue to stay connected with the consumers through social listening and digital interaction and picked up the demand trends. Our HUL patient hub process this inputs to build superior experiences and products for consumers. And the customer ecosystem, Shikhar, are ordering up hundreds of thousands of retailers to place contactless orders safely and provided them visibility to the fulfillment of these orders through logistics tie-ups and intuitive interfaces. Operations ecosystem is an ecosystem across the supply chain vertical or plan, source, make and deliver. We have digitized the factories and are building automated warehouses, which allot capacities for us and provide the agility we require in running operations. All of this is powered by intelligent data and analytics, ensuring smooth and optimized operations. Our strategy remains consistent and fit for purpose. We continue to progress the purpose-led future-fit agenda and remain focused on delivering competitive, profitable and responsible growth enabled by excellence in executing the 5 fundamentals of growth. I now have a very pleasant task of talking about my colleagues, Amit Sood, who worked very closely with me over the years and is our Controller of Investor Relations, leaves us to join [ Mandra ] as their Vice President Finance. He did a great job for us and goes with a best ration. Amid will be succeeded by Ravi Shankar, who comes with huge experience, and I'm certain he will take the function to new heights. Thank you, Amid, and welcome, Ravi. This is the last quarterly call of my colleague, friend and counselor, Srinivas Phatak. He's been an outstanding CFO and a pillar of strength for the business. He goes on to a very important role at Unilever's corporate center. I would like to acknowledge his immense contributions to our business, and I'm sure all of you would join me in wishing him the best. I'm also absolutely delighted to welcome another of our stars, Ritesh Tiwari. He's a quality product of HUL. And after extremely successful strength in Singapore and London, takes over this critical role as CFO of HUL. Welcome, Ritesh. Before I hand over to Srini to share with you deeper insight around our in quarter performance, I would like to say that in this fight against the virus, our resolve remains absolute, our spirit [indiscernible]. We will do whatever it takes to ensure our nation triumphs over this adversity. Together, we will prevail. Together, we will come out stronger. We stand with the nation. With this over to you, my friend, Srini.

