Marico Limited (531642) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q3 FY '21 Earnings Conference Call hosted by Axis Capital Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Anand Shah from Axis Capital. Thank you, and over to you, sir.

Yes. Thanks, Rutuja. Hi, and good morning, everyone. And on behalf of Axis Capital, I welcome you all to the Q3 FY '21 Marico Earnings Con Call. We have with us the senior management of the team represented by Mr. Saugata Gupta, MD and CEO; and Mr. Pawan Agrawal, CFO. Before we get started, I would just like to remind you that the Q&A session is only for institutional investors and analysts. And therefore, if there's anybody else who is not an institutional investor or analyst but would like to ask questions, please feel free to reach out directly to Marico's Investor Relations team. With that, I would like to hand over the call over to the management for opening comments. Thanks, and over to you.

Yes. Hi. Good morning, everybody, all those who have joined the call. I hope all of you, your friends and family continue to stay safe and healthy. Let me quickly take you through the quarter gone by and our outlook going forward before I leave the house open to questions. Quarter 3 was a visibly robust quarter for us on all fronts as we witnessed encouraging demand trends across our key portfolios. Consumption has been steadily moving in the right direction with COVID restriction easing across the board. Consolidated revenues grew 16% plus riding on a strong 15% domestic volume growth and 8% constant currency growth in the international business. Despite inflationary trends in input cost, we delivered a resilient margin performance on the back of tight execution, rigorous cost control and rationalization of A&P spends in discretionary portfolios. In the India business, more than 95% of the portfolio grew well ahead of medium-term aspirations. General Trade has displayed a steady growth trajectory over the past few quarters, with this quarter being no exception. Rural markets continued to outperform growing at 24% vis-à-vis urban markets, which grew by 10%. Growth in rural has been a heartening trend, given that these regions have been less affected by the pandemic, has been a focus and also been a focus of government-led stimulus. We expect this trend to continue with the union budget just around the corner and hope for a good monsoon season this year as well. E-commerce delivered accelerated growth and contributed to about 8% of share of revenues in Q3. Modern Trade recovered sequentially to deliver almost flat quarter Y-o-Y, driven by rising footfalls during the quarter. CSD too fared better sequentially, however, had a modest decline Y-o-Y. Delving further, Parachute had another stellar quarter with 8% volume growth. Given the recent hardening in copra prices, we rolled back certain consumer offers in December to recover some portion of the cost hit. The increased effective pricing by 5% in the current quarter will be -- has been implemented. We are seeing early signs of copra prices cooling off by 10% from its peak in December, and we believe that it should correct another 10% to 15% as the season sets in. We expect no copra price inflation next year on an annualized basis, owing to a healthy crop outlook. We believe Parachute will extend its relatively higher growth trajectory over the next few quarters before reverting to medium-term growth levels. Value Added Hair Oils posted a strong broad-based 21% volume growth, with most brands delivering double-digit growth. Nihar Shanti Amla gained significantly across markets as we continue to invest behind market share growth as well as driving penetration of larger packs. The rest of the brands in the portfolio are showing sustainable robust volume growth after many quarters. We estimate healthy and accelerated share gains in the VAHO portfolio. We are now confident that the portfolio will sustain the double-digit growth trajectory over the medium-term through multiple growth engines across the pricing pyramid. Saffola Edible Oil has delivered double-digit volume growth for the fifth consecutive quarter, recording 17% volume growth Y-o-Y. We estimate that 65% of the growth is attributable to increase in overall penetration or higher retention, laying a healthy foundation for sustained growth, even as consumption patterns post COVID normalize. We believe the brand can continue to grow in high-single digits over a medium-term as a base case. During the quarter, rising oil tables have necessitated multiple rounds of price increases in the portfolio, and we have taken price increases to the tune of 15% plus. That has allowed us to counter some part of the cost push. However, we believe the inflation is transient and expect that pricing to come down over the next few months. Coming to the food business, we have scaled up growth of 74% in value terms, with the base oats and Masala Oats franchise registering a strong 50% value growth and new launch is trending very well. The oats franchise has been growing from strength to strength on the back of increased penetration and heightened focus on healthy snacking in-between meals. Saffola Honey is ramping up very well, much ahead of our launch estimates. In fact, looking at offtake trends, our growth was limited by supply-led capacity constraints, which we plan to overcome in the next few quarters. In Honey, we have reached close to double-digit market share in modern trade chains and crossed 20% market share in e-commerce. These 2 channels are over-indexed in the Honey category. Our aspiration is to touch the INR 100 crore mark in revenues by next year, which will make it one of the fastest INR 100 crore journey in the midsized foods category, considering that we extended this brand nationally only in November, December 2020. Saffola Chyawan Amrut has been tracking well in the select launch markets. We have continued to broaden our play in Healthy Foods with the launch of Saffola Mealmaker Soya Chunks, marking our entry in the plant-based protein category. These launches further reinforce our strategy into entering into large food categories with high tailwinds, which offer the potential to quickly give us scale through differentiated offerings. In premium personal care portfolio, we observed a gradual revival in demand on a sequential basis. There was a modest 4% volume decline Y-o-Y with Livon Serums registering growth and the skin care portfolio also trending positively. As the discretionary spending pops up, we intend to build this growth engine for the future. Post our recent foray into the hygiene category, we have taken a conscious decision to defocus from the segment as COVID-led consumer demand has been receding. We believe in the post-COVID world, the category will see consolidation by the top 2, 3 legacy brands in the segment. Beardo now integrated within Marico fold is tracking well. It should touch INR 100 crore run rate next year in realization terms, not GMV. Coming to the International business. Bangladesh saw another steady quarter with a 15% constant currency growth with the non-coconut oil portfolio growing 27% Y-o-Y. The newer launches in baby care and Parachute shampoo range has been seen encouraging trends. South Africa saw resilient growth on the back of buoyancy in the health care and hair care categories. Southeast Asia was down 3% as the HPC category in Vietnam witnessed down-trading and soft discretionary spends. With all the transformation initiatives undertaken in Vietnam, we expect the business to rebound healthily in the coming quarter and trend positively going ahead. The MENA business saw a marginal decline in constant currency terms, as growth in Egypt was offset by softness in the Middle East. At 9% of sales, advertising spend was up 4% despite significant efficiency-led savings and rationalized spends in the discretionary portfolio. We continue to invest behind brand building in core categories and scaling up a host of new launches. On the overall business, we hold our medium-term aspiration of delivering 8% to 10% underlying domestic volume growth and double-digit constant currency growth in international business. The near term, however, looks even more promising, provided there is no second surge in COVID-19 cases and the economic recovery continues. In quarter 4, we have the potential to deliver 20%-plus revenue growth with domestic volume growth is mid- to high teens in spite of the fact that we had a marginal volume decline of 3% in quarter 4 last year as compared to other players in the industry. International business is also expected to be in line with medium-term aspiration. The cost pressure will be transient and is expected to ease as we enter the next financial year. And therefore, it will not be prudent to -- it will be prudent to tie it over this quarter without resorting to any multiple short-term tactical actions in pricing and distracting ourselves from the high-growth momentum. With respect to our end-to-end cost-savings program, I'm happy to note that we are on track towards accruing structural savings to the tune of about INR 150 crore in the India business and INR 50 crore in the international geographies this year. This savings will thus flow through in the base for the next year. While the underlying fundamentals of our business remain strong, we are -- we believe there are 5 factors that have enabled us to reignite growth despite the challenging environment. We had initiated most of these measures in the latter half of FY '20 when we had a little bit of a soft result in quarter 2 and quarter 3 last year. Firstly, we have single-mindedly focused on doing a few things right and driving simplification and execution excellence across processes and systems. A systemic process of stop-doing list has been executed across the organization, which has involved SKU rationalization, automation and process agility. We are focused on quality versus quantity since we believe too much proliferation can give short-term tactical gain but leads to long-term complexity, wastages, higher inventory, working capital and clogging of management bandwidth. We aspire to operate key organization processes like a Formula One pit stop in terms of execution standards over the next few years. Second, getting GT right through efforts directed at optimizing profitability and throughput per outlet while reducing interchannel conflict and ensuring healthy ROI for our distribution partners. We have also significantly reduced distributor stocks, in fact, they are at now 2015, '16 levels; and monthly and quarterly sales SKUs, which existed in the system. We have now negligible variability in a daily run rate of sales across the quarter. Simultaneously, there has been a significant investment behind increasing quality of rural distribution and chemist and food outlets in urban. Our rural stockists will increase by 33%, and chemist cosmetic outlets covered 6x in urban metros over mid-'21, '22. Third, turning the tide in VAHO by focusing on broad-based growth rather than just Shanti Amla. We have now corrected the mix wherever required to ensure most of the brands are on track for double-digit growth. Incidentally, these brands have both higher margin and higher realization and, therefore, will drive value share at an accelerated pace, along with premiumization in the segment. Fourthly, driving innovation in categories with a large addressable market with growth tailwinds that offers the potential to build franchises with a quick scale and market share gains. Hence, our larger focus is on foods, where we have the option to get at least 2, 3 more INR 100 crore franchises within the next 2 years. Lastly, the continuous focus on driving cost efficiencies provides adequate cushion to our P&L and allows us to hold threshold operating margin at 19% to 20% of the medium-term while aggressively driving volume and market share. I would like to summarize the key -- 5 key focus areas for the company going ahead, which we believe will anchor our growth momentum over the medium term: first, continue to drive double-digit growth in VAHO while maintaining growth in the core Parachute and Saffola as for medium-term guidance; aggressively scale up food business into INR 400 crore to INR 500 crore business in the next year and then aspire to cross INR 100 million plus by FY '23, '24; bring discretionary portfolios back into healthy and sustained growth; dial up the contribution of Vietnam in International business while maintaining momentum in Bangladesh; and accelerate digital transformation and try to create at least 2, 3 digital brands like Beardo; last but not the least, I would also like to thank all the Marico members and associates for exhibiting tremendous resilience and grit, enabling the company to deliver strong performance amid fairly challenging circumstances throughout the last calendar year. I'm certain that we'll continue to keep up the spirit and progress from strength to strength on the back of agile execution, trusted brands and a strong culture and high ESG standards. Thank you for your patience listening. We are happy to take questions.

