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Dabur India Ltd
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Ladies and gentlemen, good day, and welcome to the Q3 results investor conference call of Dabur India Limited. [Operator Instructions] Please note that this conference is being recorded.I now hand the conference over to Ms. Gagan Ahluwalia. Thank you, and over to you, ma'am.
Thank you. Good afternoon, ladies and gentlemen. On behalf of the management of Dabur India Limited, I welcome you to the conference call pertaining to results for the quarter and 9 months ended 31st December 2019.We have here Mr. Mohit Malhotra, Chief Executive Officer, Dabur India Limited; Mr. Lalit Malik, Chief Financial Officer; Mr. Ashok Jain, Senior Vice President, Finance and Company Secretary; and Mr. Ankush Jain, Head, Financial Planning and Analysis, besides me.We will be starting with an overview of the company's performance by Mr. Malhotra, followed by a Q&A session.I now hand over to Mohit. Thank you.
Thank you, Gagan. Good afternoon, ladies and gentlemen. Welcome to Dabur India Limited conference call pertaining to the results for the quarter and 9 months ended 31st of December 2019. Demand for the FMCG products continued to see a sharp slowdown with further deceleration during the quarter. Despite the difficult environment, Dabur reported a healthy growth of 7% in consolidated revenue. India FMCG business grew by 5.6%, both in value and volume terms. International business reported a growth of 12% on constant currency basis.In India, the health care portfolio grew by 10.7%, driven by topical marketing campaign, localized sales activation and sustained investments behind our power brands. Health supplements portfolio grew by 12.2% led by a robust growth in Chyawanprash. Digestives category recorded a growth of 15.9%, driven by strong performance of Hajmola and Pudin Hara. A new variant of Hajmola tablets was launched, Chatpati Hing, which has been received very well in the marketplace. Honitus, a part of our Cough & Cold portfolio reported a double-digit growth in the quarter. While OTC and Ethicals business witnessed a muted growth in primary terms, they continue to do well with double-digit growth in secondary terms.With Home and Personal Care portfolio -- within Home and Personal Care portfolio, Oral Care recorded a growth of 8.5% despite sharp slowdown in the Oral Care category. Dabur Red, our flagship brand continued to perform well with 9.5% growth, leading to an increase of 80 basis points in market share. The Red Tooth Powder posted a growth of 10.4%, driven by renewed marketing inputs. Babool franchise also along with the newly launched Babool Ayurvedic saw a turnaround with a growth of 5%. Our overall market share in the toothpaste category continued to see an uptick with an increase of around 30 basis points in overall Oral Care category. Hair Oils reported flattish growth on account of further slowdown in the category. Brahmi Amla and Sarson Amla posted a robust double-digit growth. Our market share in Hair Oils increased by around 50 basis points. We continue to pursue our flanker brand strategy with investments behind our power brand, Dabur Amla.Shampoo portfolio reported a 5.1% growth and witnessed an uptick of 60 basis points in market share to touch 5.6%. The bottle portfolio post revamp reported a strong double-digit growth of 38% resulting in increase in [ salience ] of bottles.Home and Skin Care categories reported muted performance due to very high base of last year. Odomos recorded strong growth of 15% and saw a gain of more than 250 basis points in market share to touch 60 percentage point level.New fragrances in Odonil Aerosols resulted in a strong growth of 50% in Aerosol portfolio. Food business declined by 1.7%. This was mainly on account of sharp slowdown in overall juice category and early onset of festive season. Excluding Diwali Gift Pack, the beverage portfolio business saw a growth of around 5%. Real Activ saw a growth of 17% on back of strong growth in Activ Coconut Water and institutional business. We have introduced a new variant called Real Aloe Vera Kiwi at premium price point to tap into the value-added juice segment. Our market share in juices and nectars category touched 62.4%, showing an increase of 530 basis points. This is ever highest in the history of juices. Culinary business under Hommade brand posted a growth of 15%.Coming to the channels now. E-commerce posted a strong growth of 93%, taking its contribution to 2.9%. Modern trade grew at the rate of 10%. Driven by infrastructure investments, rural continue to perform very well, growing 400 basis points ahead of urban. Our rural reach is now 51,511 villages, an increase of 17% over last year.International business reported a constant currency growth of 12% with strong performance across regions. MENA market reported a growth of 10% in constant currency. Egypt business grew by 17%. Hobby had a strong quarter, growing at 32%. Namaste business reported a growth of 10%, with strong performance in Africa business. Nepal business increased by 20%. Operating margins improved in international business by around 100 basis points on account of soft commodity prices and operating leverage.Gross margin for consolidated business expanded by 80 bps on account of material deflation. Part of the savings from raw material was reinvested in A&P, which went up by 14% during the quarter. Operating margin saw an improvement of 70 basis points to touch around 21%. Consolidated PAT increased by 8.7%. An exceptional provision of INR 20 crores was made during the quarter on account of impairment of treasury investments because of rating downgrade. Growth in consolidated PAT before the exceptional item was 12.8% in consolidated and 10.8% in stand-alone.Although the demand situation continues to be worrying, we are staying the course in terms of our strategy to invest strongly behind our brands, expand our distribution footprint and enhance our competitiveness in the marketplace. This has enabled us to grow ahead of our categories and gain market share across our portfolio. We plan to continue on this path and ride out the consumption headwinds while they last.With this, I open the Q&A and invite your questions, please. Thank you.
[Operator Instructions] The first question is from the line of Abneesh Roy from Edelweiss.
Sir, congrats on good market share gain and volume growth. My first question is on Oral Care. What's driving the 10% growth in tooth powder? Is it because down trading is being seen in rural market? Or you have taken specific activation there?
Yes. Abneesh, Oral Care saw a growth which was secular across all our brands. In terms of tooth powders, we'd actually kind of over past couple of years stopped investing behind tooth powders because we thought this category is declining, and we started investing all the money in toothpaste saying that we'll follow a portfolio approach and the toothpaste advertising will drive the tooth powder also because in a sense, it's the same umbrella brand. But we very recently, in past 1 quarter, taken a celebrity on Lal Dant Manjan and renewed our marketing focus on the toothpaste category also which happens to be the backbone for the Red franchise for us. So I think behind those initiatives, it's actually grown.As far as down trading is concerned, down trading is definitely happening. But down trading is happening to low unit price points within the toothpaste category. I don't see any cross-category movements happening between paste and a powder, that doesn't happen. So powder is essentially a INR 400 crores, INR 500 crore category, which is declining, in which there are essentially 2 big players, one is us and other is a market leader. So we also want to take share from the market leader, and we see a lot of headroom and opportunity of growth even in that segment.
And sir, 1 follow-up here. How is the profitability in Oral Care because all the players are very high on advertising and promotion? And you also mentioned LUPs are growing faster. So will the margins be sharply lower than the last 3 years' average in this category?
