Bajaj Consumer Care Ltd

NSE:BAJAJCON

Earnings Call Transcript 2025-Q2

[Operator]

Ladies and gentlemen, good day, and welcome to the Bajaj Consumer Q2 FY '25 Results Conference Call hosted by ICICI Securities. [Operator Instructions] Please note that this conference call is being recorded.

I now hand the conference over to Mr. Karan Bhuwania from ICICI Securities. Thank you, and over to you, sir.

[Karan Bhuwania, analyst]

Thank you, Siddharth. Good morning, everyone. It's our pleasure that I set to host Q2 FY '25 Results Conference Call for Bajaj Consumer Care. From the management, we have Mr. Jaideep Nandi, Managing Director; Mr. Dilip Kumar Maloo, Chief Financial Officer; Mr. Richard Dsouza, EVP Finance.

Now I'll hand over the call to Mr. Jaideep Nandi sir for his opening remarks. Post that, we'll open for the Q&A session. Over to you, sir.

[Jaideep Nandi, executive]

Thank you so much, Karan. Good morning, everybody, and thank you all for participating in this Q2 FY '25 earnings call. Let me take you through the performance of the company for the second quarter of this fiscal and half year ended 30th September 2024 before we open the floor for questions.

The consolidated sales for the company stood at INR 230.7 crores for the second quarter and INR 472.4 crores for H1 FY '25. On a consolidated basis, Q2 sales declined by 0.4% on a year-on-year basis. And on a stand-alone basis, the decline was 1.4%. The consolidated volume grew by 1.1% in the quarter.

The demand conditions in urban remained sluggish, while rural is seeing some signs of recovery. The gross margins for the company in Q2 FY '25 on a stand-alone basis stood at 52.5% which [indiscernible] at 53.9%. The decline in gross margin in primary -- is primarily on account of adverse product mix and higher RMO and copra prices.

The stand-alone EBITDA stood at INR 34.9 crores, which is 15.5% of sales for Q1 -- H1 EBITDA -- the EBITDA was at INR 73.2 crores, which is 15.8% of sales. The PAT for Q2 was INR 33.2 crores and INR 71.2 crores for H1.

The General Trade business registered a mid-single decline in Q2 year-on-year. The rural business performed better during the quarter and grew on a Y-on-Y basis. The demand in urban remained sluggish, resulting in single-digit decline. The retail channel remained steady during the quarter as well as in the first half of the fiscal year. The wholesale is where the dip has been.

Our retail loyalty program for top urban retailers delivered strong results, achieving a 27% growth in Q2 FY '25 and 21% in H1 FY '25. The program contribution rose to 24% in FY '25, up from 19% in H1 '24. And this will remain a key focus area of the company, is basically the top retail loyalty program.

The RTM revamp Project Aarohan undertaken with the leading strategy consultant is well on its way. In the previous -- from the previous quarter, it aims to enhance distribution, particularly in high potential towns and villages while optimizing the presentation in lower potential towns. This project is also looking at improving sales enablement across and sales development functions to drive offtake.

The pilot inflammation -- implementation started in the quarter in 2 states of UP and MP has started showing promising results on key deliverables. The pilot led to improvement in representation from sub DV to DV by 40% to 50% of Q2, approximately 250 new towns in UP and 30 new towns were added in MP were added to the existing distribution network.

Direct distribution to new urban outlets added has been increased by about 1.2x. The weekly servicing of high potential outlets in TLP towns has also increased the throughput from these outlets.

In the other initiative of geotagging urban outlets, we achieved more than 80% tagging till now of the entire country. As part of next steps, geofencing has started in key states of Maharashtra, MP and UP and is expected to be completed in the coming quarter. This initiative will help us enhance sales force efficiency as well as optimizing cost of sales.

The organized trade continued to deliver good performance during the quarter. This channel registered a growth of 10% year-on-year in Q2 and now contributes to 30% of our domestic sales. Conscious steps taken to -- in general trade, conscious steps taken to correct distribution inventory has resulted in about 5 days inventory correction by end of September from the beginning of the financial.

Coming back to organized trade, modern trade business grew by 4% in Q2 year-on-year. Independent change along with 1 national player continues to perform consistently well. While on the institutional business, it registered a strong growth of 67% on year-on-year basis. E-commerce continues to do well, registering a growth of -- robust growth of 32% year-on-year. This channel contributes now to about 13% of our top line in the quarter.

Almond Drops, hair and skin care range and Bajaj 100% coconut oil continued to form well in this channel. These brands are gaining traction on major platforms as well as and now contribute to about 8% of the total business.

Now quick commerce channel grew by 42% year-on-year with significant scale up across all leading companies like Instamart. The International business continues to deliver strong growth, double-digit growth momentum, registering a 36% growth year-on-year. Bangladesh demonstrated visible resilience and witness doubling of top line on back of good execution and distribution, in spite of unrest in the country.

We continue to invest in our brands in Bangladesh through digital marketing engagement activity. These activities helped us reach about 9.7 million consumers and 20 million impressions in Bangladesh. Print ad in special memorably edition helped us generate goodwill with our channel partners. This was during ease in the additional.

If you see our Africa region delivered a 22% year-on-year growth led b KSA that is Kingdom of Saudi Arabia, Qatar. We expanded our presence in UAE by adding 100-plus stores across the country in Q2. The Rest of the World region continued to deliver strong performance and witnessed about a 50% year-on-year growth. The company delivered strong growth across all the identified key markets of U.S., Canada as well as Malaysia and Australia.

Delving into our brand performance for the quarter, ADHO saw a low single-digit decline on a year-on-year basis, primarily due to a decline in mix packs. The large packs continue to perform well with high single-digit growth in OT specific packs of 650 and 750 ml. 190 ml PET bottle will continue to scale up well and registered a high single-digit growth, as saw high-teens growth on a year-on-year basis on back of increased distribution.

During the quarter, we launched a 285 ml new flip to pack for added consumer convenience. This also helped us in lowering our packing material costs. For the festive season, we launched 2 different special hair nourishment kits with ADHO and hair care range as well as ADHO and third-party hair dryer on e-commerce platforms. This has been received very, very well from the customers this festive.