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

Congratulations in the New Year for an excellent result, and good luck for the continuation. Just 2 questions. One on Saffola. Just some insights on the consumer behavior in the last 6 months, 9 months or even in 12 months on, let's say, is there a mix improvement there? Is there a premium efficient opportunity within Saffola, thanks to COVID, and more healthy adoptions? So that's point number one. And if yes, how sustainability it is and what's your thoughts on that? Point number two, just some examples for the structural cost resets and continue to observe also on the significant reduction in the working capital. Again, what has driven it and the sustainability?

Yes. So if you look at the Saffola growth journey, I will talk about the general consumer trends which we noticed. So I think we are now entering the anniversary. I believe that by 15th March last year, we witnessed a significant amount, first there was pantry loading. Secondly, I think in April, May, June, 2 things drove a lot of consumption: one was availability and a choice for trusted brands. Obviously, as things settle down, I think there are 2 trends we observed. One is that people continue to have, perhaps, much more in-home cooking. But there was a significant proactive choice that consumers were making on trusted brands across the categories. It is just not in edible oil but trusted brands which are seemed to be healthy and also adopting healthier trends, whether it comes to snacking or meals. I think a lot of this Saffola foundation is completely in place. And as you know that we are now lapping a very high base of the previous quarter 3. We started double-digit growth in quarter 3 last year. So this was the first quarter of lapping a very high base. And therefore, if you look at the combination of growth, 65%, and last year was -- last quarter was a similar number, we are approximately getting 2/3 through better, higher penetration and retention and 1/3 through additional usage. So what happens is in a lot of Saffola households, there is 2 or 3 brand usage. We are perhaps getting through higher usage or higher SoR, share of requirement. And I believe this trend will continue because one of the things we have noticed is a permanent trend, which will help healthy foods as a segment is that consumers will continue to focus on staying healthy in terms of adoption of things which drive immunity and adoption, which drives healthy living because one of the things that has happened in this pandemic is there's a significant realization that if you have lifestyle diseases or comorbidities, your propensity for things getting complicated is far higher. Therefore, the consciousness level, whether it's in immunity, whether I see a potential in nutraceuticals category or healthy food and trusted brands will just continue, and this is something which is going to be permanent to a large extent. And just to also give you a trend, if you look at -- by November, December, the opening up has been pretty rapid. So people are now going back to restaurants. People are going to the offices. So that in-home cooking upside was anyway calibrated in Q3 itself. Your second question on structural costs. I think there are 3, 4 areas, big areas. The first, I talked about simplification, reducing wastages. We had rationalized 26% SKUs. So we are running with 26% SKUs less, which we did pre-COVID, and we -- which may have contributed 2% of our sale, and we continue to be very, very rigorous in our entire inventory planning, our wastages. The second one has been huge in -- which is spend effectiveness across. We have looked at a lot of our contracts, whether it's outsourced contracts. And the fourth, we are moving to a 75% perhaps model, 65% to 75% hybrid working model post COVID, which also requires giving up of office space and other admin and fixed costs. So those are perhaps the 4 big areas, but a significant portion has happened on spend effectiveness in both marketing sales, and the second one is entire inventory, working capital, supply chain. So investing in an automatic supply chain tower, which means that everything end-to-end will move into auto replenishment, especially for the tail-end SKUs, where there is always an inventory issue or a wastage issue.