See -- no, margins, I don't look at category-wise break up in the margins. If I look at the total Dabur portfolio, Oral Care is definitely accretive in terms of margins because we've got a juice portfolio also which drags down the margin, and which is little dilutive. So if our Oral Care portfolio grows at around 8.4%, it is surging the average gross margins and operating margins of the company. So -- and it's across all brands, if you look at. Within the portfolio, Babool is a little muted in terms of margins, but Red is very high in terms of margins.
Sir, my second question is on Hair Oil strategy. So when I see your other categories like Honey and Chyawanprash, you have regained most of the lost market share. Now in Hair Oil, over the last few years, the other large player had gained lot of market share. And now when I see, clearly, you're doing well. You have gained 50 bps market share and you've grown flat on a 2-year very strong numbers of 23% and 16%, you are flat, which is a good number from a 3 years perspective. So do you want to regain all the lost market share in Hair Oil over the last many years? Is that the long-term goal and strategy?
See, the long-term strategy, while you're right, past 1 year, 1.5 year, we've renewed our focus on Hair Oils, and we feel there's a lot of headroom and opportunity of growth in Hair Oils. We, at the moment, if you look at total Hair Oil portfolio, 80% of our Hair Oil portfolio is restricted to only perfumed oils. There is another part of coconut oils where we are a very small marginal player. So there's a huge headroom in coconut oils also which is available for us to capitalize on, along with the perfumed hair oils. Here we've lost significant amount of market share to low-priced players where we want to regain back the lost share that we've done, that's why we embarked on a flanker brand strategy. We've got cheaper brands in terms of Brahmi Amla and Sarson Amla, which flank the mother brand, which is Dabur Amla, which is where we have the premium. So we'll defend our market shares in terms of Dabur Amla, gain market shares in Brahmi Amla and Sarson Amla, and also we'll have a market share gain strategy in coconut oils going forward. So I find this category very exciting, attractive, but also very competitive though. I hope I've answered your question.
Yes. And sir, last question on Foods. So in the last 6 quarters, 5 quarters have seen flat or negative growth. Now when I see in terms of the category, you've said 11% dip as per Nielsen number. But my question is, FMCG slowdown is more there for the last 3 quarters, while this category or your category is facing issues for the last 5 of the 6 quarters. So why here the customer is either going to LUP or maybe going out of the category? You mentioned, in Oral Care that's not happening. Why in this category, especially health, that should happen? And what are you doing proactively at the LUP level or at the lower-priced alternative, what are you doing?
Right. So I think there is a impact of a slowdown definitely and therefore, the category growth have further accentuated. The declines in the category growth have accentuated because of the slowdown. But this -- here, the slowdown was more prolonged for over 5 quarters, to your point. Now 1 reason here is because there are substitutes available in beverages. There is a juice available. There is 100% juice available. There is a nectar available, there is a drink available and there are flavored waters available. So there is -- there are options to the consumers to down trade rather than just moving to a LUP and the price points are, there's INR 100 juice, there is a INR 120 for a 100% pure juice and there is a INR 50 drink and there is a INR 20 milk-based beverage also.So there are multiple options available to the consumer for quenching their thirst. So they down trade with a little stress on the pocket. That's what is actually happening without compromising on the taste or without compromising on the thirst-quenching ability of a particular beverage. They don't see too much of a difference between whether it's a juice or a nectar or a drink. Now that is the reason why this category has seen down trading which is sharper as compared to Oral Care or for that matter, Hair Oils. Now what are we guys doing? We think we've got a brilliant brand here, Real, which was not really leveraged, and it can really straddle the drinks portfolio also. As we communicated earlier, we've extended Real to the drinks portfolio. We launched a INR 10 price point, Real Koolerz, which is doing very well in the marketplace. The growth is ahead of some 20%, 30% there, and it's doing reasonably well. We've -- we are now planning to extend it across India. That's 1 initiative.The second initiative is that we are getting into PET bottles, which will spur out-of-home consumption. As of now, we are present in Tetra Pak 1 liter and 200 mL pack, so we'll be getting into PET bottles also. That, I think, will again, spur consumption. That's at the LUP end or the popular end to capitalize on INR 6,000 crores drinks market where we are not present.We also want to premiumize this portfolio because getting into drinks and getting into LUPs can also become margin dilutive. So we are getting into premium juices also. Last quarter, we launched Real Aloe Vera premium juice at INR 110 price point, so we want to upgrade the consumers in urban India and we want to capitalize on drinks in the rural India, and also use our distribution network to distribute those drinks.
One follow-up here. So are you prepared to take some cannibalization here? So are you differentiating in terms of distribution, in terms of the Real Koolerz, et cetera? Or you are prepared to take cannibalization hit because you want to take more share of the category.
No. See, there is no cannibalization here because the pool where we want to fish going forward is INR 6,000 crores, and the pool where we are present in is only around INR 1,700 crores. So we will gain much more than we actually cannibalize. So the question of cannibalization arises if the pool is restricted. Here the pool is not restricted at all. There's a huge headroom available for us to get into the drinks market or carbonated juices market or carbonated drinks market. So I don't think it will cannibalize. Overall, we will only, in quantum basis, we'd only increase the profitability as the volume growth come in because we'll get into the drinks market.
But sir, when will the growth come? Your base becomes quite favorable next 4 quarters. So will that drive the growth? Or all these initiatives will actually bring incremental growth?
No, I think it's another 1 quarter. We are getting into the season. So as the season starts in the end of the next quarter, I think we should come back on the growth. If you see the current quarter also I think we already turned the bend on juices. If I ignore my Diwali Gift Pack, my juice portfolio has grown by around 5.4%. Then what happened in Diwali, Diwali got preponed. Last year, it was in the month of November, this year it was in October. So the preseason loading, which invariably happened in the quarter 3 this time, happened in quarter 2. So we lost out a little bit on that. If I ignore that, then our growth is around 5.4%, and that's also getting reflected in our market share gains. We've gained more than 500 basis points of market share, and now we sit at 62.4% in Real. So it's a very strong franchise that will extend into drinks. So I think it's only a matter of time before the innovations hit the market and our volume growth should start by. We are very hopeful. And plus, we've got a distribution footprint in rural India, which we are not capitalizing. With Real Koolerz, at least it started riding that rural infrastructure, and we've been able to reach out to the rural consumer. Rural contributes a good 45%, 46% of our business.
Next question is from the line of Aditya Soman from Goldman Sachs.
So a couple of questions. Firstly, can you talk a little more about strong performance in the health care brands, particularly Chyawanprash, Hajmola and Pudin Hara? And what drove those?