Zero marketing for ADHO expanded its incremental reach by 10% through various platforms like YouTube and OTT shows gathering 35 million views. Social media efforts, including deployment of 60 influencers coupled with training mundane led to improvement in engagement rate of around 5.9%, which surpassed the hair oil industry back mark for organic posts.

Our Teacher's Day post was featured on Ads With Benefits, a popular Instagram page with 111,000 followers that showcases outstanding market campaigns and topical posts by top brands. Almond Drop hair skin care range saw a growth of 60%, reflecting strong consumer traction. Almond Drop shampoo and conditioner performed exceptionally well and earned an average rating of 4.3 stars from 5,000-plus organic ratings and 350-plus reviews in major e-commerce platform. Almond Drop's ultra light modulation for summer use along with the lotion saw an uplift in e-commerce channels on account of intra display images, new pack launches and campaign.

The Almond Drop soap, which is consistent offtakes in modern trade chains and e-commerce channel with focus on various bundled packs offering based on the retailer. The Almond Drop serum, where Almond Drop hair serum achieved 20% year-on-year growth in H1 FY '25 aided by display and influences.

Bajaj 100% pure coconut oil continues to deliver strong double-digit growth. We continue to witness consistent gain and nearing double-digit market shares in traditional Bajaj stronghold states. The market share in Maharashtra also saw an improvement in Q2 FY '25 supported by media initiatives and distribution drives.

To enhance the brand market reach in general trade specific excuse of 300 ml jar and bottles were introduced during the quarter. We also launched the 1.2 liter jar for 1 major e-commerce platform. Digital marketing campaign across platforms delivered remarkable results, again, achieving 35 million views and impressive 1 million views.

Pricing intervision were taken in Q1 as well as Q2 to offset the impact of issue coconut prices. As of now, we have taken 6% in our Bajaj 100% pure coconut and we'll continue to monitor the copra prices to see how further -- how much further pricing need to be taken.

During the quarter, we relaunched Bajaj Gold 100% pure coconut oil with improved packaging and formulation for the East and Northeast markets. The product is now available in 3 SKUs of 100 ml, 200 ml bottles and 175 ml. The GTM targets for both primary and secondary were exceeded. The initial product feedback on this brand has been very encouraging from both the channel partners as well as consumers.

With the launch of this offering, we expect to gain market share in coconut oil category [indiscernible] We continue to make good progress in diversifying our portfolio with the NPD and traditional portfolio now contributing 20% with a double-digit growth in H1 FY '25. On a 3-year basis, this is in excess of. This highlights that our strategic pillar of portfolio diversification.

During the quarter, the LLP prices saw a marginal decline due to weak demand and reduction in crude oil prices. Refined mustard oil prices strengthened by about 11% year-on-year, driven by higher import duties on all edible oils and limited master available.

The copra prices also saw a substantial increase year-on-year as well as sequentially fueled by higher demand. Both the latter had an adverse impact on gross margin for the quarter. Multiple initiatives have been taken to reduce metrical structurally, which will give us sustained benefits for the long term. These initiatives have resulted in savings of over INR 2.5 crores in the first half of the current financial year.

Our focus on increasing productivity through smart manufacturing programs and use of technology have resulted in improvement in productivity by 6% at our Guwahati facility and 14% at up on the site facility in this year. We remain committed to ESG goals by optimizing its process to reduce water consumption and energy consumption at both plants and pursuing water positivity in line with the ESG targets.

The key initiatives to lower carbon emission include automation and installing advanced machines, energy-efficient compressors and Miyawaki Tree plantation project at our plants. We implement rainwater harvesting projects at our plants, which led us to being about 5x waterfall.

CSR initiatives through rainwater harvesting and sustainable agriculture practices undertaken during H1 has positively impacted more than 11,000 families across 420 villages, mainly in UP, Rajasthan and Maharastra.

To sum up with sum-up with rural going -- rural growth continuing to be resilient, sluggish demand in urban expected to have bottomed out, we expect demand conditions to improve going forward. This, coupled with our trust on our initiatives, our strategic initiatives, ending the distribution reach to Project Aarohan in general trade, portfolio diversification, scaling up organized trade, building up of international business, we are confident that our performance will track well and achieve sustainable growth in the near to the medium term.

So with this, I end the opening remark and open the floor.

[Operator]

[Operator Instructions] Our first question is from the line of Abneesh Roy from Nuvama Wealth Management.

[Abneesh Roy, analyst]

My first question is on the geotagging and fencing. What exact benefits will come in the urban areas once in November, all the outlets will be covered? And how common is this with the larger hair oil companies? So will it be more that you come at a level playing field with them in the urban areas? Or this is something different versus the larger players?

[Jaideep Nandi, executive]

Absolutely correct, Abneesh. It will actually come level playing with most of the larger players. I would not say all the larger players, but most of the good practice FMCG companies all have done geotagging, and fencing is one step higher. So I'll just explain. So geotagging is basically, you go to each of these retail outlets and basically tagged out so that you know exactly the longitude, latitude of that place. So first and foremost that you figure out is that what you're reporting in your system, in your both BMS as well as SFFA, et cetera, are actually shops which actually exist. And in this, there'll always be a little bit of a churn, you will actually find that there are into outlets. This has happened for all companies. We are also seeing there are some not very large numbers, but in certain places, physically that actually physical shops are not there.

So what happens is as a result of your efficiencies, moment you identify the shops, actually, that is the shop with the specific locations, then even when your ISRs, et cetera, is visiting, then if you are reporting 40 outlets, they'll actually have to visit 40 outlets rather than have some 10 outlets, which are phantom outlets, which actually just visit 30 but actually, we are reporting 40. So this efficiency will come in.

Fencing is one step forward where after you have tagged the outlet, you actually sense it, whereby you can only take the order from the shop when you have reached the shop, you can't take an order for a shop, let's say, 2 kilometers. So then it is absolutely perfect. So fencing is a little more hard for us. So we are trying out with a few states to see how it will work and will not go ahead with all the other states also. But tagging is something that we want to do so that we are absolutely clean retail map as far as entire urban listing in the country is concerned. So we have finished about 80%, we'll be -- I mean, we are now near completion. So we have a full map of where our outlets are.