Saugata, just part of the second question was also on the drivers for the [ NWS ] reduction, working capital reduction. And because it's been quite significant, it's been happening over the last couple of quarters, it probably -- so I recon, it's probably just not a one-off. So just trying to understand what has driven these debtor reduction in inventory you spoke about and the sustainability? Or is it all linked, probably what you got -- you just explained on cost as well?

Yes. Manoj, Pawan here. So you're right. If you look at debtor turnover days, it has reduced from 36 to 23. And a large part of it is because of the strict credit control in the general trade because we have reduced inventory levels of the GT distributors significantly, and therefore, we have tightened the credit control. So this is quite structural, and we believe this will continue. At the same time, debtor turnover has also gone down because of a lower contribution from modern trade and CSD. So that has also led to reduction, but this will slightly inch up. So from the levels of 23, we believe at best it should go up to 25, 26. Inventory, I think Saugata explained in detail as to why inventory turnover has gone down. At the same time, another driver for improvement of working capital was, we had paused the supply chain finance program for a while, which we have reactivated, and therefore, trade payables have gone up. So I think this also is a structural intervention and we'll continue. So therefore, we believe that net working capital, which is currently at 21 days, should remain in the range of 24, 25 at max. I hope it answers your question, Manoj.

Absolutely. Absolutely.

The next question is from the line of Tejash Shah from Spark Capital.

And congrats on a good set of numbers. See, first on VAHO. So we have posted double-digit volume growth after almost 10 quarters and I believe there is a base also which has helped. But nevertheless, the momentum seems very solid. So what has changed here? And is it largely that we can extrapolate this trend for the whole category? Or is it that we have gained disproportionate market share in the quarter?

Okay. So if you look at VAHO, there are -- if you look at the pricing pyramid or the laddering of VAHO, there are 3 sets. One is the base or the Bottom of Pyramid where you have the BoP pack for the INR 10, INR 20, where a lot of action happened in the last 2 years, and there also Shanti Amla operates. There is a big segment where brands like Jasmine, Nihar perfumed hair oil, there could be some other brands which are operating. Even Dabur Amla operates in that segment. And then there is a premium segment, whether it's Almond -- Bajaj Almond, Hair & Care, then hair fall, which is at 1.5 to 1.6x. The mid-segment operates at 1.1 to 1.3x. I think the reason VAHO was not growing was nothing to do with Shanti Amla. I think, [ 2.1 ] was a lot of action and focus happened in the Bottom of Pyramid. And our brands are that 1.1 to 1.3x and 1.5x is not growing -- was not growing. And number two, we were not actively participating in that 1.5, 1.6x, which has got things like Aloe, Almond and all that. Now most of the brands, and if you look at the history in 2011 to 2018, the double-digit growth, consistent growth in VAHO was just not led by Shanti Amla which was the accelerator, but also because all the brands grew double digits. We have gone to that level where not only new brands like Aloe and the Ayurvedic hair oil is doing double digits, but of the existing brands, which is Nihar perfumed coconut oil, then Hair & Care, Jasmine, which are big brands, the sizes of oil brands like INR 300 crores -- INR 200 crore, INR 300 crore sizes, they are actually now back into double-digit growth. There was a correction in mix in terms of pricing. There was a correction in terms of some of the communication and positioning. All have happened together. It has taken time. As I said, we started the journey sometime in last October, November. And I think now we are -- and of course, we have also launched Almond, which is doing reasonably well. So all this put together, there is -- we are extremely confident of getting back into double-digit growth for definitely in the medium-term. Yes, I think while we are not -- we believe Nielsen numbers will stabilize or whatever estimates indicate that we are back on accelerated share gain. And our focus in the next couple of quarters will be just not volume share but also value share.

Very encouraging. Second, Saugata, we have made a very commendable and noticeable entry into Honey segment and Chyawanprash. But what we have seen in most natural ayurveda product in the last 4, 5 years that the journey starts with product efficacy and integrity. And once the scale comes, then the integrity of the supply chain gets compromised. So since we have very aggressive plan here, what are we doing on supply chain part to support our ambitions on growth front?

Marico has extensive experience in managing the commodities and supply chain of these natural products, whether if you look at our copra program, it's designated. As you know, it's a case study in international business schools. We have done -- we were on the pioneers on contract farming in Safflower. So Marico has very, very strong this one and a very, very good track record of producing and manufacturing and offering to the consumer the purest products, whether it's in coconut oil in Saffola without ever compromising anything on supply chain. So I think that's assuring. And therefore, we have already started that process of supply chain management in place. And that is the reason I said that we -- while there is huge offtake promise, we are going steadily on Honey because we want to continue to provide the best and the purest form of honey, which is NMR tested, which is internationally acclaimed this one to the consumer. So therefore, we are okay to actually forgo, and we have forgone in the last 6 weeks some volumes because there is a demand because we want to get it right. And as you know, that Marico standards are always best-in-class, whether it has been in Saffola, whether it's been on Parachute.

Sure. Very helpful. And one bookkeeping, if I may. Was there any one-off in employee cost this quarter, 28% growth? I understand base was weak, but despite that, that's a sharp increase.

Yes. Pawan, will you just take it?

Yes. Employee expense, you'll see that on a Y-o-Y basis, it is about 28% higher. And this is basically because of 3 reasons: First one being that employee cost pertaining to our acquisition of Beardo is not in the base; and second, there is a hit on account of cash settled [indiscernible] from the share price as on 31st December '20, while in the base quarter, there was no charge to the P&L account of this; and third is higher incentive provision due to better performance, whereas in the base quarter, it was quite negligible. So these are 3 reasons because of which employee cost is about 28% higher. And also, for quarter 4, it will be slightly on the higher side.

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

Congrats on very good set of numbers. My first question is within Saffola, the 2 new launches, why is there a divergence? Why is Honey doing much better than Chyawanprash? Any learnings there? And any piece you can do to Chyawanprash? And in Honey, you said capacity will come onstream in the coming quarters. So till then, are you able to manage and completely meet the demand?

So Abneesh, I think you are presuming Chyawanprash is not doing well. I'm sure you give people a chance. We just launched in select markets in October, and we don't take a judgment on whether a brand is doing well or not in 3 months. So therefore, I think we deserve a little bit of -- because it takes time for a brand to do well and project traction. And therefore, I can't conclude that the brand is not doing well. I think as per action standards, the brand is doing okay.