Thank you, Sanjiv, and good afternoon, everyone. I'll now walk you through the performance from an in quarter perspective and talk you through some elements in terms of what's worked for us some elements of P&L and the future outlook. Start with really the growth, and the growth story, as we've said, has been competitive and profitable. More than 87% of our business is gaining relative penetration. And upwards 82% of our business is winning shares as to the Kantarpanel. Our reported growth stood at 34%, including the nutrition business and acquisition of VWash. We are pleased with the performance in both Nutrition and VWash. On a like-for-like basis, excluding the impact of M&A, our domestic consumer business grew at 21% with a UVG of 16%. We continue to see a sequential pickup in momentum. Growth was broad-based across all the 3 divisions; all of them have grown in double digits. And Health, Hygiene & Nutrition, which forms 80% of our business, continued strong momentum and picked up growth. We also saw a big build back in terms of discretionary in home segments. We'll talk more about the growth when I get into the category slides. Net profit after tax grew by 41% to INR 2,143 crore. A few call-outs here. First, EBITDA margins were up Y-o-Y by 150 basis points, but we all recognize that March quarter of the base year was impacted by COVID and a lot of lockdown in the last 10 days. So our EBITDA margins at 24.75% are up 150 and up 43%. As I said previously, Y-o-Y comparisons are difficult because of COVID implications, and the base quarter also does not include nutrition. Sequential is a good way of thinking about our business. And on a sequential basis, our EBITDA margins are up 32 basis points. This is consistent to how we had spoken to you in the last quarter. Our effective tax rate for the quarter was 24.1% given certain prior period items. And therefore, you have seen the flow-through of all these elements are from EBITDA to PAT level. If I give you a flavor of the performance on the divisions, Home Care grew at 15%, enabled by strong recovery in fabric wash and on the back of improved mobility. Beauty and personal care grew at 20% and there was good performance across the various categories. And foods and refreshments sustained a high-growth momentum and led the growth for us by growing over 36%. Let me give you a bit of a flavor about some of the few interesting innovations and activations that we have done in the quarter. Starting with Home Care. In a bit to ensure safety of our citizens, Domex, our clinical disinfection, branded a month log disinfection campaign across key stations in Mumbai. The campaign aimed at creating awareness around disinfection and hygiene. First XL's wholly campaign address the reality of avoiding gatherings and practicing social distancing. Surf also partnered with Dunzo to bring to life by enabling consumers to spend specially curated Holi excel hampers to their loved ones. In case of BPC, we launched quite a few products across the portfolio. Dove has launched a brand new care and protect range, which brings together germ kill and long-lasting moisturization. Another innovation from Dove comes in the hair category through the Dove Intense Damage Repair hair mask. Close-Up launched Red Hot Mouth spray infused with clove to fight germs and provide instant freshness. Our celebrating international women's day, Clinic Plus launched a film under its MeriBetiStrong campaign, encouraging mothers to speak up against domestic violence and furthering our commitment towards promoting inclusion. Dove, through its Stop the Beauty Test campaign, is challenging the stereotypes and urging people to adopt a more inclusive lens of women. In foods and refreshments, our strategy to unlock growth in HFD portfolio is to really guide by driving category penetration. To this extent, we have doubled on our actions to improve accessibility in the HFD through the sachet portfolio. We launched the INR 2 sachet in Horlicks and Boost. We have also increased the grammages in our sachet 5, INR 5. As we enter the summer season, ice cream had series of mouthwatering range of innovations, such as Cornetto, Magnum, Trixy Cup and Desi Kulfi. Building on the proposition of restaurant-like food at home, Knorr has launched its new ad campaign on Knorr pizza and pasta sauce. If I were to give you a bit of a flavor on the Home Care performance, strong performance in HFC continued, and Fabric Wash had a rebound. Our HSE had another quarter of delivering strong double-digit growth led by Vim. Fabric wash definitely picked up and picked up significantly, aided by increased mobility. Continuing the premiumization journey in fabric wash, our liquid and premium portfolios grew ahead of the category. Purifiers improved sequentially, led by acceleration in e-com. In Beauty & Personal Care, we saw good performance across the categories. In skin cleansing, the performance was led by high double-digit growth in Lifebuoy and in premium segments. Lux performance was stable. Our VWash, which is, again, the third quarter of post-acquisition, is actually driving relevance through contextual communications, and growth momentum is indeed picking up. In skin cleansing, inflationary pressures continue to remain high. We have taken a few rounds of pricing in December quarter and March quarter, and we will take up further prices in the current quarter, and I'll talk a little bit about this later in the presentation. Oral Care continues to do well and sustain growth momentum with strong results in CloseUp. We're continuing to gain shares. Hair had a stellar quarter growing in high double digits. Consumer-focused innovations and communications are yielding good results for us. Again, in this segment, we say that our growth will be significantly ahead of the market. Skin care performed well with growth in Vaseline, face cleansing and talc. We all picked up the momentum sequentially, coupled with penetration gains, and this is an important one for us. Quarter-on-quarter, we have now started to see a good pickup in absolute turnover and penetration gains, which in due course will translate into healthy growth