And now when you add, actually, we also tagging them as we had earlier, this was not happening. So this has been done in the last maybe couple of years by some of the top players. So we are just going to do that as well. And we at level playing field with the top players. Many of the large players, they do not have that.

[Abneesh Roy, analyst]

So to understand this better, ultimately, when this is fully done and there is some time for execution. This helps revenue, does this help cost or does this help in terms of better selling of new products because sales guy will have to go physically to the store because the Phantom store, which you explained it seemed that virtually things are being managed. So actual effort may or may not be there. Could you tell us revenue, this will help or in terms of cost this will help?

[Jaideep Nandi, executive]

It will help both. So if you look at -- see, the cost to sales will clearly improve, it will become better because while you are reporting that you're going to 40 outlets, you're actually going to only 30. So now you'll have to go to 40 new outlets. The moment you go to this 40 new outlets because if that is your, let's say, effective mandate, you need to visit 40, then you will have to identify those new 10 outlets and go to these shops. So 2 things will happen. Either you will reduce the number of people by looking at the geography if such outlets don't exist. But typically, that does not happen. Typically, what will happen is those 30 the fellow is doing in the bid, he will have to add 10 more and do that cover. So it will be a mix of both. There will be some maybe pruning of 1 or 2 ISR territories, et cetera, but most of them will actually have to critically add to this -- to ensure that the effective mandate is covered. So it will both helping cost of sales as well as in terms of number of outlets that you add. .

[Abneesh Roy, analyst]

My second and last question will be on the pure coconut oil business. You have done good scale up in those 4 states where you have called out. So if you could tell us, one, there is a very sharp inflation in copra. So have you also passed on to the end customer, similar to what the market leader has? Second, for example, this 2.1% market share in Maharashtra in coconut oil, where has this come from? Is the repeat purchase happening? I'm sure you're offering more value to customers versus the market leader, which is fair because you have entered late. But is the repeat purchase also happening? And how is the market leader retaliating because they are extremely large. They are much better sourcing advantage than you because it's not possible for you to have the same sourcing advantage. There is no comparison in terms of size. So if you could also talk on profits, our profits in this business in terms of gross margins.

[Jaideep Nandi, executive]

So I'll start with the second last premise of yours, which is what I've been countering for quite some time, and I personally think that is a great work done by our supply chain team, whereby if you track because copra corporate price because it's a single commodity price, we have a good understanding of who's buying at what price.

Unfortunately, because of our strong back in, we have been tracking for the last 8, 9 quarters as to what kind of prices, let's say, everybody is buying versus us. And in quite a few cases, we have actually had a better pricing. It might be a little difficult to understand why in a player which is much larger because some of it is also based on your forward purchases, which are because some of them will have to be speculative purchase in purchasing in terms of a little bit of advance too.

So it can work both ways. If you purchase in advance, if the prices were to fall, somebody else will get an advantage. But fortunately, for us, the last 8, 9 quarters, we have been able to at least track it well, our marketing diligence have been pretty strong because we have invested a lot of effort in terms of getting our entire backing right up to the copra farming to the farmers, et cetera. So good understanding, right? From me downward to a lot of people have very deep understanding of how this entire cycle works. And we have a sense of where the price is going, what is napa doing, what is in terms of earned doing, what is in terms of the Kerala farmers even doing it in terms of pricing. So we keep a good track of that. So fortunately, for us, we have been able to do pretty well in terms of purchase pricing is concerned.

There's not too much difference between what the purchase, but it might be a little difficult to accept it from the outside, but that's for the pro. The other thing that we have done is we are also pricing decision wise. We have started with about a 10% lower MRP as far as the larger player is concerned because that's how we want it to be.

Now if you look at the pricing now, the price gap, and that is something that we are conscious that if we had -- if we actually scale up our product, and we are able to cross the, let's say, the 3-figure mark and go beyond, let's say, a annualized basis and which we have done earlier itself. So there we will slowly bridge the gap. Today, that 90% is slowly move towards 95%, and we tend to take this even further basically the price indexation for that. So we intend to take some advantage from that.

And the third thing that we talked about is in terms of pricing, passing on the price, I think from the market that we get. In fact, one of the good things that I would want to report, which I reported even last quarter is that general trade today is higher than modern trade plus e-commerce as far as coconut is concerned. I think that is a great proof of that the product has got well established in the marketplace and even in Maharashtra. So I'll come back to the Maharashtra.

So having done that, now we are clearly seeing that we are able to pass on the price meter. We, as I said, we have taken about a 6% price increase as far as Q2 is concerned, and we look to even take further price increases in Q3 as we work on. So this is the price gap that we'll be maintaining.

As far as Maharashtra is concerned, it is not first-time seating, et cetera, because the product was launched in Maharashtra about 1.5 or about 7 quarters back, so this is more repeat purchase happening. So distribution is going up in overall country level itself, we have more than 50%. Our distribution is already coconut, what we have in ADHO or more than 50% of that is already. So that's a substantial number, I would like to think as far as the new product is concerned. So it is tracking well all across, and I think we are in a position that we can make our coconut portfolio far stronger offering.

[Operator]

Our next question is from the line [indiscernible] Branston Investments.

[Unknown Analyst]

A very basic question, which I think most of the people would have. And I really appreciate some of the things that you guys have been doing for a period of time. But if I just look back 5 years and see, ultimately, whatever you are doing is towards the betterment in terms of both revenue and bottom line. So 5 years back, we were at around INR 900 crores top line, INR 250-odd crores for operating profits. And after all the changes that we have been doing some successful, not successful, we are still at the similar level of top line and half the amount of bottom line. So as an investor, how should we look at it now? And when would the numbers come and when will the company grow?

[Jaideep Nandi, executive]

From an -- absolutely perfect question. And I think if you look back 5 years back itself, we have said that this will be a hard uphill client because lot of the things, initiatives that we are talking about, some of the things that you said are good, are tracking well and good initiatives taken. We knew that all of them will be investment hungry. There was no easier way out because the ADHO had done great work and ADHO obviously needed to grow, but the market needed to grow along with for ADHO its own growth. But we wanted to ensure that all the other levers that are required to be pushed are pushed because otherwise, it would always be a situation where we'll keep looking for a higher EBITDA in the short term and not compromising the mid- to long-term perspective.