No, I said based on your comments, one is doing expectations, and one is doing well beyond expectations.

No, no, no. So this brand has not been nationally scaled up. It is available in only 3, 4 states. So obviously, I would like to be -- normally, in Marico, we believe in first doing and then saying. So it's -- I would think that it takes at least 6 months or 7 months for a brand to get traction. As far as Honey is concerned, we started launching Honey in July. So we at least have a visibility of 6 to 9 months because in the first 3 months, it's very difficult to give a trend. Sometimes, some things could be because of pipeline and pipeline this one. So I think we should be able to get a fair idea about Chyawanprash only by April, May. So I think that's to give you this one. I think while -- so both soya nuggets and Chyawanprash, which have been prototyped in select markets, are actually reasonably performing well. And we should be able to give a clearer picture in April, May. And as I said, that obviously, Honey has done well above performance in terms of whatever differentiation. I think it's scheming up well. And I think a lot of the capacity issues, which we had in December, January has been taken care of now. So I think we are okay. But as I said, that we are gradually increasing capacity and ensuring that we -- the fact that with the kind of standards which we -- in terms of the purity we are able to maintain in the supply chain, so we are doing it gradually. So I think if we have ambition to touch INR 100 crore run rate by next year, I think that capacity is more or less there.

So one follow-up, Saugata, on Honey, the INR 100 crore target for next year. In terms of GT distribution, if you could tell us a bit more how much of that should come from GP based on your Saffola current oats distribution. What percentage are you targeting to reach in FY '22 in terms of distribution? And in terms of the CSD issue, the other honey player said that, that issue has now died. So any comments on that? Is that benefit still coming?

I don't want to comment on the second one. I think at the end of the day, Marico is -- we -- as I said that our endeavor is to provide the consumer delight by providing the best quality products to the consumer. I would not -- Abneesh, I will not be in a position to give a distribution plan. But if you -- just to give you an idea, our estimates indicate that Modern Trade and e-com is slightly over-indexed in Honey as a category. I think 35% of the -- at least broad estimates, anything between 1/3 and 1/3 plus of the category comes from these 2 channels. We have started our distribution in GT. It is available reasonably well. And I think -- and therefore, as you know that even in Masala Oats, a significant portion of -- a similar kind of 2/3 of that comes from GT. So we -- and Marico has this one of reaching food outlets because, as you know, that till 2010, '11, we used to had -- fill in our portfolio is to distribute Top Ramen. So therefore, our food outlet distribution is very much intact.

Sure. That's helpful. My second last question is essentially on the digital brand. So you have mentioned Saffola FITTIFY, Coco Soul, ImmuniVeda, Kaya Youth, et cetera. So if some update you can give on that? And second, the hygiene brands which have defocused...

Hello?

Digital advertising also.

No. So we will not invest behind advertising in the hygiene brand. I think I'm clear that they are tactical -- there were tactical entries with the COVID decreasing. If you look at data, the category is -- every month is reducing. And therefore, it doesn't make sense to create a high base in year 1 tactically beyond the point which you can't maintain in year 2. So I think it has so far contributed to around 1% of our top line. And by December, when the COVID cases started drastically reducing, we took the call off, taking out the investment behind it. What was your first question? Sorry.

Coco, FITTIFY, sir.

Digital brands, yes. So I think I don't want to get into individual details. But as you know that we are invested ahead of the curve in e-commerce, which we are 8%. Obviously, in e-commerce, our product mix has to be far more towards digital brands or, I would say, digitally premium brands. And given our Beardo experience, we now -- and we have a separate business unit, which we have created to handle digital brands, which operates completely independently of Marico in terms of processor systems. And we believe that either organically or inorganically, we should be able to replicate and have 2, 3 more Beardos in place in the next 2, 3 years.

The next question is from the line of Vivek Maheshwari from Jefferies.

Just one question I have. So I did hear your comment about the hygiene category and the fact that you have defocused on the segment. But just if you look at 3, 4, 6 months back when it was looking almost like that hygiene, some of the changes that have happened in consumers' life, those are going to be -- going to sustain in the medium-term, et cetera, et cetera. And most of the companies had entered into this space. And -- so in the context of what has happened to hygiene category, doesn't it worry you from some parts of portfolios, particularly on the Saffola side and the food side, that as and when -- because a lot of these things we think that are sticky, but they may not be as sticky as at least the hygiene category is kind of pointing us to. So what are your thoughts on that? What gives you that confidence from a medium-term perspective?

Sure. Okay. So let me just segregate this thing. What has happened in hygiene is that hygiene was a tactical entry for a lot of players. There was a significant demand, and therefore, demand was far more than supply, and therefore, a lot of players entered into the category. What we are saying is that hygiene has settled to a definitely far higher level to pre-COVID levels. If the growth was 5x, it would have settled to a 2.5, 3x. Now what happens in that is that, therefore, strong legacy brands will obviously have a right to win because they have this equity of hygiene and health for the last 100 years or 50 years in this country. There's a different thing in foods. Foods, first, the habit is permanent. Number two, these categories were anyway growing before that. It was not that Honey category was not growing. Saffola Masala Oats was not growing. All these categories, because there is -- and the trend towards healthy eating and healthy foods is actually independent of COVID, COVID is just an acceleration. The second difference is Saffola in the health equity is one of the strongest brands versus when we entered hygiene, we never had a hygiene equity, okay? So we entered. We created certain this one. So there's a significant difference between these 2. Saffola's right to win on health is extremely high. And as I said, in hygiene and the foods category, what we are doing is we are entering midsize segments. A midsize definition in food is anything between INR 600 crores to INR 1,500 crores. With some tailwind, that I'm saying let us discount the tailwind of 40%, 50% growth, even with the 10%, 15% growth, if you have a differentiated entry and a strong brand, where each category has an incumbent, you make supernormal profit getting 10% market share, 15% with a differentiated proposition and distribution is not a very difficult proposition. Just to give you an example. Let's take the example of plant protein, soya nuggets. There's a huge unorganized, there's a significant branded segment. Again, the branded segment is anything between INR 800 crores and INR 900 crores. It has got 2 players. Saffola's equity on health is very high. And therefore, in these INR 800 crores, INR 900 crores segments, getting 10% to 15% market share with a strong execution is imminently possible, and that gives you quick scale. So I think there's a difference because one is strength of the brand, strength of the proposition and the category, these categories are already midsize. If you look at the sanitizer penetration pre COVID, it was very low. The Honey penetration or Chyawanprash penetration or nuggets penetration is far, far higher, even pre COVID.