Right. So health care portfolio has really done well and it's aligned with our strategy. We said that we'll focus on our power brands and major power brands happen to be in the health care area. And we have disproportionately invested behind health care. We've done customized topical marketing initiative on Chyawanprash. And in Chyawanprash, the market share has surged by around 300 basis points, and we've reached around 64% market share in Chyawanprash. We've also premiumized Chyawanprash in the segment by launching Ratanprakash (sic) [ Ratnaprash ] now that is available in our Ethical segment. And we are selling it and doing advocacy among our medical practitioners. As and when it scales up in volume, we will be making it mainstream.We also introduced, I think, last year, the sugar-free variant of Chyawanprash. That also is doing -- that maybe 2 years back, and is relatively new, so that also doesn't have that kind of a distribution width as our regular Chyawanprash. So that's also riding the Chyawanprash distribution and doing very well. And the -- in this quarter, what we -- and the competitive intensity is also very low. We've got a headroom in terms of taking price increases, which is what we have done.And in the slowdown, doesn't impact the health care portfolio as much as it impacts the discretionary portfolio of HPC. That helped us a bit. And plus, the winter has been good for us. So that has been icing on the cake. We capitalized it reasonably well. So just not Chyawanprash, which grew by 25%, we saw a growth in our Honitus brand also which is a Cough & Cold portfolio. We saw growth in our digestive portfolio also on the back of Hajmola, which has grown by around 21%. All the innovation initiatives that we've taken on Hajmola seems to be firing. Chatcola, which was launched last year, is also doing very well. Already, I think, 10% to 15% of the brand sales is coming from Chatcola. We introduced a new variant called Chatpati Hing, it has been received very well in the marketplace. And the brand is doing well with competitive intensity being low.So I think across the portfolio of health care, we are consciously -- all our efforts are paying off here, and they are doing reasonably well.
No, very clear. And just on that line, I mean given that Hair Oils is almost an extension of Hair Care, is there more brand launches that we're likely to see there or product launches that we are likely to see there to see sort of a pickup in volumes? And just on Hair Oil, is there a big difference in the volume and value growth there for the category?
Yes. For the category, as I told you, for the category, the category is declining by minus 0.8% in terms of volume. Volume is what we will track very closely. We look at volume shares and we track the volume, which is basically a measure of the health and the robustness of the way Vatika is doing. The value growth in the category is around 1.2% and volume growth is minus 0.8%. That's the difference in the value. Not very significant, but little bit is there.As far as our innovation agenda is concerned in Hair Oils, we are embarking on innovation. You will see a slew of brand launches in the Hair Oils, both at the top end and the bottom end by the company. In the bottom end, we already introduced a INR 10, INR 20 price point, which is doing exceedingly well for us because people are down trading. On the premium end, I can't talk of those initiatives right now, but we've got a slew of launches planned at the premium end also for the Hair Oils, and we feel there's a huge headroom. Like I told you, we are only scratching the surface in terms of only perfumed oils being 80% of our portfolio. We are not there in coconut, we are not really a marginal player in value-added coconut. We are, again, marginal players in light coconut, and coconut is a big category which can be subsegmented into various subsegments. And also in the perfumed oil also and Almond Oil.So we see a lot of headroom across different subsegments of Hair Oil category, which is in excess of INR 10,000 crores and our turnover in the Hair Oil is only in the range of around INR 1,200-odd crores.
The next question is from the line of Sameer Gupta from IIFL.
Sir, this is Percy Panthaki here. My first question is on the international business. You've done quite well there, growing at about 12% constant currency terms, which is a significant pickup I think from Q2, where you had done just about 3% growth. So if you can give some idea on what is driving this growth, which regions are driving the growth? And also within those regions, what is the reason for the growth going up? Is it general economic situation improving? Or is it something that you have done? And also the international margins have expanded quite a lot. In fact, most of the EBITDA margin expansion on a consol basis, there's a very large contribution in that of the international business, if I sort of got my calculation right. So can you throw some light on that as well?
Right. So Percy, international business clearly has done pretty well across different geographies. If I keep talking about geographies in terms of percentage contribution, the largest geography with the highest contribution is MENA markets. MENA markets have grown by 10%, followed by Egypt. Egypt, in constant currency terms has grown by around 17%. Then we have Nigeria market that also has grown by around 17%. And Nepal business has clocked a growth of around 20%, then sub-Sahara Africa in Namaste terms has also grown by 20%. The overall Namaste business has grown by 10%. Turkey business has grown by around 32% for us. So across all geographies, the business has done well.It's partially -- I should not take the entire credit of activities, it's also coming off a low base of last year, wherein we corrected the business and did some sort of pipeline corrections last year. So it's coming off a low base, 12%. That being said, mid- to high single digits growth trajectory is what we expect to sustain in the international business also. The only outlier is the Bangladesh business, which also it's internal issues for us, which we are in the course of correcting, which I think also by the next quarter or quarter after next, we should be in a situation to correct.As far as operating margins are concerned, we have gone up in international business on the back of benign raw material, packaging material costs being low. If you see, international business is entirely personal care, and in which our petroleum basket is very big and because of benign petroleum prices, we had an upside in terms of our gross margins. We've invested some gross margin upside on our advertising. And that has really led to our growth. Apart from this raw material prices, we also got a leverage. We managed our costs very well in international business.Our indirect overheads have gone down, our S&M costs have gone down, and that all has provided operating leverage in the business, which is flowing down to the operating margins for us.
Right, sir. Secondly, just if you could give for the next 12 to 15 months kind of horizon what is your view on the margins in India? Do we look at sort of margin expansion in FY '21 over FY '20? Or do you think that you would rather invest whatever extra you have in terms of the expansion into the business and just grow the volume? Or do you think that you can manage a little bit of both?
Yes. So 1 is the intent and 1 is the reality. As we go into the fourth quarter, we are covered for the fourth quarter in terms of [ RMP ] in prices which happen to be benign. So I think next quarter is no issue. So I think we should expand our margins or maintain our margins or whatever upside that we get in gross margin because of [ RMP ] in prices, we'll invest back into the business, and that's been our strategy, and that's what we'll continue to do. If there is any favorable upside on margins because of [ RMP ] in prices, then we will invest back into the business. So we want to maintain the margin. We don't want to expand the margins going forward also. That said, we already are witnessing some surge in the commodity prices now, especially our agri commodity basket is seeing inflation. So we will have to wait and watch to see if that upside will be available in margins for us going forward. Because during slowdown, we also be very calibrated in terms of taking price increases, and we'll have to watch the competitive intensity in every category before we are able to take. If the table of prices goes up, then it's great for the whole category and for everyone, but we'll have to watch.We are committed to increasing our market shares in the market that too tonnage and volume market share. If the table of prices goes up, we will take a price increase. And if at all, there's upside in gross margin because of those prices, it'll be invested back into brand building. We broadly want to maintain our margins. I can't give you too much of guidance into what the volume growth next 12 to 14 months would be. We are in the process of making our budgets and also awaiting the union budget, which is on the anvil and see what it brings to the table and how the business can leverage on that. Yes?
Right. And last question, sir, if I may. What do you think over the next 12 to 18 months will be the main driver for growth? Is it going to be innovation, new products, et cetera? Or is it going to be mainly distribution expansion, big data analysis and improving supply chain efficiencies, et cetera? Which of the 2 is going to be -- in any business, you'll have all the things contributing, but which 1 of these 2 will be the bigger driver of growth?