And that's why we looked at our modern trade e-commerce, which you remember, 5 years back, e-commerce was 0.5%. Yes. the kind of numbers we are reporting is in, I think, best-in-class in terms of the percentages that we are seeing. The organized trade business is now at 30% savings, which I think will remain one of the best ones, given that there has been pressure in -- this is one.

Two is, we were to look at what beyond ADHO. ADHO 5 years back, as you said, I mean, it was a 5% contribution. To date, that contribution -- or rather the non-ADHO product range beyond ADHO was just 5%. Today, that has come to 20%. And as you can see, all of those ranges, whether it be the extension that is hair and skin range or whether be it the coconut drink, all of them have been expanding much better. But ADHO remains where it is in terms of the market. If the market is decent, ADHO is also falling track. Yes, I would agree that there will not stop gains as far as ADHO is concerned. That could have only happened if you have gone into, let's say, the southern markets or some markets where we are 100% so that I would admit.

So all the tracking that we we were planning to do, all the initiatives that we are planning to do, international growth, modern trade is the right volume products, et cetera, all of that. So the big difference that we have done during our projections at that time today is that we did not expect the market to tanked this badly and especially in the last 2 years, the way we have been saying, we are not projected.

But I think the fundamentals or rather the basic structure, the foundations of the company doing well have been all put in place, whether it be it systems, processes, people, I mean, these are all things which are never mentioned, but I think the kind of people, quality, et cetera, that we have built, I think, are now very clearly set for a growth market obviously needs to turn and when the market turns are in a comfortable position.

[Unknown Analyst]

So 2, 3 things quickly here, Jaideep, and just a follow-up of these questions. First, if I look at ADHO as a portfolio, if I look at last 5 years, probably the RM prices have gone up. So I'm sure our average product prices would have gone up there. And ADHO falling as a percentage of sales would mean that others should be able to aid the sales rather than absolute sales remaining at the same level. So why we would have probably INR 150 crores or INR 200 crores from new products, and I'm sure your thought process would also have been that this will add to the top line. Unfortunately, that has not happened. That's the first part.

Second, we have always maintained in the past that EBITDA margins would suffer but company would maintain absolute level of EBITDA. In this case, the EBIT absolute level of EBITDA is actually halved. And this is also happening in the backdrop. When you look at last 5 years, most of the consumer companies have actually grown the top line by 50% on an absolute basis over a period of 5 years. So I think when I look at this and when I look at our performance, is it something that we need to actually rethink as to where are we going? Are we actually undermining ADHO? Is it actually something which we should be focusing on because that leads to larger growth?

[Jaideep Nandi, executive]

So as far as ADHO is concerned, so let's answer all your questions in parts. So as far as the ADHO is concerned, if you look at all the levers that would have been pushed, are being pushed. So whether be it looking at the entire digital aspect of bringing the entire digital earlier, we did not have anything working as far as digital part is concerned. We created the digital marketing team, et cetera, and a lot of good work as well as the digital side of it already happened.

In terms of marketing campaigns, a lot of the thematics, et cetera, has been changed more, made it more topical and more relevant to the new edge customers, so that work itself has happened. As far as the product is concerned, in terms of new additions. Newer pack, newer SKUs, newer -- I mean in terms of initiative as far as the packs, et cetera, themselves are concerned, a lot of it has already been in place.

But yes, the market is what it is in spite of pushing Almond Drop, it has had its impact. Yes, I would assume that. So coming to the point that you said that all the other companies have had this growth, and we have not -- you're absolutely right. But on the same point, you also need to look at so how much has been contributed by new products or from portfolios to which they already had. Unfortunately, our portfolio is only ADHO nothing else. All the other companies had portfolio, whether all these competitors that you tap out, they have been able to place one portfolio or other, which they have been able to push up.

If you look at -- I say this growth in the last 5 years, there -- obviously, there will be some companies where only new products have achieved that. But most of the other companies have been from portfolios either of acquisitions they had done earlier, which have now started scaling up or portfolio they already had, which have been -- unfortunately, we did not have that advantage, and that is what we are setting up for.

Only other choice that we have had -- we would have had is do not pick up this new portfolio, do not take up the international, which is just push on ADHO. I'm sure ADHO might have given another 2% growth over and above. I'm assuming, I'm not so sure. But in case that, I would think the company would have been -- maybe would have reported better EBITDA margins, but would have been structurally much weaker, which I think is something that we would have wanted to avoid. I think we aim for a much better future than we are today.

[Unknown Analyst]

So last question Jaideep...

[Operator]

Sorry to interrupt, may we request to join the question for any follow-up questions.

Our next question is from the line of Gaurav Gandhi from Glorytail Capital Management.

[Gaurav Gandhi, analyst]

Sir, as of now in the market as e-commerce is growing in metros, have we looked at our arrangements with the quick commerce companies about focusing our products and how are we looking at improving ourselves from the e-commerce platforms and about the display of our products because it will be really, very important to grow our top line and get our products from the customer preferences. So your thoughts on that?

[Jaideep Nandi, executive]

So if you ask me, that is one area where I would think that we have not done as well as we would have liked even in the last conference, I mentioned that quick commerce has to become one of our key focus areas, and we have to just go upside down to ensure that e-commerce we have growth, which is far, far higher than what we are -- we had a 42% growth as far as we can quick commerce is concerned this quarter. I think that is -- if you ask me overall where my disappointment would be in terms of initiatives, this is one area where we have not done. And clearly, that's a focus area. I am sure that in the quarters going forward, that you will see far better performance. 42% is good, but not good enough. I think it should be in triple digits, this growth rate and that is what we are targeting.

Clearly, the team as well as the entire marketing as well as the sales team in terms of how the assortment should be, how we should be placing it how we should tie up with all the key players, et cetera. I think that clarity is already there. We just need to ensure that, that execution, which has already started, will happen and will become a player as far as quick commerce is concerned. Clear. I don't think there is any dispute in that, and you have absolutely identified the issue right on actually. Yes.

[Gaurav Gandhi, analyst]

Right. And the second question is, now despite every quarter growing revenue from new products, we are unable to grow the absolute revenue number and it's still stable at verity. So can we come out with the assumption that there is some permanent loss of revenue in Almond hair oil category, your thoughts on this?