Sure. Sure. Just a quick follow-up on that. So on the food side, point taken. But what about Saffola Edible Oil, Saugata, because if I look at the journey from, let's say, 2017 to most part of 2020, the struggle was to have that high single-digit growth barring a few quarters. In most of the cases, it was not growing in line with your expectation. Now that business is on strong footing, from a medium-term perspective, is there something that you can do differently compared to -- so that again, you are not stuck in the same zone where you were until, let's say, second quarter F '20, for example? Because that's the part of the portfolio as consumers start to go out more, then automatically, the in-home consumption will go down, et cetera, et cetera, right?

Okay. So 2 things, Vivek. I think first, let me just clarify, and this is, I think, a misperception about Saffola growth. If you look at 2017 to 2019 growth, and if you take out the GST quarter and the demon quarter and 1 more quarter, the weighted average growth of Saffola has been 9% volume growth. Just look at those numbers. So therefore, if -- and a -- for a brand, which is INR 1,000 crores plus, a 9%, 8% volume growth is fair. So I think sometimes, as a company, because we are much more transparent, sometimes we are more self-flagellating towards us. So I know that's the problem. What we did was pre COVID, we corrected 2, 3 things in terms of -- what was the issue that was happening. I think we normalized our discounting and pricing. We normalized our promotions. We also ensured that the significant portion of advertising and investment goes towards Saffola Gold rather than Active because Active was cannibalizing perhaps of Saffola Gold. And the fourth thing we did was in our communication from fear and anxiety, we moved towards food values. So all these 4 things we had initiated pre COVID. And therefore, just another piece of information, which I just want to reinforce, that even before COVID, till February end, Saffola was -- even in Q4 was growing at 15%. That 15% grew to -- I think 15% grew to 24%, I think, last -- in the Q4. So I don't think there is an issue. I just want to also put the numbers on Saffola because I think some people have been slightly this one to Saffola. FY '16 volume growth was 9%; FY '17, 8%; FY '18 had a demon and the GST 1%; FY '19, 9%; and FY '20, again, was this one. There has been a -- this brand has actually delivered a consistent growth of 8% to 9%. Now I would say that in terms of growth rates or volume, how many brands about INR 1,000 crores continuously has delivered 8% to 9% growth? I would say that we are certainly about median as far as growth rate is concerned. So I think there is no reason on this. That's why I said that even if I have lapped a quarter growth, we had a double-digit growth, and we have lapped that quarter with 17%, we are pretty confident of delivering high single digit as a base case going forward over the medium term.

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

Congrats on a great set of numbers. My question is on foods, and there are 2 parts to it. One is you have done brilliantly in terms of ramping up the foods growth rate. And obviously, there would have been some amount of tailwind from COVID, but that certainly doesn't explain the whole story. So what is it that you have done? I mean if you can give me the story behind the numbers to get this kind of growth rate, which earlier on an even smaller base, you were not able to get? And secondly, now I think oats has reached what you used to call that critical mass of about INR 200 crores, where, in addition to top line, you would start to focus on profitability. So if you can give some thoughts on that as to what is the sort of sustainable margins of the oats business, let's say, 2, 3 years down the line. I mean you had earlier said that once you reach a particular scale, you can do a lot of things in terms of sourcing, et cetera, and bring up the margin. So yes, this is my first question.

So let me talk first about foods. I think food was a significant strategic shift. I think if you noticed in the last Marico's, the approach to NPD had been creating categories. And we used to like being pioneers and innovate and create categories. I think what we realized, especially during '18, '19, is that focusing on creating personal care categories, which have low penetration and driving them is a kind of a long haul. And therefore, if we wanted to have the option 2, which is of getting scale, and by that time, you will realize that by last year, Masala Oats had broken even, and we were sitting almost close to somewhere between 150 and 200. So we knew our working model in foods was possible. I would -- I must say that some of our entries we were looking at is healthy foods. But obviously, COVID, I think, accelerated that choice making because, obviously, the -- in the initial stage, what we found is that there would be stress on premium personal care. Also, you would realize that last year only because of the economic -- lower economic growth in '19 pre COVID, a lot of premiumization agenda had got, what I call, decelerated. So I think foods offer a far better business model. And if you want to look at one of the metrics we use, which is called strategic funding to turnover multiple. Foods, there's an opportunity for scale-up faster. And also the food category, A&P compared to, say, a skin care or premium hair care is far lower. And food also gives you significant scale advantages. So if you cherry-pick category, which are reasonably good addressable market with potential for growth and having opportunity to get 10%, 15% market share with a differentiated entry, we started picking up these category in foods. Also, there could be large food, and we also looked at categories which have significant overlap with our existing distribution, whether it's modern trade, e-com or are general trade. So we have looked at both and then shifted to these food outlets. Coming to Masala Oats, you are extremely right. I think we are reaching that inflection point where in another 1 year or 2 years, there will be significant opportunity to improve margins because of backward integration and scale. We have reached that. And I think this year also, we are making decent monies in Masala Oats. But I think in foods -- and I said you shouldn't look at just Masala Oats as such, but once you hit INR 400 crore plus in foods, our entire manufacturing and supply chain footprint we would be able to extract significant margins because right now, it is a little bit fragmented. Right now, we are not getting economies of scale. So while in Masala Oats, we are getting in, but in overall foods, there are a lot of things which are common in the food backward and backward back-end supply chain. So at another 1 or 2 years, our ability to get -- integrate some of our food supply chain and getting cost efficiencies, we will start getting it in '22, '23.

Saugata, my question was in Masala Oats, the kind of growth that you are clocking right now are much higher than the growth you used to clock a couple of years back when the size was even smaller. So what exactly is the story behind the numbers in terms of this oats growth accelerating to this extent?

I see -- again as I said that I wouldn't be able to share everything, but I can give you a broad focus. I think 2 things, 3 things, we are focused on increasing penetration and moving the category from breakfast to in-between meals. We are focused on distribution. And I think these are the 2, 3 things, and we have continued to invest behind the brand.

Okay. Understood. My second question is on VAHO. So while you have definitely done well, and you mentioned that your gut feel is that there might have been some market share gains also, just wanted to understand if the overall growth of the VAHO industry has also like materially picked up in Q3? And if so, is it just pent-up demand? Or is it that this category largely rural consumption category and rural, in general, is doing very well, so that has got tailwind? So any color you can throw on...