So again, multiple areas, Percy, multiple vectors to growth that we've identified, and our strategy is yielding great dividends for us, and we are growing ahead of our peers, ahead of the market and taking market share across all categories. So no reason why we should change the gear on which we are actually moving. So there were different pillars identified in the beginning, which is what we will be doing. First of all is our power brand architecture. So I think we've got 8 power brands. We'll continue to invest behind our power brands and increase advertising investments behind our power brands, that's one, to increase market share. So that is investment in power brands, first.Second is, not to lose focus on our market share status. So I think we are very focused on our market share, that too volume market share increases across categories for which we'll have to be very competitive. And if it calls for lubricating trade and giving higher consumer promotion, that's what we've been doing in the past couple of quarters, and that's what we'll continue to do. So that is going to be long-term sustainable growth for us. That is volume share.So if it calls for being giving tactical trade schemes and consumer schemes during slowdown, we'll continue to do that. Then third is innovation. It is going to be 1 of the hallmarks of our future growth around all the power brands and capitalizing or capturing the adjacencies within the categories. We'll be doing a lot of innovations. That, again, at both premium end and also to leverage our rural infrastructure also in terms of LUPs and accessible price points.Then fourth is the go-to-market strategy. Go-to-market strategy, we've got some 3 legs to it. So first of all is the rural leg, which is very important for us. We'll continue to invest on improving our rural infrastructure and rural reach number of villages. We've already gone up to around 51,511 villages. We are committed to go up to 60,000 villages end of next fiscal year, which is what we will be doing. Then we are committed to on e-commerce piece. Our e-commerce is growing by 93%. We've created a whole organization vertical and innovation structure to leverage this e-commerce growth, which is happening. Third is the urban GT, which is a pain point for us. There's a huge -- lot of distributor attrition happening here. I think this is where we have to correct. And we'll be embarking on a strategy to correct this GTPs, where we are facing severe headwinds in terms of price equilibrium, et cetera.The fourth lever is the MT, Modern Trade. We are underleveraged on MT. Our market shares in MT are lower than our market shares in GT. I think this is where we need to stage up and do investments behind it. Our feet on street are also less, so therefore that also calls for an investment. We've done some investment in S&M expenses, but I think we will continue to do that.Then there's a digitization focus. We have created an entire infrastructure for digital growth in terms of SAP moving to SAP HANA, in terms of IBP for supply chain, in terms of upgrading our handheld terminals with a sales force. Now that we put these basics in place, which were missing, now we will get into next level of analytics and AI and predictive for cross-sell, upsell, et cetera. But first was to put this basic infrastructure in place, which is what we have done. By end of the year, we will complete that and then we'll embark on that analytics. And this analytics will happen on for cost optimization, for consumer promotion optimization and trade optimization, so multiple levers here of analytics that we will reach.And the last is organization restructure. We are gradually, slowly, restructuring organization also. If you see the head count in the company, our costs are very high as compared to our peers. We are doing best-in-class benchmarking. And we will work on organization restructure also for getting a cost leverage in the business as we see inflation picking up, so cost optimization will also become a big lever going forward for us in terms of maintaining our margins or increasing our margins.
The next question is from the line of Prakash Kapadia from Anived PMS.
Yes. If you could give us some sense, what has been the growth for Honey this quarter and year-to-date?
Yes. Honey has been a soft patch in the business and Honey has actually marginally declined in this current quarter. A, it came off a very high base of last year and we've grown by around 20% in Honey last year in this quarter, so that's why it's come off a high base. We are not overtly worried because Patanjali competition has kind of abated a little bit, but there are smaller regional players which are chipping away our shelf share. Our market share continues to surge in Honey. Our market share has gone up by some 40, 50 basis points. I think 400 basis points in modern trade, I stand corrected, 400 basis points gone up. So we -- it's not getting reflected in market shares. But in terms of what we hear from the market and what we see in the market, smaller players, which are very regional in nature, they are chipping away our shelf shares.So while we are doing tactical consumer promotions and trade schemes, but it is not enough for us. We have to structurally do something to protect our market share in Honey. The way we've done in Dabur Amla we will have to do something in Honey. Still, the plans are not concretized yet. So as and when the plans are concrete, then I will be able to talk about it. But that said, we are looking at premium variants of Honey. Honey is a very under evolved market and underpenetrated market in India. And there's a huge headroom for growth in terms of both penetration and introducing newer premium variants. With e-commerce now presenting a platform to test out the NPD, I think we will be leveraging that and coming back. So Honey doesn't worry me, it's only a base issue that's where the shoe is pinching.
Sure, that helps. On Babool, how has been the reach and distribution? So now with growth coming back, what is the target in terms of reaching in terms of outlets going forward? What's the word for Babool? And if you could comment on Meswak growth, what has that been?
Yes. So Meswak, after many quarters, is back on the growth path again. We've registered a growth of around 2.5% on Meswak. Babool franchise, with Babool main brand and Babool Ayurvedic has grown by more than 5% after many quarters of sequential decline that we saw in Babool. That is on back of new launches, mega campaign, taking celebrities. So across the board, Babool sentiment has really improved and it's at a price point. Earlier, it was essentially a price warrior brand. But we've now embarked on market share gain strategy on Babool also. Therefore, we're positioning it as more herbal toothpaste, which is better and more efficacious than a regular calcium carbonate toothpaste. So that campaign has worked well for us. We've done some high impact media inputs, that also seems to be working.And also the low base of last year, we've kind of overlaid, that is also working in our favor. In terms of distribution, we have a huge headroom in Babool. If you compare Babool to Dabur Red, Babool will not be even half of what our direct reach on Dabur Red would be. So there's a huge headroom for growth. Exact numbers, I would not remember on Babool, but there's a huge headroom for growth, both in direct reach and also indirect reach for us.So as the demand perks up, the indirect reach and wholesale channel will also fire and also our direct reach will also go up and our ecos will also improve, which is the direct reach, basically. Yes, Prakash?
And lastly, on the Food business, Mohit, you gave a very good perspective. I had couple of more things. Is a case for higher contribution from Real Activ also a driver to sales because that has been a much lower contribution as compared to the Real brand. And we were also targeting higher growth from south of India. So if you can comment on these 2, it would be helpful.
Yes. So Activ portfolio has done very well in the current quarter. We've grown by around 17% on back of Real Activ Coconut Water, which has done well. So you've noted it well that Activ has got a huge potential as compared to the Real brand. Although it's expensive, but the coconut water is not expensive. We've got a coconut water, which is priced at INR 40. Going forward, we'll be introducing a lower price point of coconut water also in the range of around INR 25, INR 30, so that will become very affordable. That will also blow up the market, and we feel coconut water has got a huge potential. That said, Real Activ portfolio, 100% juice is also under exploited. We are underway in terms of improving our packaging on our entire Activ portfolio. And Activ portfolio continues to do very well on e-commerce for us. But point very well noted, there's a huge headroom for growth here. We are in the process of putting in new premium variants in Activ also. As I told you, we've launched aloe vera variant in the Real and we'll be launching multiple other premium variants in the Activ portfolio too.