[Jaideep Nandi, executive]

No, you will not be able to commit that here because if you look at -- I mean, just look at the current situation today. You look at most of the consumer companies reporting what they are reporting. And just look at just sheer numbers, if you look at food inflation, food inflation in April was 8.7%, May 8.7%, June 9.4% when it dipped a bit in July August is back to 9.2%, with this kind of food inflation that is happening and the real wage going address at 4% to 5%, you expect discretion to take tables will still do a little better ratios will take ahead.

Now the question is much broader. Do we trust the Indian economy and we expect the economy to do well. And if that does well, then this will have to come back or do you not. It's a most fundamental question rather than a Bajaj Consumer question. If we trust that the economy will do well, this is more a temporary phase, maybe 2 quarters, 3 quarters, 4 quarters phase has to turn. If that is then obviously, it will come back. I don't think Almond Drop has only lost any specific share of course. Our shares remained more or less steady at a similar level. So that will have.

[Gaurav Gandhi, analyst]

That's right, sir. But looking at the choices in the market, market [Foreign Language] better? Or should we expect -- keep on expecting that there will be growth in the revenue from that category?

[Jaideep Nandi, executive]

I would think it will be the latter mainly based on the market. So as I said, Almond acceptance, et cetera, is not something that I'll subscribe to. Yes, the market has gone down, and you see all the major players have the same, even the other very, very large player other than coconut. The other large player also has had the thing. I don't think there is anything happening to their brand equity as well. This is just that the market is now under stress. So the cheaper products are selling, et cetera, when the market comes back. All of this we see, again, natural go back. There has been no shift -- the overall shift in the marketplace where the practices itself have gained here usage has gone down. We track the Kantar data, look at household data. We don't see significant drops, et cetera, happening either in terms of hair all usage or the frequency of use, et cetera, et cetera. So I think we remain quite proven. Yes, the market foundations have been difficult. As the demand conditions turn, I think we would also bounce back.

[Operator]

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

[Shirish Pardeshi, analyst]

Just 2 questions in the beginning. You said that non ADHO portion is now 20%. .

[Jaideep Nandi, executive]

Yes.

[Shirish Pardeshi, analyst]

So my question is pertaining to the overall hair oil business for us. if you include Coconut Almond and all the hair oils put together, what is the volume contribution of non-Almond oil in terms of volume?

[Jaideep Nandi, executive]

See, as I said, overall, it's at 20% and Amanda hair and skin range also is a substantial portion. So we'll keep it at that. I would not be able to do exactly the hair oil numbers. But this is where we have 20% comes out of that, where coconut is a substantial number, Amla is another number as well as Almond Drop hair and skin. These are the 3 main contributors with other contributing here and there. So that is...

[Shirish Pardeshi, analyst]

So I'm trying -- Jaideep, I understand. I'm trying to find out the margin depletion story. With the Almond Drop price premium to coconut and the coconut portion is going to be stronger in terms of volume. How this margin story is going to pan out in like 3 to 4 quarters? Because what you said that now you are now 2.5 share in Maharashtra and Maharashtra being a coconut oil market. If that volume comes in, what are the levers which are available? I mean, yes, cost efficiency is another thing which is ongoing.

[Jaideep Nandi, executive]

Fair point. So if you look at both Amla and coconut, both of these portfolios, which are the larger of the portfolios Almond Drop sales. Almond Drop here in skincare range, obviously, the gross margins are similar to ADHO. So there, we don't have an issue. The amla and coconut, obviously, are lower than Almond Drop. Our expectation is the market improves and Almond Drop will perform better. Almond Drop has not done well, so this margin looks decreased. Moment Almond Drops to come back, we'll be seeing gross margin dilution of going up.

[Shirish Pardeshi, analyst]

Okay. My second and last question on the net distribution or STR, if you have the number, if you can share with me a little more debt in those 4 states, where we have taken action on coconut. So what is our end for Almond Drop and coconut?

[Jaideep Nandi, executive]

See, our NDA is typically, as you are aware, about for about 8.5 lakh as far as our -- 8.6 now as far as ADHO is concerned. And as far as coconut is concerned, it's already a 3.8 or close to that number. So it's already...

[Shirish Pardeshi, analyst]

3.8 lakhs?

[Jaideep Nandi, executive]

Yes.

[Shirish Pardeshi, analyst]

And specifically in Maharashtra, would it be much higher?

[Jaideep Nandi, executive]

No, it is all across. So Maharashtra is also tracking well, but I think the numbers are still a little higher on the northern side. So all your states of UP, Rajasthan, MP, Punjab. Delhi also to an extent, Haryana, yes. .

[Operator]

[Operator Instructions] Our next question is from line of Kaushik Poddar from KB Capital Markets Private Limited.

[Kaushik Poddar, analyst]

Yes. Last time, you gave an indication that we'll be turnover growing at a rate of around 10% or something for the next 3 to 5 years. So in the light of whatever consumer slowdown, rurals slow down, do you modify that forecast?

[Jaideep Nandi, executive]

Yes. I think if you look at the midterm, I would not like to modify the forecast because I think now that the both rural slowly coming back, urban now bottom now. We don't see that it will continue to bottom out, and there is a bottom left it. So we don't think so. Yes, in the near term, there might be a bit of a pressure. But I don't think in the mid to -- midterm also, in fact, a little more than the near term and midterm, I don't see any pressure. Most of the things that we have now put in place should backers we should be back on that growth. So I'm not going to revise to make some numbers that.

[Kaushik Poddar, analyst]

Okay. Now on the non ADHO portfolio, is this something that you are trying to emphasize more than others? I mean is this any product or any category that you feel has a higher growth potential than others?

[Jaideep Nandi, executive]

Good question. 2 portfolios clearly. One is obviously the Almond Drop hair and skin range. I think we have been seeing good traction at shampoo, at conditioner. Conditioner is very small. The summer lotion that we launched, we've got good traction. Now the winter lotino loading is happening last year, we got some good responses from the winter lotion, we launch the air serum sachets in West Bengal, which is the sachet market. In serum, we are seeing good traction as far as modern trade and commerce is concerned. We are looking at sachet -- sorry, serum going across the country in general trade as well.