So it's a combination of 2, 3 things. I think firstly, you must realize that when there was economic slowdown in '19, '20, and there was also a little bit of -- in a competitive action at the Bottom of Pyramid, that encouraged a lot of unorganized players who also started -- not unorganized but smaller brand, regional brand also to pick up market share. Now here, post COVID, 3 things have happened. First, I think players with direct distribution, especially in rural, as you know, that we have actually -- from quarter 3 onwards, we have aggressively -- started the process last year. But this quarter, we have started aggressively driving rural distribution. And we are going to add rural stockists by 33%, and we'll continue to do this year-on-year. So we believe that given our mix in -- as you know, we don't sell sachets. As a result, our gross margin of our rural portfolio, and we don't sell Saffola. So unlike other companies, the gross margin of our rural portfolio is far higher than urban. So therefore sometimes what happens is that our breakeven in rural is -- works on a different business model, it's less than 2 years in rural distribution. So therefore, we are expanding behind that. So that is one reason. The second one is, obviously, there is, first, there was migration from urban to rural; number two, rural economy is less impacted, and therefore, there is a demand. And I would think that we would have taken significant share in rural. The category continues to grow. Now in urban, what we saw is 2 changes. One is, in the initial part, the nonsticky hair oil, which is the part which is used largely post to us, because people are not going out and nonsticky hair oil is also used for setting and styling by -- especially by males. That sector had a significant impact. It was anyway getting impacted because of downgrading, but I think that sector had a significant impact in quarter 1 and quarter 2. That part is now recovering well. In quarter 3, it will start recovering as the economy opens up. The last thing I would like to point out, and this is a general trend. If you look at the top end, and I'm talking of just not top end, but [ SEC, ] A1, A2, A3 and even B1, there has been a significant -- while there has been, I understand, income losses and job losses, there have been also, at the higher end, significant savings in terms of consumption, whether it's eating out, traveling and all that. So there has been, therefore, a focus towards healthy eating, going for far more hair nourishment and doing good to yourself. That trend in consumption, we are noticing significantly. So anything which is natural, anything which is a practice, in fact, I'm very happy to state that we have actually witnessed significant gains in household consumption of hair oiling as a habit this year. So there is eating healthy. So these trends and most of these trends will continue going forward in the next 2, 3 years, which is natural, less chemicals, eat healthy, things like eat plant protein, eat less meat, vegan, all these trends will continue.

Okay, sir. That's all from me. Just a quick question. What would be your total foods turnover approximately by -- I mean for the year FY '21?

So we should be hitting 350-ish definitely, around 350-ish, 325 to 350. And we will able to hit 450 to 500 by next year.

The next question is from the line of Arnab Mitra from Crédit Suisse.

Congratulations on a very strong quarter. My first question is actually also on oats. I mean in the past, what we've seen is in many of these new food categories which can develop, they hit some sort of headwind once they cross INR 150 crores, INR 200 crores turnover. But you seem to have actually accelerated at that stage when you reached that level. It also happened in the COVID year. So just wanted to get a sense of, is it more households which are actually consuming, which is guiding the 50%-plus growth? Or are you -- in your sense, is it more gain of consumption within existing households because that kind of determines a bit of the sustainability of the growth going ahead? And also because oats seems to have been the only category in food which hasn't slowed down with the quarters. I mean most other categories had this high surge and then have slowed down sequentially in 2Q and 3Q. So just wanted to understand that. And do you now feel confident that this is kind of broken out and can actually become a large category in itself because you are the category effective leader?

So firstly, Arnab, I think it's a combination of both Plain Oats and Masala Oats. I think in Masala Oats, we are growing the category to penetration. In Plain Oats, we have perhaps gained market share because there are other players which were bigger than us, okay? If you look at oats, last year, I think we grew 20% plus in oats. And what we did was 2 sharp choice making we did: one is significantly increasing distribution, especially in food outlets; secondly -- the second thing which we did was moving away from -- moving this category from breakfast to in-between meals. The addressable market in in-between meals healthy eating is at least 50 to 70 times the breakfast market. And breakfast is always center of the plate. And as you know, a lot of cereal makers and others have struggled with that. The second thing we have done also is driven regional taste, if you look at some of the launches we have done. And lastly, I think the target segment is -- there has been a shifting target segment. And I think earlier we were driving very, very weight management, and we have become far more this one. People willing to experiment with healthy this one. Now in the repertoire and households, it's not that people are regularly eating oats. But if there are 10 occasions of snacking in a week, if I can enter 1 or 2, my job is done. And therefore, a significant majority of the oats growth in the last 2 years has been on increased penetration and distribution. And in distribution, just to give you an idea, we may be still 25% of noodles [indiscernible].

Okay. Okay. That explains. And my second question is also related to foods. So it was just the first couple of choices that you made in new categories, which is Honey and Chyawanprash, I think you had given the template high-size growth. But these are also very high-margin categories that the incumbents are very high margins. Soya Chunks, does it kind of meet that criteria? Or do you think it's basically a category which can grow very fast, and therefore, even if it's a bit more fragmented and margins are not that good, you could play a longer run? And therefore, does it open you up to other kind of premium kind of basic foods where there could be a health play, but the margins may not be as high to begin with?

See, I think Soya Chunks makes a similar margin like Masala Oats. So there is no reason to get this one. I think in Soya Chunks, which offers another playing to our strength, our ability to convert unbranded or unorganized to organized, the market is huge. Secondly, I believe plant protein is a big trend. In fact, if you look at plant protein trends in the west today, plant protein is a big trend. And therefore, this is a market which we believe -- again, Saffola has a strong equity in health. We should be able to grow the category. The category size is INR 200 crores -- INR 2,000 crores, out of which the branded is around INR 850 crores to INR 900 crores. And it has been growing double-digit, the branded category, in the last 3 years.

And is there a concentration on market share? Or this is a bit fragmented within brand...

It is fragmented. And therefore, in this space, Saffola is perhaps the strongest health brand with the strongest health equity. And you may know that in 2005 or '06, we had this thing called, Mealmaker Soya Chunks, Soya brand. So we know the supply chain also.

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

Sir, a couple of questions from my end. So firstly, on Beardo, I mean you've talked about sort of an aspiration to get this INR 200 crores over the next couple of years. I wanted to understand, one is in terms of new products, is there any sort of planned new products in this? And do you expect to extend the range quite significantly? And secondly, in terms of distribution, where are we today? And how much can that increase for Beardo?