rates. Telecosmetics, while demand continued to improve sequentially, there is a possibility of some of this getting impacted by, again, the onset of COVID. But structurally, there is a very attractive category, and we continue to be very, very hopeful about it into the medium term. Coming to Foods and refreshments, this business has been on a good growth trajectory, and we have sustained the momentum for another quarter. In Foods, both ketchups and soups grew in double digits on the back of strong consumer traction. Beef continued its stellar performance with all the brands growing in double digits and well ahead of the market. We've also taken up further pricing, and now we get a good mix of price and volume. As Sanjiv highlighted, we have completed the 1-year integration and made very good progress in the nutrition business. As Sanjiv called out, I think it's important to say that the focus for us is to really driving volumes, getting new users into the category. Therefore, penetration and volume growth become the lead indicators for us. And if we manage it well, then you'll start to see the USG come through. I think a couple of data points. Our absolute volume growth was in high teens. And because we talk of UBG, UBG a combination of mix and volume. Our UBG was a bit lower in double digits. And that actually is an important one for us. Again, from a penetration perspective, we are gaining more users, especially through the sachet portfolio and now as we have gone and introduced the rupee to fashion. Given that we are delivering healthy margin expansion, and like we said, about 370 basis points over where we were a year ago, we are taking those synergies and investing back into price, product quality and distribution. This quarter, we also got the nutrition business onto SAP, and now we have started to run more of a tech stack that is applicable to HUL. We have also started a bit of the initial integration of the go-to-market systems, and we expect to complete more of that in the coming quarter, and like we said, between June and July. This did have some impact for us, especially in a few markets, which are covered by subdistributors. There was a little bit of market disruption, and we are taking steps to address them in the coming quarters as we complete the integration. In ice creams, we have seen a strong recovery in the quarter. And the innovations are quite exciting, and we definitely urge you to really try them because these are again some fascinating products from quality walls. Sanjiv touched upon it. Therefore, I will make a very, very brief mention. Our Health, Hygiene & Nutrition has continued to be very strong through the year. And clearly, we have seen a big step-up in momentum in March quarter. Our discretionary has come back. And out-of-home has performed well, predominantly led by ice creams. If I come to the P&L, I think it's important to understand the quantum of inflation because a few times, I think you will all have questions on what's really happened to BPC margins or what's happened to F&R margins. And therefore, I really -- indulge me by really paying attention to what I'm going to say. On skin cleansing, we have seen significant inflation in palm oil. Palm prices are upwards to 40% to 50% Y-o-Y and even sequentially have gone up significantly from December quarter to March quarter. The industry will actually need to see somewhere in the middle of 10% to 13% just to cover the cost. And if you actually have to cover the margins, you can simply do the math, the price increases tend to be much higher, into high teens. And therefore, you have seen a pricing action from us, and therefore, you've also seen pricing action from many of our peers. We have taken up prices in a calibrated manner in every few weeks. And by the end of April, we would have priced somewhere in the range of 7% to 8%. We are leading prices. And if the price holds and competitiveness holds, we will take up further pricing. But obviously, this has a good impact on the BPC margins, but it is absolutely the right strategy in the current context where soaps is a very critical product for many consumers, and I think we need to manage this in a sensible manner. But I think it's also important to reiterate that we'll not be shy of taking up prices and lead pricing. On tea, we have talked about inflation. And if you see in the prior quarter, in December, again, tea had again sizable inflation between September quarter and December quarter. And therefore, in a sense, our December quarter margins were impacted by a calibrated approach in tea. It was not possible to price out all of that inflation. As has been our practice, we have continued to take prices in small lots and frequently. As a consequence of this, we have also seen further pricing, which has gone in tea, and that's also enabling us to improve margins of foods and refreshments at an aggregate level. In case of Home Care, we have actually reversed some of the price drops as crude has continued to inflate. In fact, where it was feasible for us, we have actually gone in a bit early with our pricing. The commodity covers give us some benefit. And a consequence of it, you will see that our margins expand similarly in March quarter. But again, the way we manage it is that, in some cases, we are able to capture some of the benefits early, and the costs follow. And the others, it works vice versa. So that, I think, I believe, starts to give you a good sense in terms of how we've looked at the 3 commodity categories. And therefore, at an aggregate, if you see, our sequential pricing is up by 2%. We continue to drive savings, and our EBITDA margins at 24.8% are quite healthy. If I also give you some more elements to this and a consequence of everything that I've explained to you, our cost as a percentage of turnover is up 145 basis points sequential, and therefore, you start to get a good sense from skin cleansing, laundry and tea. We continue to invest behind our brands. If you see, our absolute BMI spends are up INR 25 crores sequential, and we maintained our competitiveness. Even on a Y-o-Y basis, our investments have gone up significantly, both in our non-nutrition