So overall Almond Drops extension portfolio or hair and skin range, if you may, we expect that has a good future. It will take -- I mean, it's already showing good traction to become substantial and start contributing big time to the revenue and profit might take another 2, 3 years. But I think clearly, that traction has been seen. Last year, this time, I may not have been so confident, but today, I can confidently say that we are seeing good traction in those products, those 6, 7 products that we have launched, and we'll continue to push that.

We have also seen good traction coming out of our coconut and as I said, all the measures that have been taken to ensure that the profitability of coconut. Obviously, it will not track as well as Almond Drop profile. But as much as it can, which is still better than all the other hair oils put together, clearly, we are focusing on everything that is possible to be done as far as coconut is concerned. So whether we that we have launched in Eastern markets, whether it be the blue coconut, which has been launched in the -- all the other parts of the country, some of the other products, which we are planning to launch in maybe in the coming quarters, et cetera.

We feel that the coconut portfolio will be a large portfolio Bajaj concerned that inherent strength of the confidence of the Bajaj household name and the quality that we provide has stood us in good stead, and that is something that we will pursue. So these 2 ranges clearly. There are certain other ranges that we have already in pipeline, but we don't want to launch it now because there are already so much in the portfolio, in the pipeline until the market conditions improve, we would not like to Phase 2 of the launches and some of the other products, but that is something also in the pipeline.

So as far as pipelining is concerned, we are very clear. At this stage, Almond Drop has that range and coconut range, and not coconut oil only, but the one, these are the 2 things we pushed quite strongly, and we look at future as the market condition.

[Kaushik Poddar, analyst]

Coconut range means what, I mean beyond coconut oil also?

[Jaideep Nandi, executive]

So beyond pure coconut oil. Yes. So today, we have 2 pure coconut oil, one is as far as the rest of the market is concerned, which is a pure coconut copra Grade 1 oil. And the one that sells in the eastern part, which is similar to the market leader, which is Alimak, which is also a pure coconut oil, but that's not a Grade 1. It has a real statement. It is a little different -- distinctly different texture. So that is what we are -- these are the 2 products. We feel that there are 2 more other products that can be launched in that work is already there, good gross margin profile, they will come back. Yes. .

The one you can obviously understand is the value-added coconut, which we already had a coco onion that needs to come back. We'll see when we time that launch as well as another one we are looking at in that thing. So there will be about 3, 4 products in the overall coconut portfolio.

[Kaushik Poddar, analyst]

Okay. My last question, which is that -- I think...

[Operator]

I request you to a get back to the question queue.

[Jaideep Nandi, executive]

Let him finish with those. I think...

[Kaushik Poddar, analyst]

Okay. My question is, I see the Eastern region. I don't see much of advertising or sales promotion in this thing. I mean is it done at the shop level or something that we are missing out, at least on the newspapers or magazines or anything. I don't see much -- I mean, how is ASP tackled in, say, Eastern region?

[Jaideep Nandi, executive]

So what we wanted to do, and that is what is the template that we have put for most of our new product is. First, we get into GTM, once the entire GTM is over and it already is the retail outlet center in then we get into both either in complete local advertising or definitely POS already -- seen POP and POS already at the shop various green tissues and anglers, et cetera. Those are already there. Already, we had a digital content made specifically for the regional language in West Bengal. So that is already there. Some of it is already there. You may not have tracked it directly. We are now exploring whether we need to get into regional language advertising, et cetera, like we have done in Maharashtra. That is something we'll have to decide based on how we want to structure. So yes.

[Kaushik Poddar, analyst]

Okay. So the 10% medium-term growth stands, right?

[Jaideep Nandi, executive]

Yes, definitely. We would like to.

[Operator]

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

[Percy Panthaki, analyst]

So our overall EBITDA margin is around 15%, but it's a story of 2 parts, right? ADHO is quite profitable. Some of the new businesses or rather new products would be either very low margin or might be loss-making. So could you give us some idea as to what these 2 parts are. So like it's ADHO alone, if I look at, can I say that it's like 20% plus margin and then there is a certain loss on the remaining products. Can you give some idea on that?

[Jaideep Nandi, executive]

It's perfect figure. It's not loss making for all the products, obviously. So yes, some of the products we are investing in, let's say, most of the AD extension products, the EBITDA margins will not be positive. Some of them will not be positive at this stage. Yes, but the gross margins are in upwards of 55%. So we are investing in some of these products.

some of the products like coconut, et cetera, they are positive as far as EBITDA is concerned, but not obviously in the range. So if you look at very, very overall, if I were to give you 10th the year ADHO remains 20% plus and the different delta between ADHO and the non-ADHO would be about -- roughly about a 6% difference between ADHO and non-ADHO.

[Percy Panthaki, analyst]

Right. Secondly, I just wanted to understand on ADHO. If I look at the sales versus pre-COVID, I think it would be flat to a marginal decline. And over a 5, 6 years period, the pricing has gone up close to 15%. So would I be right in estimating that versus pre-COVID levels, the volumes of ADHO are down about 15%?

[Jaideep Nandi, executive]

No, I don't think so. So if you look at the volume, the value sales, if I look at the 4 years, ADHO is about 4% from 817 -- sorry, give me a minute, sorry that's the overall rate is about 780 to about 792. So that's about 0.5% this thing. And in terms of price increases, I think the overall price increases will be in the 7% to 8% range. So yes, there has been a little bit of a drop, but not to the extent that.

[Percy Panthaki, analyst]

Okay. Okay. Understood. And can you give us some idea as to, again, on the margins, what is your plan? One is on ADHO, do you expect to see current margin?

[Jaideep Nandi, executive]

Sorry, give me one minute. I just took out the data. So the volume decline in a 4-year CAGR as far as ADHO is concerned, it's minus 0.6% is the volume decline in ADHO and the value growth is 0.4%.

[Percy Panthaki, analyst]

This is over what period, sir?

[Jaideep Nandi, executive]

This is over a 4-year period. So 4-year period, '20 to '24, the difference. I'll just explain the difference in terms of the price increase, et cetera. So one of the things that also has happened...