And south of India, is that on track...
In terms of south, you're right. Again, there's a huge potential available. We've -- we have divided our distribution now for food separately. Earlier, it was all combined, CP and Foods were combined. So we've started recruiting people and creating a separate vertical of distribution for Foods because Foods goes to more E&D, Eating and Drinking outlets than really the regular grocery. To leverage that, we've put up a separate team of distribution in south. That should help our distribution. That said, our Koolerz is doing exceedingly well in the south.
And as of date, the INR 20 or the lower price point would be what percentage towards sales, if you can just share a number?
Our INR 20 portfolio, which is Tetra Pak?
Yes, Tetra Pak. Yes.
Around 40% of the portfolio would be INR 20 price point for us. And INR 10 price point is too small for us to talk about percentages yet. We've just increased our capacities, but it's growing more than 50% year-on-year, and we are increasing capacity there.
The next question is from the line of Mohit Khanna from Future Generali Life Insurance.
Congratulations for a strong set of numbers here. I just wanted to know the issues that the FMCG companies are facing on the distribution side. I mean the wholesale continues to struggle, which makes the direct reach important, but there is an additional cost related to it. On the other hand, the companies have started or increased their discount into the modern trade. What do you think, Mohit, is the solution to this issue? And what is your approach to the whole issue over here?
All right. So Mohit, structurally, I think going forward, wholesale as a channel will come down. And in India, there's a new ecosystem. I talked about this before also called Ebutors, and organized wholesale, which is picking up, which is eating into the shares of wholesale. Also there is a cash-and-carry, which is also replacing the wholesale channel. So therefore, to your point, direct reach becomes very important, and that's what we are working towards to our direct reach to the retail and not go through the wholesale. And that's happening at 1 end and 1 is working towards it, both in rural and also urban to improve your direct reach. We are not facing any issue in terms of appointing distributors in the rural India. The struggle that we are facing in, in urban India, these distributors are not really viable. So therefore, I talked earlier also we're embarking on a strategy to see how we handle this whole urban direct reach piece and making the distributors more viable. So that is -- but long-term, we are very clear that we have to reach directly, and we are looking at means and ways how we can avoid the price itself. In that sense, we cannot avoid these new organized wholesalers who are coming up like Jumbotail and lots -- ShopKirana and many others who've actually come up. So we are engaging with them very closely, and we are making sure that we are making our products available to them also so that they are able to go to the remote corners where even wholesale is not able to reach and neither are direct distribution is able to reach.We are very conscious in terms of price equilibrium. Our prices to them are very closely monitored. And if we find that they are undercutting the prices, then it's taken up very strongly with them because a lot of such players are also private equity funded and that is where the money is coming from. Gradually slowly, it's a matter of time because there are so many players, this market will stabilize over a period of time. So I think it's a wait and watch. It's engaging with them very closely, ensuring that they're not able to undercut your products from 1 channel to the other, and we don't lose in the bargain. That's as far as the wholesale is concerned.The second part is modern trade is growing at a very fast pace in the country. And we've seen evolution happen in other parts of the world where gradually and slowly modern trade will engulf the general trade. And if you look at general trade also most of the general trade, which used to be counter sales, this is also converting from counter sales into self-service. So when a consumer is growing bigger groceries, which is in the range of 500 to 1,000 square feet, they are converting their layouts and becoming more quasi modern trade. And the big organized modern trades are acquiring these quasi mom-and-pop who've converted into modern trade.So there will be consolidation happening and -- but modern trade will grow at a very fast pace. That's why our focus on modern trade will continue. While you're right, consumer schemes and trade schemes are higher in modern trade, but that's a part of day-to-day business that 1 has to manage reasonably well. So we are focused on e-commerce. We are focused on modern trade. We are focused on very clearly to go direct. We are feeding wholesale and we are trying to avoid if any price inequilibrium is there between wholesale and new Ebutors or these organized wholesale, which is coming. And also we are working very closely with cash-and-carry channel.What happens today is that a lot of KVI brand that we give to cash-and-carry, we undercut in the marketplace, they were compromising on the profitability of the GT. So we are trying to create a portfolio, which is very unique to cash-and-carry. So that this undercutting can stop and there will be a different set of KVI brands for cash-and-carry and different set of KVI brands for wholesale.So it's all work in progress. And as I told you, we'll be working on a GTM project, which will anchor all these for us.
And 1 follow-up over here that -- when you say that the next 4 quarters is difficult for you, how much would you attribute to the demand? And how much would you attribute that to the supply side issues?
Yes. I never said that 4 quarters are going to be difficult for us. I said near term there is a challenge and we are facing severe headwinds in terms of categories declining. So I said there'll be a pain in a couple, it could be 1 quarter or it could be 2 quarters, it's a matter of time because we'll also have a low base going forward because the whole slowdown actually started off from quarter 2. So quarter 2, there should be a recovery definitely, to a certain extent, because we'll be on a low base for business.If you see this quarter, I'm sitting on a base of 15% growth for me. And on a 15% growth, I've grown by around 5.5%. So while the categories are not showing any green shoots, which is worrying for us for at least immediate next quarter and maybe a quarter after next, after that, I think things should start at least picking up for us. Sorry, what was the second part of your question?
No, I was just trying to see that the thing -- the slowdown that you said was actually you're referring to the demand side issues or the supply side issues, I mean if...
You're right. Correct. So demand side issues remain. As I've told you, people are down trading and there is no money in the hands of the consumer to buy, that's why people are down trading from INR 40 to INR 10, and that's visible. There's also a liquidity crunch in the marketplace, which we are feeling in the sub stockist and super stockist network. And therefore, we've extended credit. Earlier, our credit used be in the range of about 6 days, now it's gone up to around 15 days. So there's a 2-day of DSOs, which actually improved over -- are increased over our last quarter. So -- but it's not very material to impact our overall profitability, and we are selectively extending this credit to our stockist network and working along with them.So a slowdown is demand going down, liquidity crunch and all the categories are not showing any green shoots. So we are waiting for the union budget and the Commerce and the Finance Ministry to give us some good news as far as consumption is concerned. So let's see what it has.
The next question is from the line of Harit Kapoor from Investec.
Just had 2 questions. Firstly, I was picking up on your comments from your media interview as well as what you said so far. I was just trying to understand why you're so negative on the quarter for the near-term because your base significantly reduces. You have a quarter 4 base of only 5%, 6% growth. As well as the fact that juices has picked up ex the Diwali pack piece. And the fact that at an industry level, at least some of the industry guys like Nielsen expect quarter 4 to be marginally better than Q4 -- Q3. So category growths possibly could pick up a little bit. So just wanted to understand little bit as to why -- what you're seeing here that is making you more cautious?