So Beardo will focus as a digital-first brand. In fact, a significant, if not 80% to 80% plus comes through DTC, our brand.com and e-commerce. And therefore, we would like to -- we had also started a sell on distribution, a little bit of organized retail pre COVID, but that was something which we had passed. I believe there's enough opportunity to focus on getting a very, very profitable working model with digital-first and then move gradually rather than aggressively proliferating. In Beardo, our objective, as compared to a lot of other startup brands, is building to last as compared to building to sell. And therefore, our approach will be gradual. We believe that we -- the only thing which we said that Beardo started off with a trend on beards. As you know, a lot of -- whether it's Indian cricket team or a lot of personal -- personalities in public life, beard is the trend. But one thing we have ensured at least by year 3, which is now, our portfolio dependent on beard as a category within Beardo is now 50%. So tomorrow, we are not betting against any trend if that trend reduces. Thirdly, I think we are letting Beardo function completely independently. And I strongly believe one of the reasons startup brands work well is because there is not -- too much MBA interference. The moment multiple MBAs start adding value to a brand, these start-up brands stutter. So we are letting it do. It's okay to make mistakes. But we are -- based on the current run rate, we are pretty confident that next year, it will create a run rate of INR 100 crores. And when I meet INR 100 crores, we have a far more tougher norm, which is net realization and not GMV. I think GMV INR 100 crores will happen. I think we are almost hitting GMV INR 100 crore run rate now itself.

No, I understand. Totally clear. Sir, you think you'll get to INR 100 crores vis-à-vis staying at this sort of...

Maybe a little bit on -- color on this one, but I don't want to -- see because I am not wanting to sell for valuation. I want to do a growth which is sustainable and which is investment. So we are a -- we continue to -- while it makes -- we will make money next year, but we will continue to invest behind it and not maximize profits and show short-term sales. So the approach will be different. It's -- while it's a digital brand, our approach is building to last.

No. Understand. Very clear. And then using this methodology, with Honey, that's a different strategy, right? I mean, there you will expand your physical...

Absolutely. Honey is available and GT in most markets, especially in the south and west, we are gradually expanding. And I think it will be just like any other brand. I mean you can see -- in terms of distribution, I think Masala Oats is available in 1.5, 2 lakh outlets. 1.9 lakh outlets. So we will have Honey very soon in 1.2 lakh outlets.

No. Understand. That's very clear. So basically, Honey started off as being sort of more focused on digital, but eventually, you'll get it out to all your food outlets. Got it.

The next question is from the line of Harit from Investec.

Yes. Just 2 questions. One was on the pricing side, you have taken some price increases in coconut oil. I just wanted to understand, at a competitive level, what has been the reaction of the unorganized as well as the regional brand to the increase in copra prices? Is your pricing before or after? And how do you look at that?

So most of the smaller brands are the unorganized operates at cost-plus. So I think the reason we didn't take a proportionate price increase, we believe that by the time we took the price increase, which was in December, which was -- at this time copra pricing was at its peak, we were pretty confident that the prices will come off. So I believe that by March or it will come off by another 10%, 15%. So again, 20%, 25% of its peak, which is back to a certain level in November -- October, November. And therefore, this pricing is good enough to stay for some time. One of the things we are avoiding and -- is that we would like to ensure that we are far more proactive in a price drop. But when it comes to price increase, better be sure that we don't have to take multiple price increases and price drop because we want to operate as a brand and not as a commodity. So I am pretty confident that whatever price increase effective which we have taken, our overall -- if I look at the overall copra forecast in April, May, June, we will get back to the margins we enjoyed in October, November or September, October, November. And next year, as I said that we don't expect any annualized inflation. There could be a difference in quarter-to-quarter, but annualized, we are okay.

Got it. Got it. And second thing is also on pricing, but on the VAHO side. Do you think, given the inflation in copra and given some of your value-added portfolio is coconut based, would you need some level of hike there as well?

Not really. I think I'll tell you on VAHO what we have done also. We have got a significant spend effectiveness program where we have got significant amount of consumer promotions, BTL, and actually taken some price drops in 1 or 2 SKUs because we believe that, that would drive growth. So I don't think -- so we -- this was from our net revenue management and market mix modeling exercise which we have done. So actually, in 2 of our brands in VAHO, we have taken price drops without any deterioration in GC. Basically, what we have done is a significant ineffective BTL and ineffective consumer promo has been transferred towards pricing, similar exercise which we did in Saffola. So we don't -- there has been no impact on VAHO gross margin at all even after taking those price drops and the input cost inflation.

Okay. Very clear. And one last was on VAHO itself. So can we expect that innovations on the VAHO side going forward would largely be in the mid-premium to premium and for you because you seem to have populated the rest of the space quite well. Is that a fair way to look at it?

You're absolutely right. I think we -- our share in the base VAHO is far higher than -- that's the reason that explains that gap of value versus volume, and over the next 3, 4 years -- currently, our -- the gap between volume and value share is 10. We intend to bridge that significantly, we don't have -- other than, of course, cooling. Cooling is a different -- we don't consider it as hair nourishment. But in terms of -- I think we don't have a significant presence in Almond. We don't have a significant presence in that. Also, I think at the premium end, what happens is that the VAHO category converges into serum, which is nothing but oil plus silicon in some way, even. So I think we will have significant investment and this one behind these brands. And as I said, even within VAHO, there were 3 to 4 brands. I think some of the new brands are doing well. And the 3 existing brands, which is Nihar perfumed coconut oil; number two are Hair & Care and Jasmine, which were declining last year has gone back into double-digit growth.

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

Yes. My question is on pricing. You mentioned that in Parachute, you don't want to take multiple price hike. While in Saffola, there has been like price hike in October, November as well as December. So can you explain the difference in thought prices and how the consumer has reacted to these price increases? And also, with high deals and these price increases, should we expect Saffola volume to moderate?

So I think 2 things. There's a significant difference because Parachute is a mass distributed brand. And therefore, the technical pipeline, whether you look at retail, STR, distributor, pipeline and others, they end up sometimes adding up to around 40 days, okay, which is the retail plus distributor pipeline. And given its deep rural penetration, any pricing change, the impact that happens on Parachute takes almost an offtake either way, whether you are gauging there's an offtake drop or getting the offtake back takes 80 to 90 days, and we have modeled this on the pricing. Saffola, actually, especially, which is far more modern trade and e-com, 40% of the sales comes from there, we actually have -- and including metros, where distributor stocks are actually 1 to 2 days. So I think Saffola -- and also the entire market behaves like that. And we are a small player. We actually follow pricing in Saffola. While in Parachute, we lead pricing. So therefore, the 2 scenarios are different. And I think also what has happened is the inflation has been significant, although in rice bran, it was less, but -- and safflower. But in sunflower and other things, the inflation was significant that forced other players also to take price increases. What we are trying to do, however, is restrict the number of price increases because we believe that, yes, there is an erosion in margin that could have happened for 3 to 4 months, but we will get back into kind of a stable state pre October, November, again, as I talked about even in Saffola by April.

