Eveready Industries India Ltd

NSE:EVEREADY

Earnings Call Analysis

Earnings Call Transcript 2024-Q2

[Operator]

Ladies and gentlemen, good day, and welcome to the Q2 FY '24 Earnings Conference Call of Eveready Industries India Limited. [Operator Instructions]. Please note that this conference is being recorded.

I now hand the conference over to Mr. Siddharth Rangnekar from CDR India. Thank you, and over to you, sir.

[Siddharth Rangnekar]

Thank you, Michelle. Good afternoon, everyone, and welcome to Eveready Industry India's Quarter 2 and H1 FY '24 Earnings Conference Call. We have with us today, Mr. Suvamoy Saha, Managing Director; Mr. Bibek Agarwala, Chief Financial Officer.

Before we commence, let me first share the standard disclaimer. Some of the statements made on today's call could be forward-looking in nature, and actual results or vary from these forward-looking statements. Our detailed description in this regard is available in the press release, which has been thought circulated to you earlier and is also available on the stock exchange website.

I would now like to invite Mr. Saha to share his perspectives with you. Thank you, and over to you.

[Suvamoy Saha, executive]

Thank you, Siddharth. Good afternoon, and it is our pleasure to welcome you all to our earnings call today. I will commence my remarks with some pointers on the developments during the quarter and progress made by us during this period. As you are aware, Eveready comprises of 3 distinct business segments. The first and the core category being that of [ tries ] batteries. 'Till we have our other traditional category of flashlights and the recently initiated category of LED lighting and associated items. All these businesses based on the 2 pillars of our company, brand and distribution. Majority of all businesses are run with brand Eveready, the premium portfolio with the brand Eveready the Ultima and the smaller part being run with power cell and immurospreads.

As indicated in our earlier calls, over the last 1 year or so, we have been engaging ourselves with making these 2 pillars stronger with a view to move to attractive growth in a sustainable manner. With this in view, lately, we are spending much higher than the historic norms towards advertising and promotions. Ours is a consumer-facing company. and it is vital that we engage with them on an ongoing basis. I am pleased to advise that in every category that we are present, there is affinity and salience around the brand and our investments with focused amounts is only going to solidify that bond.

Apart from increasing space, during the quarter, we overhauled our brand logo to the new Infinity [ of that ] with a transformed tagline of, Give Me Power, Give Me Red. Consumer research forms the core of this revised architecture and the results are pleasing.

Similarly, in order to achieve this robust growth agenda across our 3 categories, we are in the process of a revamp of the distribution infrastructure in keeping with the requirements of the market. This entailed a pruning down of the overall distributor count to enhance efficiency in the higher tier areas introduction of a super stockist network in replacement of many small dealers to access and service more effectively the remote areas.

In doing so, we have made some challenges over the last quarters in settling down with the right choice of channel partners and getting our internal ecosystem in complete alignment with the new architecture. We did expect some amount of disruption during the implementation of the new route to market. However, the total transition is taking more time than what we had budgeted for. The distribution initiative, while the current one for long-term sustainability of the business is causing some temporary pain. Our growth objectives as guided earlier for the first half was not met. Revenue growth was at 2.4% against our target of high single digit. We are recalibrating our target for the second half, in particular, the third quarter. Once again, I reiterate that we are on the right track, and we had to necessarily take this journey as the earlier route to market was not upgraded in over 2 decades. My management team and I are confident that we will have every last wrinkle out of the way in the course of the next few months of the current financial year.

Let me now get to the specifics of our 3 business categories. While continuing to focus on our traditional carbon zinc batteries, the quarter saw our launch of the latest technology Ultima. Ultima grew batteries in the premium end of the market. Our communication with the launch of this high-technology premium range, captures key product attributes while conveying the essence of the Eveready brand. During the quarter, we saw handsome jump of volumes in our latest offering of this premium portfolio with growth moving ahead of the market trend.

On the cost front, the industry is benefiting from lower raw material prices and stability in exchange rates. As a result, there has been a marked improvement on the margin front of the battery business unit despite the higher charge on account of A&P. The overall battery revenue for the half year remained flat due to constrained purchasing by trade following the [ game ] event as explained in my remarks earlier, which will normalize in the coming months. However, due to good movement of our secondary and tertiary sales, we maintained our market share in batteries at 53% plus as per the latest Nielsen report.

Now I'll come to flashlights. Flashlights has seen interesting SKU introductions from us in the growing rechargeable category. We believe that our offering provides the right quality product and the future value proposition. As mentioned in our earlier calls, we made a late entry to the segment of [ torch ] market with a view to protect our traditional but be growing battery-operated torches. The market is right with immumorable offerings from unorganized players at very low price points with larger than reality promises. While the consumers eventually get disappointed with such products, it is still a task for organized players given an already established pattern of rural consumers down-trading in the recent times. However, we remain confident that with our superior product proposition, we will be able to secure a healthy share of the market.

While we are receiving a [ dealable ] traction for our range of rechargeable torches, the battery-operated market is growing faster than our earlier estimates. Combined with delayed and erratic monsoon in parts of the relevant geography, the uptick of flashlights was slow in the rural segment during the quarter. As a consequence of this, our flashlight revenues remained flattish.