Right. Harit, if you see, the overall FMCG growth is sitting -- value growth is sitting at around 6.6% as we see the average of the quarter, okay? If you look at the 6.6% growth and you break it up into the month, we find that 6.6% growth has come down to around 5.3% growth in month of December. And this growth used to be 8% in the month of October. And this 8% came after around 7.3%. So there was an instant surge we saw in the month of October and we thought there's a green shoot and it'll sustain over a quarter, but that 8% has fallen down to around 5.3%. Now this is a value status and this is in the month of December. So I am -- if the 6.6% is an average and 5.3% is December and we had a tough December, and going forward, now, we are almost 1 month into the next quarter also and I'm not seeing any green shoot, at least in terms of the secondary business. So it makes me a worried man. So that's why -- and most company results are also not great.So this is a weak consumption story, which is getting reflected in the numbers. If you look at the volume numbers, volume numbers are down to 3%. Now this is for the FMCG market. Now -- and in this, there is food also. Now if I break, then food is what is driving this growth. If I do a further microanalysis of the 3%, I find in our respective categories, which is Oral Care, Hair Oils, Shampoo, Shampoo growth in volume terms -- in value terms is 1.7%, Hair Oils is minus 0.8% and Toothpaste is minus 3.7%. So this is actually worrisome until this is revived and J&N juice category is minus 11.6%. So while we would have geared ourselves up, we've got everything in place, our strategy, but these extraneous factors definitely have a bearing on the performance of the organization.And we can't isolate them and say that we will grow irrespective of what the market is. Because at the end of the day, it's a consumer. That said, our rural growth in the market terms is almost stable, 5.3% to 5.3%. Urban growth, which is actually going down. So this is why -- where this tone and spirit of little pessimism is coming from for us. That said, we are embarking on a lot of innovation, and we feel our juice business should be reviving. But in categories where we are market leaders, and we have to grow the category as a leader, there, there could be some pressure. Where we have market share gains, there also competitive intensity will go up. And everybody will fight for that chunk share of wallet of the consumer in FMCG.
Very clear, sir. The second question was on the liquidity side. So given that you have a strong presence in rural, I just wanted to understand going from quarter 1 to quarter 2 to quarter 3, have you seen any signs of an easing liquidity environment in the channel incrementally, I'm saying, or it's more of the same really?
I think we have not seen any improvement as far as the liquidity is concerned, I think it continues to remain tight. Also having said that, I think it was also a festival season during Diwali, and now it happens to be winter season for Chyawanprash, where a lot of stocks are kept by the distributors. So keeping that in mind, I think the liquidity pressure continues as of now as we speak.
The next question is from the line of Shirish Pardeshi from Centrum.
Congratulations. Just extending the number, you have taken -- you said that you've taken measures for providing liquidity. And in the last quarter, we heard that you have pushed inventory. While your commentary is a bit different and worried, do you think that -- we have done whatever is required. But are you worried that the inventory pileup, which will happen, and that's why the demand may not come and then your sales would be affected. That's what the condition is you're trying to see? Or is there something -- anything else?
No, I don't think it's an inventory issue. We are maintaining inventory, so we are very cautious. So inventory is not the issue, neither did we give any guidance on our inventory actually going up or anything like that. I don't think that's the case with us. Maybe with a couple of our peer companies, this is a genuine issue. And therefore, it's leading to stockist attrition, et cetera. So I don't think it's inventory pileup. As a matter of fact, wherever inventories are high, we want to correct, and we keep correcting the inventory [indiscernible] happened because our portfolio is such. We do preseason loading and then the offtake happen in the season. So at times, what happens is inventory remains and is not liquidated. So then we take a conscious effort to liquidate inventory, even at the cost of giving some extra schemes, et cetera, if it has to be liquidated from our pocket, we want to maintain the discipline of keeping a 20, 21 days of inventory with the stockist, so that's not there. I think you're maybe referring to the inventory in our C&FA and the factory, which is what is getting reflected in our working capital number perhaps. That has marginally gone up because of the slowdown and the projections were aggressive, and we anticipated a higher secondary and if the higher secondary did not happen, there's a little bit of pileup of the inventory which happens, but which in subsequent months and subsequent quarters get liquidated. So that does block the working capital for some time, but that is momentary and is a part of doing business, especially if you have a seasonal portfolio.
Okay. My next question is on categories, which are highly belted such as Hair Oils and Toothpaste. And both these categories, you mentioned that either they are flat or they have degrown. What could be the reason? I mean I believe that we would not stop using the products, maybe LUP might be the thing. But how can be possible that even Hair Oils and even Toothpaste also this kind of decline we are seeing, especially when all the players in the categories are spending so much in terms of advertising and promotions?
Yes, I don't think I have a clear answer on this also. I also don't have an answer because Hair Oils, definitely, I think that's clear because it's a little discretionary category. If a consumer was using hair oil, now the periodicity of the frequency of hair oil usage would come down. So is the case in Shampoo, because in winters, what happens, the frequency of usage of shampoo goes down. Every day using, now a guy would use once in a week. So therefore, shampoo consumption also definitely can come down, especially in a slowdown where LUP consumption goes up which is sachets and the bottles, and that happens in Hair Oils also people down trade to a INR 10, use less. Oral Care, it beats me a bit because -- but Oral Care, if you see, it's almost 80%, 90% penetrated category, and everybody's going to have a INR 10 price point. Now that going down to around 3.7% is something that beats me also.That said, we are not overtly worried on that end because majority of the market is a wide market here. We operate in the natural and the health care segment, which is around 20%, 25%, and that is growing at a rate -- double the growth rate. Now when I say double, also that growth rate is about 2%, 3%, there's nothing to rave and rant, but when the market is going down by 3.7%, even 2%, 3% is good. So that would become the tailwind for companies like us who are almost market leaders in the natural toothpaste segment.So that's as far as we are concerned. But I really can't put my finger on the pulse and say this is the reason why toothpaste consumption is coming down.
Yes. Just 1 follow-up on...
Mr. Pardeshi, sorry to interrupt. May we please request you to return to the queue for your follow-up, please, as there are several participants?
If you can, it is only 1 last question. Yes. From the result, I noticed that you've done fantastic on Digestives. But if I see that OTC & Ethicals has not done well. So what is it different in this quarter we've seen?
Yes. So I think it's only optically what you see as the primary growth, which is actually down. The real barometer of performance is the secondary growth. And secondary growth has gone up in the OTC portfolio by around 12% and also in Ethical portfolio by around 12%. Actually, it's the base effect of last year and this year, which is what is impacting the primary growth for us.So if you look at the breakup of our OTC portfolio, all the brands have done well, Pudin Hara has done well, Hajmola has done well, Lal Tail has grown by around 5%, 8%. So Honitus has registered growth of around 14%. So all the power brands have done well.Some marginal brands where we have not focused, they are the ones who has not done well, especially Ashokarishta and Dashmularishta, they are the ones who are not firing, which are classified in the OTC portfolio for us. Ethical business also continues to do well in terms of secondary.
[Operator Instructions] The next question is from the line of Kunal Vora from BNP Paribas.
Yes. On the December weakness, do you think the steep increase in telecom tariffs is having an impact on consumer spending on staples? And whether this could be a headwind for 4Q as well? Your thoughts on the steep increase in telecom tariff.