portfolio as well as nutrition. But given the robust turnover growth, we have had a leverage impact or a benefit in a percentage of bps basis. Our employee costs are lower sequentially. Obviously, there is an element of BPA bonus payouts, which gets stood up in March quarter. Given the COVID impact, the bonus payouts have been a bit lower for us this year. I mean other expenses have been lower sequentially by 130 basis points. So we've had absolute costs which are lower and we've also had a turnover leverage. As we have explained to you, this is a large bucket and continues to have many elements, including investment in future-fit capabilities, many, many elements of overhead, supply chain costs, non-supply chain costs and also the savings of nutrition. So why from -- and it's also that during -- at the end of a financial year, we do true-up or true-down some of our estimates and provisions, which also means that we have got some credits in the current quarter. Yes. Hopefully, that starts to give you a bit of a flavor of other expenses. And there are many aspects to it, which are fixed variable and semi-variable. And therefore, the quarter-on-quarter picture always is a bit difficult to predict. But if you see it in aggregate on a full year basis, our other expenses tend to be around 13% of our turnover month. Therefore, I think this is a very good way to segue into our segmental performance. All the segments have performed well and grown in double digits. You've seen the growth numbers. And therefore, from a margin perspective, in Home Care, we have seen a sequential improvement. In S&R, we have again seen a sequential improvement. But for the reasons that I called out of skin cleansing, elevated inflation and overall mix not really coming through at a pack and a subcategory level, we have seen some dilution sequentially. But I think the important aspect is even BPC margins at around 28% are extremely healthy, and I think that's really the right navigation strategy for us as we look forward. So this is really a quick flavor of the P&L. And as we have talked about most of the elements, there are a couple of call-outs, which I would like to do here. In the income tax line, we have got a INR 30 crores credit of a prior period adjustment as we have got some orders from the authorities. So we have seen a benefit of INR 30 crores in the tax line. And we also had a benefit of about INR 56 crores in the interest line. Because of these credits and the truing up of tax, our ETR for the quarter was about 24.1% for the full year and at about 24.2%. On an ongoing basis, I think it will be good to look at ATRs in the range of about 25.9% to 26%, and this will get finalized in due course. The other important element is we also had property sales of INR 91 crore in the quarter. We had sold off an old factory of ours, which had the impact of reducing the restructuring costs and the integration costs. Our supply chain restructuring, therefore, is on track and is poised to bring in more agility into the network and drive savings. The full year picture, I think it makes a good summary in the context of a challenging year, and we have seen how sequentially, the business has picked up. Our sales has grown by about INR 45,000 crore with 18% improvement to our PAT and net profit. Again, this chart gives you a quick flavor of our segmental performance on a full year basis. And you get to see a step-up of growth as it has come through, and the overall segmental margins continuing to be extremely healthy across 3 of our divisions. You would have seen from the announcement, taking into account the strong performance the company has delivered, the Board of Directors have proposed a final dividend of INR 17 per share, which makes the total dividend at 31. In addition, you will also recollect that we had paid out a special dividend of INR 9.50 per share. If we add up all the 3, the total dividend payout for us during the year will be about INR 9,516 crore. Important as we really look at the situation going forward, COVID surge has really been unprecedented, and what we've realized is 3 or 4 weeks tends to be -- as we've seen a dramatic shift. Early March, we were on a strong momentum in the COVID cases for less than 10,000. And now we have seen a very different and a drastic outlook in terms of cases, which is also impacting mobility. Therefore in a situation of this kind, it's difficult to estimate the demand or difficult to really have a predicted demand. As Sanjiv has spoken comprehensively about our agility and responsiveness in the value chain and the new muscles that we have built, and therefore, I think this positions us significantly better than where we were last year as well as pre-COVID. Inflationary pressures are elevated, and especially in large categories. I think I've spoken adequately about it. There will be voracious pricing action combined with cost savings. We will lead pricing, and we will do everything which is really required to protect our business model. I think the important element for us is to really deliver on volume-led competitive growth. It's exactly in line with what we had called out earlier. When we have our EBITDA margins in the range of about 24% to 25%, I think they are healthy. So I think important is if you are able to ensure continuity of our business supplies, manage some of the on-costs, which will come not only from inflation, but also from COVID on-cost and adverse mix, I think we will have a very good navigation strategy. Therefore, as I explained in the last quarter, we will continue to put a premium on volume growth. We will continue to manage our margins slightly. And I think by doing that, we'll actually be able to really lead and deliver on our 4G growth model, where growth is actually competitive, profitable, consistent and responsible. Within this construct, I think we will continue to do on our consumer-centric innovations, market development and using digital transformation as a key lever. Of course, from a channel perspective, e-commerce, general trade and rural continue to be really key priorities. I'll now hand over back to Amit to really commence our Q&A.