Okay. Okay. And with the high days going forward in the price hike, how do you -- or have you seen the consumer react to the price increase like over the last...

We have taken already 15% and Saffola trends continue to be decent. Well, having said that, you must realize that we are now lapping this quarter a growth of 24% in the previous quarter, 24% because it had a huge pantry loading base in March. So given that, as I said in my opening commentary, we'll be happy to have a base case of a high single-digit volume growth regularly, and if -- whenever there are opportunities to move it into double digits.

[Operator Instructions] The next question is from the line of Karthik Chellappa from Buena Vista Fund Management.

Yes. Congrats on the quarter. Two questions from my side. Firstly, on the Value Added Hair Oil, this 21% growth has come on the back of a quarter last year, which was down about 17-odd percent. That means on a 2-year CAGR basis, it's more or less flat. But at the same time, you have commented that you have estimated a healthy market share gain. That would mean indirectly that the category really hasn't grown. Despite being one of the lowest price points among the hair oil category, what would explain such a weak category growth for the sector over the last 2 years?

Okay. Let me first clarify one number. The volume decline was minus 7% last Q3. So you have to see the 21% in relation to that.

I think the value growth was minus 7%.

See, the value growth, I explained earlier that last year, we were not doing well in the brands which had a higher realization, we were -- the entire growth was Shanti Amla and the Bottom of Pyramid. That was a mix issue and nothing to do with the value growth of the category, okay? It was because in last year, we are declining in the brands I mentioned, which was 1.3 and 1.5 RPI, while the entire growth was in 0.8 to 0.9 RPI brands. And there was a pricing correction we took because of the crude coming down, it was there in the base of Q3 versus the previous Q3. So I think you should look at volume growth and look at volume growth for minus 7% to -- plus 21%. I think that's a fairer assumption of the CAGR. Now coming to category growth, I think if you look at it, and I'm sure we will wait for other players to report their volume growth, I believe that whatever indication we have on the category growth, last year, the category growth was struggling because of the fact that rural was stressed, and rural contributes a significant portion of VAHO. Now if you look at VAHO category growth, so was other personal care categories that was struggling last year. So if you look at the volume cover, I think it will be in positive, and it will be positive to mix in terms of mid-single digits, if you look at the VAHO growth, that is our estimate. But I guess we have to wait and see. But our internal estimates suggest whatever Nielsen data, household panel data, that it has come back into mid-single-digit kind of a growth.

Got it. My second question, Saugata, is on Saffola. Since you have indicated that almost 2/3 of your growth are attributable to increase in overall penetration, and hence, that -- which means like new customers, are they coming in more at the base pack size or so? And could that have an impact on your price stroke mix-led growth, although the volume growth may still be strong?

So if you look at Saffola, our pricing is now almost equalized. We don't have too much of discounting on the 5 liters. Broadly, it is similar kind of a pricing. But see, you must realize that a lot of today's nuclear households and others, the average consumption, and especially, Saffola attracts people who are -- people who come in at -- they have average consumption in 2 to 3 liters. But if you look at our PAT growth this year, the PAT growth in the 5 liters and the 1 liter has been in similar trends because 1 liter is far more distributed pack. But we don't see a significant difference in -- so even if, for example, somebody who consumes 2 to 3 liters of oil, that person still buys the 5-liter pack. And the other thing which we must say that one of the things we have consciously done is that our entire focus and investment into pricing and communication is behind Saffola Gold, which is the premium part and not Saffola Active, which is the entry part.

The next question is from the line of Prakash Kapadia from Anived Portfolio Managers.

Yes. I had 2 questions. On Saffola Honey, what is working well? Is it quality or a different product as compared to others? Is it under penetration? Or is it a lot of unorganized players which are there in the market, and that is helping the tail? And secondly, if I look at the base going forward, obviously, Q4 had a low base, Q1 had a low base. And whatever we are seeing the positive data points in India. So can the domestic business sustain this high single-digit volume growth for the next few quarters? If you could comment, that would be helpful.

So in Honey, again, I don't want to get into details, but I think it's a -- I mean it's a classical marketing success, getting all the mix right, which is offering consumer delight by offering a superior product and executing well in distribution and communication. So I think we have done it. And it's a category which is also has growth. And therefore -- I think sometimes people underestimate the equity of Saffola on health. And I think now we have, I think, penetrated in foods. Saffola, in terms of brand value and the equity is one of the strongest brands in the category. So I think that's perhaps the Honey -- we have miles to go in Honey. I think we have done okay. But I think we have miles to go. So let's -- I think we shouldn't celebrate early, but I think, yes, we should just say that we have started off well. As regard to volume growth, firstly, let me, again -- if you look carefully at the Q4 numbers of the players, other than the pure food players, our base is one of the highest in Q4. And -- because our decline in volume was only minus 3% or minus 4%, a lot of players which were nonfood had actually 10% to 15% decline sometimes, okay? So actually, our Q4 base of ours is high compared to others. I think our endeavor is to deliver 8% to 10% volume growth over a long term. And we believe that in the immediate term, given the volume momentum and some of the choices we have made, we will be able to deliver higher volume growth and then settle down to a 8% to 10%. I think we will be extremely happy if we deliver 10% plus. But 8% to 10% is something which we believe is now reasonably confident of delivering as a base case on an annualized basis. Let's not look at quarter-to-quarter.

And on Honey, is there a large unorganized market also?

I think we are not -- to be very honest, I think there is enough opportunity on branded. It's a habit. Honey is used for 2 things. I think the big drivers of honey are, one is immunity. And the second big driver of honey is also -- which is increasingly being used as a sugar substitute. There is -- largely, the honey is a very urban phenomenon. I'm -- to be very honest, we have not studied too much of the unorganized sector. There is a lot of -- and we are the branded honey market, which has significantly grown. It has a very high urban and alternate channel concentration. And I would think that they obviously would be an unorganized market, but this is something we have not studied it, to be very honest.

As this was the last question for today, I would now like to hand the conference over to the management for closing comments.

Thanks a lot for attending the call. To conclude, we've had a very robust quarter 2 as we seem to be moving in the right directions on all fronts. We will aim to keep the momentum going as we plan to deliver domestic volume growth in the team at least for the next couple of quarters, and then settle down at medium-term aspiration of 8% to 10%. While there are immediate cost pressures, which we expect to be short-lived, we will strive to deliver double-digit earnings growth in the coming quarters on the back of tight cost control and driving operational efficiency. If you have any further queries, please feel free to reach out to our IR team, and we'll be happy to address it. That is it from our side. Thank you once again.

Thank you. On behalf of Marico Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.