I shall turn my attention to our LED lighting business. We have seen a sharp growth in the market, triggered by lower cost of production, which the [ players passed on ]. The degrowth for the market is estimated at upwards of 10%. We, however, managed a growth of 8.4% over the half year, which we believe a reasonable achievement.

Historically, this market has seen healthy growth, the volumes remain strong, and it is expected that the present energy growth on account of pricing initiatives is temporarily. Thus, the market is expected to return to its usual [ tell see ] within a short span of time. Our teams have made good inroads both with the exclusive electrical outlets as well as a general trade.

Over time, we have also worked upon getting a portfolio suitable for the market. And now we have an extensive range of over including the segment of emergency lens in which we are one of the leaders are in it. We continue to remain optimistic of growth in this category.

I shall now share some key aspects of our performance during the second quarter. The company reported flattish revenue due to reasons already explained in my earlier comments, namely challenges in anything from the restructuring of the RTM, a faster growth of the battery-operated flashlights, a slower-than-estimated pickup of the rechargeable flashlight segment and an overall value degrowth of the lighting market.

On the profitability front, however, there is growth to report. EBITDA [ remain ] INR 46.3 crores, giving us a margin of 12.7% relative to for INR 43 crores and 11.4% margin in the second quarter of the last year. Favorable [ trains ] in key raw materials and stability in exchange rate aided the margin performance which came in despite moderated revenue and higher A&P spends. We are not taking our [ idle ] of the accelerator yet, for A&P spends and some of the margin benefits are getting duly proud back in the business. The company reported a PAT of INR 25.5 crores for the second quarter with 74% growth over the same quarter of the previous year.

I will now summarize our position as we stand it. The current quarter's revenue was muted, but the assignable causes are identified and counter measures are in place. Our financial performance has been significantly better than our expectations. We made investments both in the brand and the distribution infrastructure. We have brought new product offerings to the market with our latest generation battery products each and leading rechargeable flashlights and the robust portfolio of lighting products. For we believe that we have worked on all areas, which provide a [ bot ] to sustainable growth. The third quarter will still be muted, but hopefully, thereafter, we shall start deriving benefits from our transformational efforts. In the overall, we believe that our journey remains meaningful and we will push ourselves for faster improvements.

I conclude my remarks here, and we'll now request the moderator to open the forum for question and answer.

[Operator]

[Operator Instructions]. The first question is from the line of [ Nirav Sixsara ] from Living Root Analytics.

[Unknown Attendee]

Sir, I just wanted to know that is the new promoter -- does the new [ promoter ] have some board representation and the new -- and the as a new promoter have the presentation in the management?

[Suvamoy Saha, executive]

Okay. So first of all, the new promoter is incidentally more than 1 year old. So I don't know whether that classifies as new. Yes, the promoter has representation in the board. He has no representation in the management.

[Unknown Attendee]

Okay. I had 1 question. We were previously investors in Eveready about some 7 years back. At that time, of course, under the previous management, Mr. [ Ketan, ] you had launched the [ AEB ] and you had launched some small consumer appliances as well -- so I believe you have moved out of your main decision to move out of the small consumer appliances.

And going ahead, sir, what is the idea as an investor entering today into Eveready. What should be the expectation from an investor [ perspective ] to the company will be focusing on [ what ] Because we all understand the brand story and the distributions are very well, that you have description across so many outlets and Eveready brand itself is an enduring brand has been the around for a few decades. So if you can just help me with the -- what is the target in terms of revenue and which areas are we going to focus on?

[Suvamoy Saha, executive]

Sure. So yes, I confirm that we have moved out of the appliances category altogether that the journey we completed sometime early last year. With regard to LED lighting, this happens to be our, I would say, a very important part of our business on which we are banking for growth. So our brand and distribution is highly synergy to the category. General [ and ] it is some, I would say, brand is, of course, there. The distribution is kind of unique. Apart from [ VPro ], no other company because we process an FMCG business, no other company has the kind of footfall in the retail outlets, in the [ Kirana ] outlets that as we have. So that is one unique proposition we bring and would be sort of a platform for growth in this part of the business.

Apart from that, we also have today a separate channel, which is currently focusing only on the exclusive lighting outlets. So we have, on the distribution side and also helped by the latest revamp of the RTM that I mentioned in my remarks earlier. I think we're quite uniquely positioned to leverage the entire distribution system of Eveready. Okay. We have already talked of the brands who are not going into that anymore. What else was required, what's to develop a very robust portfolio of products that is not only relevant for the Kirana stores, which is naturally the lower end of the product spectrum, which are lamps, battens, et cetera. But even going higher, end with downlighters, panels, et cetera, et cetera. So we have developed the entire -- and I must not forget to mention the emergency lamps, which go both in electrical outlets as well as the Kirana outlets. So we have got a very robust portfolio today, very wide. And so I think we are uniquely positioned to get leverage out of this segment. And it remains a huge cornerstone of future growth potential.