Thank you, Sanjiv. Thank you, Srinivas. With this, we will now move to Q&A. [Operator Instructions] With that, I would like to hand the call back to you, Janice, for managing our next session on Q&A. Go ahead, Janice, back to you.

[Operator Instructions] The first question is from the line of Manoj Menon from ICICI Securities.

Team, that's been a very useful and a very comprehensive 40-minute presentation, thanks for that. A lot of the questions actually got answered. I just have only 2 left, the one on the nutrition portfolio, the second is actually on the innovation pipeline. On the nutrition portfolio, given the new price points of price cuts or rather as you put it, the new SKU, the pouch pack, which is 20% lower than carton pack, et cetera. Just trying to understand the original aspiration of at least 100 bps of EBITDA by operating margin expansion in the medium term. Is that still relevant? Or some of it is being funded by that? So that's one. Just a subplot to that question is on the INR 2 price point, just being curious as a consumer. Historic understanding tells me that the INR 5 price point was necessary because of having a certain grammage to actually fill up a cup. So is there anything else which has actually changed so that INR 2 is also kind of feasible from a consumer point of view? So that's the question number one, which has got 2 parts to it. The second is straightforward question. First of all, you had done 150 new SKUs in the last 2 quarter, which is very commendable given the constraints we have faced in placing these products in the market. You have done nature product sometime in Q3 as well. Just trying to understand, when I look at HUL, Nestlé, Colgate, P&G, BNC basket or even if I include [indiscernible] or Nivea excluding Mondelez versus the Indian basket of companies. It does appear to me that the Indian basket has been a little more aggressive in newer launches versus the MNC basket. You may agree or disagree, but I just want to get your perspective on your innovation pipeline over the next 1 year.

Srini, you take the first one, I'll take the second?

Yes. So I hope you guys can hear me. So 2 sets to the equation, Manoj, good questions. Clearly, the need is to bring in more users into the category and drive market penetration and, therefore, lead market development. The way we're really positioning INR 2 is because there is a large set, and again, this is some of the learnings that we have taken from the coffee category. If you're able to actually give the right grammage to give one cup of Horlicks, then INR 2 becomes a right entry point for that. The INR 5 is actually, from a grammage perspective, Banwell is actually for 2 cups of Horlicks, yes. So there has been compromising on what it really constitutes to have a quality cup of Horlicks. It's really the right grammage. It actually, therefore, gives us an opportunity to start to recruit new users into the category. The strategy is actually on 3 prong. In one manner, you still need to drive your jars. And therefore, that's a very different consumer set, and we'll continue to do that. Sachet is really trying to go rural, go deep and get new users into the category, which actually then starts to play as you start to get an upgrading story. This is in addition to what you do in terms of your plus range and the high sciences. Now as far as the margins are concerned, what we had called out for the markets when we made the acquisition case was an expansion between 700 to 1,000 basis points, which we subsequently said, 800 to 1,000 basis. Obviously, when -- and if you also remember, there was a question from Percy, I think I don't know what was the previous quarter or the quarter prior to that. Our ability to generate gross savings are obviously higher than the range that we have called out. The strategy has always been consistent that we will invest back many of that savings, therefore, get into a virtuous cycle of growth. So this is actually having higher gross savings, reinvested into product price, and therefore, drive market development and drive growth. So to that extent, we are not making any change or shift to that. I think it's also important. That's why we called out saying that even in year 1, if you were on a like-for-like basis, we have actually expanded margins at about 370 basis points. So that is a matter actually is the total story when you see from a Horlicks perspective. Sanjiv, over to you on the innovations, please.