[Percy Panthaki, analyst]

Sir, '20 would not be a correct starting point because FY '19, your sales was INR 880 crores, FY '21 also was INR 898 crores, but FY '20 because of the Q4 destocking last 15 days, it was only INR 820 crore. So I think FY '20 is a very low base to start off with, if you could either look at FY '19 or '21, it would be okay.

[Jaideep Nandi, executive]

So what I was trying to explain. So look at FY '21, if I take okay, the CAGR is minus 1.3% and minus 2.7%, respectively, value and volume, so what I was trying to explain to you is that the price increase part of it, what you have said is correct. But the way would have seen also retracking is that a lot of larger SKUs have been launched, the 475 -- the 650 ml launched, the 700 ml we launched. That price per ml is a little worse off as far as this is -- which will happen for a very, very large fact the price will be better offering to the consumer. So that has also offset where the volume growth has happened, but the value growth is not compensated for that. So that's why in spite of the price increase, the differences of just about 1.6% between value growth and volume growth volume 1.6% CAGR 3 years.

[Percy Panthaki, analyst]

Understood. Understood. And sir, how do we look at EBITDA margins going forward?

[Jaideep Nandi, executive]

So I think that, as I said, we have been maintaining. So as of now, it's at 15.5%, we are doing a project as well as the strategy participants in the strategic project, which is taking about 0.5%, 0.6%, roughly about 0.6% from our EBITDA. So it remains about 60-ish percent. So this will -- this will go through some bit of curve at this stage itself. But I think overall, the 16% to 18%, which remains standard, I think, remains very, very is what...

[Percy Panthaki, analyst]

In the near term, have we bottomed out? Or in the near term, it can go even lower?

[Jaideep Nandi, executive]

Very difficult to project. It will be a function of what happens to the RM prices where we take pricing action, how competitive action is on, so it's a very difficult coming to make at this. But this is what 16 to 18 remains our target, and that's how we are tracking.

[Operator]

Our next question is from the line of Amit Purohit from Elara Capital. .

[Unknown Analyst]

Sir, just on the quick commerce side, you said that you were not satisfied one. I wanted to understand the arrangement that you have with quick commerce is? And what are the kind of brands that are getting sold in quick commerce and getting good acceptance for?

[Jaideep Nandi, executive]

So as far as quick commerce is concerned, in fact, other than Amla is seeing the entire team. So ADHO, we are continuously looking at improving our assortment, all the SKUs getting listed with all the all our partners, that is obviously one, ensuring that our availability is across all the regions, that is other things.

In fact, we are, at this moment, Blinkit, where directive billing well to is going through our distributors. But in terms of the product range, the product range we are pushing is obviously ADHO entire range across all our partners as well as across the entire all the regions as well as the coconut is doing well on that as well. So we want to take it much higher than what we are doing as well as the AD extension range, the shampoo, the lotions, the serum as well. So that is something that we are also pushing.

[Unknown Analyst]

And what would be the salience of quick commerce right now?

[Jaideep Nandi, executive]

So quick commerce sales, as I said, is low at this stage, only at 6%, which we think can really scale up the macro.

[Unknown Analyst]

Okay. And just the last thing on the extensions of ADHO, is the acceptance on quick commerce are relatively higher? Or it is too small to now talk about it?

[Jaideep Nandi, executive]

No. So wherever we are seeing responses, the responses are very, very encouraging. So that's where we are going very heavy on the extensions as well as come. So quick commerce obviously, as you are aware, the margins at this stage, at least as of today, as we speak, are better than the larger e-commerce players. So that also obviously is an incentive for everybody as well as -- and fortunately, we have seen good traction as well as our AD exchange hair and skin range products are concerned, which is what we feel up significantly further point last.

[Unknown Analyst]

And last on the channel mix itself. You highlighted that almost, I think, 30% of the sales comes from the organized retail, right? So is this share likely to go up, then is there any impact on our overall margin profile for the company?

[Jaideep Nandi, executive]

So I think at 30%, we are already topping it out. I don't think that a significant increase because our major focus is to ensure the general trade, which has had not a muted performance on Almond Drop. That is what will be the effort in, yes, the 30% can go up a few percentage points here, but I think roughly popped out as far as that 70-30 mix is what will be the new normal as far as what we...

[Unknown Analyst]

And why do you say that quick commerce would have better margins than e-commerce?

[Jaideep Nandi, executive]

See, it's just a power of negotiation as far as the 2 very, very large players are concerned. If you look at the 2 large players I mean, given the fact that they also see that general trade most of these companies are finding difficult to scale up general trade. They also realize that these are -- we are the easy growth drivers, growth levers for most of the companies. So they also extract their pound of flesh, maybe not in the last 1 quarter or so as we see the quick com up and they have to also.

But other than that, both these 2 large players have been commanding their pound of flesh. So that is something, at least gets a little neutralized because sales of [indiscernible] becomes larger, now saying that in maybe 2, 3 quarters, these guys will also not be extend. I'm sure there will also be asking for their pound of flesh. But at this stage, this is how the dynamic is.

[Unknown Analyst]

Okay. Versus the e-commerce and versus even GT.

[Jaideep Nandi, executive]

Versus the larger e-commerce player.

[Unknown Analyst]

Okay, okay. But versus GT, it would be lower, right?

[Jaideep Nandi, executive]

Versus GT, it will be lower than GT, higher than the larger e-commerce players.

[Operator]

Our next question is from the line of Nikhil from SIMPL.

[Nikhil Upadhyay, analyst]

See, my question is, if I compare our first half cost base to first half of last year, we see our employee cost is still growing at around 10 -- double digit. Our other expenses ex of advertisement spend is still growing at 9% to 10%. And as I understand a lot of this investment has been going behind growing the GT channel and basically on the new products, now even on the new products, our sales growth actually come down from where we went -- some amount of it is also big. So how do you see this pending sustaining versus the commensurate growth from the product segment because even GT, which has been a focus area, is actually degrowing only. So how do we add this investment versus the return which we are getting in terms of growth? Some point or some idea you can give?

[Jaideep Nandi, executive]

So sir, I'm still not clear why you see the new products are declining...