No, I think while at a broader level, definitely, if the consumer has to pay a higher tariff for a mobile phone, it would tell on the disposable income somewhere because the priority would be that rather than a hair oil or a toothpaste. So at a broader level, yes, I can say this could have accentuated. But at the microlevel, I don't have any fact to corroborate this particular hypothesis. It only remains at a hypothesis level for us that this could be one of the reasons, we hear in media, but we've not heard this from any consumer or from any panel or from any Nielsen data. This is a very broad conjecture.
Next question is from the line of Nillai Shah from Morgan Stanley.
My question is actually on the channels that you spoke about Mohit. So...
Sorry to interrupt Mr. Shah, but there is a slight disturbance on your audio when you speak. Is it on speaker, if I may ask?
No, I'm not. Let me try again. So basically, my question is on the channels that you spoke about, the channel mix you alluded to. Rough calculations seem to suggest that about 40%, 50% of your growth for this quarter should have come from e-commerce and modern day other channel. If that is true, then do you think this is a structural story for Dabur as you go over the course of the next 3 to 4 quarters?
No, no. I didn't get the last part, Nillai. Our e-commerce business has grown by around 90%, but e-commerce contribution to the business is insignificant, it's around 2.9%. So structurally, e-commerce as a percentage to business will keep trending up because the growth will be 90% here. But this is not a 40% contributor to our growth to what you alluded, that is not the case. But e-commerce definitely is very important, doing very well in the company. And it is providing growth to our brands, which are not distributed in the regular GT channel also. So that -- to us, it's a very strategic channel, and we are building our resources, building organization and doing all customized efforts for e-commerce as a business.
Okay. And when you speak about the market share, there seems to be a divergence out there because I know you're saying that toothpaste as per Nielsen has -- is down 3.7%. But we know what Colgate has reported, we know what you've reported and we know that Patanjali has been stable in terms of market share out there. So then who's really declining? Ditto in juices, down 11%, but you are at 60% of the market, down just about low single digit. So is there a problem in terms of benchmarking the growth with Nielsen and then thinking about the market share gains versus absolute growth numbers?
Nillai, the way we look at market share, I can comment upon that. We look at volume market shares, and we look at year before last. So if I'm talking about market shares currently, I look at -- sorry, last year market share. The growth over last year is that we'd look at. Now somebody might just comment on sequential. I am not commenting on sequential growth. I'm commenting on growth last year -- year-on-year growth and our total volume growth. We have definitely gained here. And Nielsen data corroborates to what we are saying. And we have market shares of all other companies. We know where the gain is coming from and where the [ loss ] is going to. So -- but I don't want to comment upon my competitors. But maybe they've got a MAT number or a YTD number or a monthly number or a year-on-year number or a sequential number. But we are talking about year-on-year volume growth number to us, that is the bellwether of how the brand is actually doing.
The next question is from the line of Krishnan Sambamoorthy from Motilal Oswal Securities.
Yes. This is regarding your direct reach. At 1.2 million, 1.3 million outlets out of 6.7 million outlets, this is fairly low compared to some of your peers. Is there some worry that the efforts that you're doing on product development or the power brands as well as the stronger communication, some of that will be suboptimal because of the problems on the indirect distribution and particularly, wholesale reach?
Yes. So Krishnan, you're right. This is suboptimal if we benchmark ourselves to the best-in-class in the industry. And I think therefore, there's a lot of headroom. And that's why we are embarking on a special GT project to embark on this end. So I think we have to work on this. And also not just on 1.2 million, this includes our urban and rural. In rural, we're talking about direct reach in terms of villages, the total number of around 6 lakh villages, we are targeting ourselves to only reach to around 60,000 villages, which is also by some standard of market best-in-class, may be low. But for us, we gradually and slowly improve our reach. And so in the case of urban also. But if you look at our portfolio, our portfolio is divided into the chemist outlet reach, the general grocer reach and E&D outlet reach also and Ethical reach also. So all put together is 1.2 million.If I dive deeper, it could be there's a headroom available in each one of the subsegments if I compare and contrast. The way we're looking at market share in Nielsen data, we also look at the relative shares in terms of distribution direct reach also. There also we have a headroom. We acknowledge this and we have to work on this. Because of the diverse portfolio of the company, it becomes a little complicated because the scale of business has to be provided to the distributor for him to actually reach out directly to the outlet. For suboptimal brands and with a limited scale, it becomes not very ROI accretive for the distributor also. So we are working on this. Because of the diversity of portfolio, it becomes a little complicated in our case.
Okay. If not for FY '21, could you share your medium-term expectations on what's -- what's your target over a 3-year, 5-year period in terms of direct reach to total reach?
Krishnan, we don't have the number. As I told you, we are in the process of making the budgets. And in the budgets, we'll decide our target for the next fiscal year and going forward for next 3 years. And we are also embarking on a special GTM strategy project, which we'll also get into the nitty-gritty details and then come out with our aspirational number. So premature for us to actually tell this number. As far as we are concerned, at the moment, we are 1.19 million, we are going up to around 1.2 million in the current fiscal, and then we will be creating our budget for next year.
Next question is from the line of Rahul Maheshwari from TCG Asset Management.
Good set of numbers. I've just 1 question. Can you give some color on your Ayurvedic products, what is the innovation pipeline? How can it be contributing in going forward the percentage of the sales? And how big can be the category where the Hommade Ayurvedic products, which -- on R&D front, which you were working on?
Right. So Ayurvedic business is a special -- we've got Dabur Ayurvedic specialties, the division that we've got, and we work on that. If I look at the total size of the category and our market share here, the total Ayurvedic market should be in the range of around INR 3,000 crores to INR 4,000 crores in India. Out of which, we guys are not even scratching the surface here.Now this market as compared to the allopathic market, which is like, I think 10x or 20x of the size. At one end, Ayurvedic market has got a huge potential to take share from the allopathic market at that one end. And government is providing a stimulus to do that with the creation of Ministry of Ayush and also giving us tax rebates of around 5% GST rate, which is low on Ayurvedic's piece. That said, in the branded Ethical market, our market share is roughly around 20%, 25%. There are other players who are more regional and who have a higher market share than Dabur. That presents us with a huge headroom for growth. Now headroom for growth comes in, first, a portfolio. So we have a very limited portfolio. And we are in the process of expanding that portfolio. We've got a very robust pipeline already in place for next, I think, 4 years to complete our portfolio. We want to be called the largest ayurvedic company. We are the largest ayurvedic company in India. But if you look at the total portfolio for all the ailments which are missing in our index, which we want to complete, while the volume will not -- the scale and the value will not allow us to launch them, but we will be launching them to be a one-stop shop for all ayurvedic medicines in the country that should be Dabur. That's a long-term vision that we are working.If we work on that vision, then every year, we should be launching something like around 20 to 30 products every year to complete the portfolio. Now this portfolio can be ghrits, it can be bhasmas, it can be avalehas, it can be -- there are multiple subcategories in this portfolio, which we have to complete going forward. So we've got a huge agenda on the portfolio completion.Second is the route to market. In the route to market, we, today, are only going to ayurvedic chemist outlets in majority. But now in India, the way things have shaped up, even the regular chemist outlets is carrying a lot of ayurvedic products. So we have to increase our reach in the allopathic chemist outlet also for them to carry our KVI brands of the Ethical portfolio. So we are working on the same.In the current year itself, we have added a number of doctors that we are reaching out in terms of advocacy, we have increased number of chemist outlets, we've increased number of stockist salesmen, we've increased number of our product specialists. And they've almost doubled the number, and we are investing ahead of the curve in this portfolio. And that's why you've seen this growth of around 7-odd percent YTD, 8% coming in the ethical portfolio, which should only strengthen going forward for us.