Yes. Manoj, we will disagree with you that there could be companies who have launched more SKUs than us. It is not just about launching SKUS. We'll just tell you a philosophy. When we launch new SKUS, we also look at culling old SKUs because the space in a retail outlet is very limited. When you look at innovation, we look at it from a lens of what is the distinctive proposition and whether we have superiority from a product perspective, then we launch it. So I don't mind people having many. Just like if you look at sanitizer, when it was a fad, every company was into sanitizers, right? But you need to assess 2 years down the road, how many have survived. That's what makes a difference. So I don't mind others having much -- you need not -- and the other important bit, Manoj, you need not necessarily be first to the market. You can be second and be better. So that's a note when it comes to innovation.

Honestly, I could not have agreed with you more on this because one of the things which I've picked up from my friends in the industry actually, largely has been that it's not about placing. It's actually about consumer having an opportunity to interact with the brand and pick it up. But what I'm just trying to understand from you and Srinivas actually the -- or how the way you're looking at for the next 12 months looks, let's say, versus the last 12 months.

So Manoj, last 12 months, we need to break it up into 2 parts: the first half of the year and the second half of the year. First half of the year had severe physical constraints. And then physical constraints manifested in lack of mobility, not just for the supply chain, for the people, which affected some of the discretionary categories where we have very strong market position, like ice cream, for instance. Yes, but it is mainly out-of-home. It is impulse buying. So it got impacted. But as the mobility started, the business started coming back. So the last 12 months, the balance part of the month were very different. And the best we saw was the momentum coming much. And even during the last 12 months, if you look at the lens, our health, Hygiene & Nutrition portfolio, which is 80% of our business, despite the fact that there were period -- long period when our laundry business was impacted because of lack of mobility of people, it still grew double digit for the entire year. So when I'm looking forward, Manoj, first is I think India has done the right thing of not gone in for a blanket lockdown because that would have resulted in another crisis on the economic front. So I think going in for micro containment, localized lockdowns are the right things. And so the impact on the physical movement of good for the supply chain is not going to be like we felt it in the June quarter, but the demand will be impacted whenever there is mobility impact. So to that extent, we have to monitor. Our first 2 weeks of April, we had the same momentum as the March quarter. The second 2 weeks, it has been impacted, but not to the same extent as it was in the June quarter. So that's what my assessment would be, June quarter of previous year.

Sure, sure. Loud and clear. And Srini, very best on your promotion and the new role. Good luck, sir.

Thanks a lot, Manoj. Thank you.

The next question is from the line of Abneesh Roy from Edelweiss.

My question is on the premium Beauty business. So what is the thought process behind this? Because currently, again, wave 2 happening and work from home again. So is this the right time to do this? And second, anyway, you had a focused team for e-commerce and other new channels of distribution. So why have specifically for Beauty business and back to premium Beauty business, what is the pet audience here?

Yes. Good point, very good point. The e-commerce business, the capabilities that we have built is now a very strong business because e-commerce business also now is very strong for us across, if you look at omnichannel, pure play, et cetera, now it's a very large part of our business. But those capabilities are mainly built towards performance marketing and the sales of link primarily. Whereas this premium beauty business is essentially for crafting propositions which are fit for e-commerce to start with. So e-commerce only play, e-commerce first play. So they would be looking at it more from the marketing perspective. The other important bit, Abneesh, is we don't play for the short term, right? We play for the long term. And even during this last 1 year, we have seen that our market development SKUs have -- or the segments have grown faster than rest of the business. So there are parts of India which even during pandemic are willing to get into categories of the future. So we are bullish on India. India is definitely going to come out of it. India will start growing again. And the premium or the mass spaces, today, mass space is a small part of the business in India. This is not about premium at 120 index, but mastering would be, say, 300 average to the index. That is the segment we want to explore.

Right. That's useful. My second question is in Wave 2. We are seeing kirana shops, the hours are very restricted, while chemist shops are open for longer hours. So is that an advantage for you versus smaller regional test, especially given GSK has come into the fold?