[Nikhil Upadhyay, analyst]

No, not declining. I'm saying the rate of growth of new products, this actually come down where we were. I understand base is also playing out. But our personnel costs or other expenses cost is actually now incrementally more than the overall company top line growth. So which means that our investments are happening behind new products, and that's also on the GT channel. But new products are growing at a lesser rate. The GT is actually de-growing. But our investments in terms of P&L behind personnel and other expenses remains at a double-digit rate. So while we are investing, we are not getting the commensurate return if I understand in a way. And this is on the first half to first half, not on a quarter-to-quarter number.

[Jaideep Nandi, executive]

So new products, as you rightly said, now is at 11% in the first half of the year, it's registered an 11% growth, which I think is still pretty decent. It is not a bad situation given the market conditions While overall CAGR has been 32-point-some percentage, 32.3% to be precise over a 3-year period. So I would like to think that the new products is continuing to perform very, very strongly. It is not that the growth rate has come down. I think the growth rates will keep increasing as these products get established for them further because this is still in still upsell the growth rate numbers were much higher because of a lower base, but prices have gone up, but still, I think the growth opportunity still.

As far as the costs are concerned, yes, some of them are a bit of a fixed cost, so that will remain in terms of other costs as well as that you have seen, we have done some investments in Bangladesh, serving some investment as we see the strategy project that is coming and that's where other expenses are coming as the some increase.

Employee cost is something that you do not unfortunately have too much of say unless you want to downsize the organization. At this stage, we are not expanding the organization in pega, but we are not looking at downsizing because we where we have invested in people, et cetera. There will be some bit of restructuring we might look at in the general trade going forward after the Project Aarohan output completely comes through, we see where there is some cost optimization opportunities there, but in terms of others, I don't think there is much reason to press the planning per tonne and reduce Pampa. That is not a direction that we are envisaging or planning to pay.

So if the sales number were not to go up with an average increment that happens, yes, this number will look a little on the higher side, but that is the thing that will remain with because we think people is an investment we continue to keep on making not by increasing people, but having quality people so that we can have this some impact.

[Nikhil Upadhyay, analyst]

I take that point and it's a very valid point. We are not downsizing. We want to grow from here. But if I broaden my perspective over the last 8 to 10 quarters, the investment behind people has been pretty aggressive. So if I consider average has been 12% to 13% growth. So from a base of INR 20 crores, we are now at INR 30 crores on a quarterly basis, and we've invested, which is a good point.

What I'm trying to understand is are we getting enough efficiencies or productivity from these investments because -- and this point was raised that where we were, we are still there in terms of sales, maybe NPD and all has come. But while people investment and everything has happened, but the starting line where we started, we are still there in a way. So how do you see this productivity improving from on the people side?

[Jaideep Nandi, executive]

So as far as starting point is concerned, my point is some alternative that you need to look at. If you have not done this investment, you would not have been where we are today. I would like to think that with only ADHO or test about the about periphery in there, we would not. It's a speculation obviously, you do not -- cannot really come to an absolute number on that. But only with ADHO firing, I think we will not have even be able to hold ground as we are.

Other is the investments that needed to be made have been made. I think yes, the numbers have not flown through. But the question is then do downside. Finally, it will have to come back to whether we downsize or whether we have overinvested in terms of -- unfortunately, many of a smaller organization, most of the costs will look a little higher and because that can only be covered through the economies of scale, which we have not been able to have, which I would absolutely expect. But yes, market conditions have a role to play. And as the market conditions improve, we expect these numbers also starting to look far benign than they are.

[Nikhil Upadhyay, analyst]

Okay. And if you can allow me one more question. See, I understand market has been difficult and earlier rural was bad now urban is weak, but from where we are starting in a way, we are starting or coming into a space where we were not present. So we are starting from 0. So in last 3 years, in terms of the new products and on, I'm saying on the ADHO, we were always present, but on new products, we started from 0. How much of a market condition has role to play in order to grow? Because if I look at the segment of overall oil and our whole idea was that we want to broaden our prospects only from ADHO to overall oil as a market. The market is pretty large from where we were starting. So while market conditions are bad, but how does it impact us in terms of not able to scale up or probably grow at a much faster rate? What are the challenges, if you can just help me understand that.

[Jaideep Nandi, executive]

So I'll just explain that very quickly, and it's pretty -- I think it's a pretty good question saying that if you're a small player, why you can do scale up, the market is that large. It doesn't matter whether it's growth or not. Unfortunately, that actually works very worse way. In fact, when the market conditions are difficult, the larger players have the muscle to builders that market and able to grow, and it is always a smaller player who suffer. So it is -- typically, that's how the market dynamics would work. Because the larger player will do its best to protect their market share. And this thing so while from a -- and you are looking at 100, somebody who's at 30 will be in a better position or a 40, we'll be in a better position to protect it and the assertive rather than a percentage.

Unless you are, let's say, invested company where you want to just invest for the next 5 years or get year bottom line and that's a different story that. But if you're a traditional company who's trying to protect it benign market will always be a better. You look at -- in fact, this coconut, coconut is a classic example of that. So when the coconut prices keep going up, the market becomes difficult, the smaller players newly get wiped out and own sector get priced out the largest sales game. Movement is other way around where copra becomes benign the smaller players become pretty I'll not a significant, but have a pro -- so this is how it will pay out for large market. So this is market dynamics, nothing to do with...

[Nikhil Upadhyay, analyst]

Sure. Thanks. Probably it will take a lot more time to understand, but thanks a lot for your explanation. .

[Operator]

As there are no further questions, I would now like to hand the conference over to the management for closing comments.

[Jaideep Nandi, executive]

So thank you so much for patiently asking the questions and the response. Yes, the market conditions have been difficult. I think nobody can deny that it has been a really picture out here. But again, I think as far as the company is concerned, we are very, very firmly committed to drive all the growth levers that we have put in place to continue to invest on those because we feel as the demand circle turns, demand cycle turns, we would be in a far better position to capture that bank where we are strategy. So we are very, very optimistic that in the near future as the market -- as the demand situation comes back, we'll be able to leverage all our strength bring back growth in a far stronger manner than we had earlier capability of.

So with that, I'd like to thank all of you once again and best of luck for the festival season. Thank you.

[Operator]

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