So just to fall back that, you mentioned that 20 to 30 products, and it's a 4-year pipeline. How big that product can be in case if you execute well into your distribution channel and in terms of the size? And also second, how in terms of doctor advocacy and Ayushman that -- can you give a little bit more color that your product would have been only restricted to Ethicals? Or it is across the category right from the foods and all those it would be launching?
Yes, the products will be very restricted to Ethicals only. I'm only talking about Ethical portfolio, I'm not talking about OTC or Health Supplements here, which behave more like FMCG. I'm talking about Ethical portfolio. And this Ethical portfolio goes through doctors, doctors prescribe and the patient buys from the chemist outlet. So here, the turnover of the product will not be anywhere close to the FMCG turnover that we are used to of INR 10 crores a year. At the best, the product in a year will give you around INR 2 crores, INR 3 crores because it has to go through the doctor, and the doctor will prescribe for which we are putting a brigade of advocacy personnel, who do the advocacy.In the current year, also we've launched these brands. We've launched a range of churnas, now range of churnas include around 7 to 8 churnas, so these are 7 to 8 NPDs. Just to give you an example, a range of churan will have a neem churan -- neem churan, it will have a amla churan, it will have a arjuna churan, it will have a giloy churan, turmeric churan, haritaki and brahmi churan. These are all used by consumers for some ailment or the other, which have potential of becoming OTC after a certain point in time, which is 2, 3 years, once it's baked in the Ethical portfolio.We also launched something called Hridayasava, now it is a hard tonic that we have launched, but again, prescribed by doctors. Then we launched a digestive tonic called Dadimavaleha. Then we launched the sugar cure called Vasant Meha Ras. So likewise -- and in the current quarter, we've launched Arshoghni Vati, which is a great cure for piles. So we are understanding which are the key indications, which will give us good turnovers and also plugging the portfolio gaps also.Today, we only reach out to around 20,000 odd chemist outlets, our aim is to go up to around 1 lakh chemist outlets by end of next year, in terms of ayurvedic chemist -- in terms of allopathic chemist outlets. It's very difficult for me to summarize in this call. But it's a whole different ecosystem here, it behaves like pharma completely.
And just a second question, sir, right now, looking at -- as you mentioned, it's a challenging environment. What is more focus for you? Is it a volume growth or to sustain the margins? Because as you told that the agri inflation is picking up, so right now to maintain the volume growth is the core focus or to maintain the margins is the core focus for you?
Maintaining the volume growth is the main focus because with those margins, we've already got upside, and we're already covered for the balance of the year. So in the current fiscal year, margin doesn't seem to be an issue because we've already taken covers to last us until March. It's more volume growth, driven by category growth and gaining market share, which is the key priority for the business.
And volume growth remains intact? Mid- to high single digit, which you...
Yes, we maintain a guidance of mid- to high single-digit for the whole year. Some quarters will be high, some quarters -- but overall, that's the guidance that we'd given in the beginning of the year, which is what we maintain.
And for next year, sir, FY '21?
Next year is still premature because we are in the process of making our budgets. So it's still premature for us to give you a number and with the budget on the annual, we will observe what the tops and fiscal benefits in the budgets are and how the category growth pan out for the month of January, February. They all have to be taken into consideration, assumptions made and then budgets created. So it's still premature for me to give you a number.
The next question is from the line of Amit Sinha from Macquarie.
My first question is on the urban GT viability part, which you discussed. Just wanted to understand, is this a recent issue for you? Or this has been there for some time? The context here is that some of the other players have been facing this issue for the last 1 to 2 years. I just wanted to understand this part? And how are you planning to resolve this issue?
Yes. So Amit, the urban GT issue is not new. It's been continuing for 2, 3 quarters. But I think the pain is actually accentuated with slowdown getting protracted. Because of slowdown, it becomes difficult for the stockist to actually do the secondary. And what's happening is with all these e-commerce players coming up and which are private equity funded, they pay almost double the amount of salary and -- which increases the infrastructure cost for the stockist also. And therefore, they have pressure. So I think the solve for this in long term, which is, again, at the stage of hypothesis for us, we are still thinking, is consolidation of distribution at least in the urban centers. If we've got 6 distributors, can we consolidate the 6 distributors into maybe 2 distributors, and therefore, give him the scale and because of the scale, he'll be able to afford that infrastructure, which will carry my brands directly to the retailer. This is in the hypothesis stage. For which, we are embarking on the GTM project, which we'll be putting in place. And then we will be handling this structurally and market by market by market. So it will be difficult, arduous, slow and steady process in which we'll be handling. That said, our current business will continue the way it is.And we've got now other wholesale channels like Udaan and Jumbotail, et cetera, who are carrying our products, and we are building direct reach also. So I don't think there's immediate pain because of this. The price equilibrium has to be maintained, which is what now we've become very conscious of, and we are working on the same.
Sure, sir. Yes. And secondly, just an update on Glucose-D segment. How has been the performance in the last 9 months? And have you been gaining market share in this particular segment after the M&A deal, which happened for one of the competition?
Yes, Glucose is one of the star brands that we have among the top. We've grown by around 52% in Glucose in YTD. So because at the moment, the season is not there, but we are now inching closer to the season as summers are approaching and majority consumption happens in summer, but YTD, our growth rate has been 52%, even ahead of what Chyawanprash growth has been for us. We have gained around 116 basis points of market share in the Glucose category. And essentially, it's a duopoly with a 2-player market. And we, I think, have been able to capitalize quite a bit on the competitor transition here, and yes. We also embarked on innovation in Glucose. We introduced mango variant, which did very well. Now in the coming season also we'll be launching a couple of innovative formats in Glucose to increase our margins and also make accessible price points to reach out to the rural consumer because there's a huge headroom in terms of distribution expansion also.
Ladies and gentlemen, that was the last question for today. I now hand the conference over to Mr. Gagan Ahluwalia for closing remarks. Over to you, ma'am.
Thank you. Thanks for participating in this conference call. A webcast recording of this call and transcript will be available on our website shortly. Thank you, and have a nice evening ahead.
Thank you very much, members of management. Ladies and gentlemen, on behalf of Dabur India Limited, that concludes today's conference call. Thank you all for joining us, and you may now disconnect your lines.