Yes, exactly. First, there's a few things which are coming in very handy. One is, of course, Shikhar; that comes in extremely handy. The second one is for rural India, we have a Shakti [ market ], they come in very handy. The third is you're absolutely right. After we acquired GSK, our footprint in the Chemist channel has significantly strengthened. Yes. So -- but I believe that this localized lockdown, which are the right thing because you need to minimize the number of hours that outlets are open, but they still result in the offtake happening. It's not that what people try to do is pick up the stuff, do their shopping, not any time during the day, but during the time when it is allowed for the retailers to open.

Right. My last question, Sanjiv, on Nutrition. You have done quite well, but my question is on health and hygiene. You mentioned LIBOR has done well.

Absolutely. I am very pleased to tell you, Abneesh, that we have strengthened our market leadership. Yes.

And how has Domex done? Because you have been taking it to new areas. And versus the other multinationals there?

Domex is a much smaller player compared to other market leader brand in the category, but we are determined. It is gaining traction in the pockets where we are playing with.

And in the new products, which you have done in health and hygiene, which are the one -- which are the SBUs, which are doing really well, which you see good potential for medium, long term?

I believe that in the medium to long term, Nature Protect for its proposition. Should be doing well? Yes. Certainly, it should be doing well, yes. But new brands are dusty. Initially, there is a fad because there was so much of focus on everything related fetish for hygiene and cleaning. But one thing stand, as you know, we are going to invest behind this brand and make it become big because I believe that nature and cleaning that does and the properties of the same are very much wanted by the consumers very strongly across the country.

The next question is from the line of Aditya Soman from Goldman Sachs.

So my first question is on Shikhar. I mean you've added 350,000 outlets, which is quite remarkable for a single year, and you indicated contribution has grown 6x. But can you give us a sense of where these outlets are? Are you in the larger cities? Are you spread across the country? Is it limited to a few states? And secondly, in terms of the absolute or contribution to your business, how much would that be at this point?

See, we don't want to give the figure of what the absolute turnover is, but let me tell you, it is substantive. Yes. And the second important thing we have to understand this today, Shikhar is being used to complement our existing system. It is not replacing. It is not that we have pulled back this. But during -- between the 2 visits of a salesman, if a retailer finds that he is out of stock, he can place the order. Yes, it's no longer linked to the peak of a salesman or during the pandemic when a salesman can't visit. Yes, they can place an order. So it is complementing our existing system, and it is spread throughout India now.

Yes. So many, many cities. I think just to complement what Sanjiv said. I think 2 sets are important. First is the numerical expansion. The second is really the number of times that they use and the order values which are coming through. I think both are important for us, and I think there is good progress happening on both those elements. And I think the important aspect is it's a complementary channel. It's not a replacement. And therefore, we are pushing both. And in due course, digitization will really take its own course. But I think it's a combination which is super important, physical as well as giving Shikhar as a capability.

I understand very clear, Srinivas. Just to add to that question. I mean in terms of -- you clearly mentioned it's complementary. But is there a completely different supply chain as well? Or does it just use the existing supply?

See, the back end is very different because you must understand that in the old system, your fulfillment was synchronized with the beat of the salesmen. Now it has to be very different because whenever our outlet plays, you have to deliver the order. So your back-end has been completely changed, and that's where the high level of automation is helping us.

Understood. Very clear. And just last question on this. In terms of -- I mean would you then have -- for a same-store or a same SKU or a same product, would it still be on both systems? Or would it then a store will get divided by products and SKU?

No, no. Today, our whole portfolio is over there. And what we can do is, increasingly, we are able to customize the proposition for a store so that they pick up what is the most relevant SKU for them.

You're not cutting stores, the cigar store and kirana stores. The salesmen still go, but the store has the opportunity at a time that they want, looking at the demand pattern and their liquidity. They can order separately. And we will service it within a time frame, which is a very, very sharply defined time frame. Because service is also an important one as we digitize. And perhaps in some cases such as lockdowns and others, in some cases, it could also become a lead option if the retailer so chooses.