[Unknown Attendee]

Sir, which areas will you be -- geographies will you be focusing on the LED portfolio? I mean, apart from the lights, you said, downlighters and other stuff also hanging -- so like...

[Suvamoy Saha, executive]

Eveready has been for whatever our size of turnover has always been [ pan-India ]. There is no region preference. There is no -- we are absolutely all over the country. And for our lighting business also, we will follow the same model.

[Unknown Attendee]

Okay. Okay. So sir, right now, lighting business is what percentage of the revenue?

[Suvamoy Saha, executive]

In lighting business, it is about [ 32% ]. And we hope to grow it to something like 35%, 40% in the course of the next 3, 4 years. That is our aim.

[Unknown Attendee]

Okay. And lastly, last question, in terms of the battery business, the battery business, have you seen any growth?

[Suvamoy Saha, executive]

Sorry, come again?

[Unknown Attendee]

I'm saying, lastly, last question in terms of the battery business. Has the battery business seen vast growth...

[Suvamoy Saha, executive]

[indiscernible] has been growing at, I would say, mid-single digit. It is -- the growth is not extremely high or any [ setting ], but it is a very steady kind of growth. So we flew with that kind of growth. Most of the time, that is what explains our market share over several years. And certainly the last few quarters, and as I have been mentioning in my calls earlier, that there is a potential for growth once new devices come into the country, but that is [ as ] and when it comes. At this point of time [indiscernible]

[Unknown Attendee]

[indiscernible] pricing was the revenue growth?

[Suvamoy Saha, executive]

So it is a combination of both pricing and pricing and volume. So typically, I would say the total industry market would grow by 6% to 7%, of which volume would be about to [ 3% ] and balance would be pricing.

[Operator]

The next question is from the line of Aditya Makharia from HDFC.

[Aditya Makharia, analyst]

Sir, firstly, can you give us an update on the case on the ongoing matter with [ KKR ]? Is the resolution expected anytime soon? Because sir, this is preventing us from infusing fresh capital in the business. And hence, our -- into newer categories is being constrained because of this matter, which now I think is over 12 or 15 months, some sort of a long time frame.

[Suvamoy Saha, executive]

So this particular case proceeding is in the arbitration court, which has given a kind of final date for [ bumming out ] with the decision towards the early part of 2024. So we have to wait for that time frame for the decision to come out.

[Aditya Makharia, analyst]

Okay. Fine. Okay. Second is on the lighting business. Do you think we have miscalculated the growth potential of this business because despite us having a 2% or 3% or maybe sub-5% market share. We're clearly not seeing the kind of growth which early entrants would see. I mean, with our brand and distribution, we should only be scaling up much faster. So do you think that there is something you have miscalculated in the way the lighting business dynamics, sir?

[Suvamoy Saha, executive]

Sorry, I have to disagree with you there with your conclusion. As I mentioned in my remarks, I first speak of this here, this financial year, the faster that we have gone by. You see the results of all leading lighting companies, they are all in serious degrowth. I don't want to name the company there in, I would say, high-single-digit [ EBIT ] growth the market overall is growing by more than 10%. In that, we have grown by 8.6%. So I would not agree with the point that we are scaled calculating our potential, I think we are growing very handsomely.

Last year, we grew by something like 25-odd percent, which again, I think was much higher than the market level of growth. So as you rightly said, maybe some of these higher good momentum is coming to us because we are still a relatively smaller player. And as you know, we scale up, obviously, the growth percentage will come down. But to get back to the main point, we are growing very handsomely compared relative to the market.

[Aditya Makharia, analyst]

Okay. So when you were referring to route-to-market, which led to change in your distribution strategy that is for which particular segment, sir?

[Suvamoy Saha, executive]

It was for the whole company's distribution system, which encompasses both general trade as well as electrical trade.

[Aditya Makharia, analyst]

Okay. So we are continuing to revamp our electrical distribution network because I thought we were pretty much through with that last year, right, because we have...

[Suvamoy Saha, executive]

We completed that the implementation in terms of new execution space, got completed sometime in March, which was FY '23, but the impact of the changes, et cetera, were more prominently felt post that. The past 2 quarters. And again, we are still continuing with some of the finishing work in this quarter in the third quarter.

[Aditya Makharia, analyst]

Okay. Okay. Got you. So just lastly, you said you grew 8.5% in Lighting in the second half.

[Suvamoy Saha, executive]

First half. First half.

[Aditya Makharia, analyst]

Okay. Okay. So then batteries is what is -- okay, batteries and the flashlight is what has led to the lower revenue.

[Suvamoy Saha, executive]

Yes, both were flat. Both we're flat.

[Operator]

We'll take the next question from the line of Rajesh Kothari from [ Alf ] Ventures.

[Rajesh Kothari, analyst]

Good afternoon, and thank you for the opportunity to lead the discussion. I wanted to ask you regarding your top line and bottom line. So in this quarter, you've done INR 365 crores, which is lesser than last year this quarter to INR 375. But your profit is still higher. It's INR 20 crores versus [ INR 16 ] second, you shed some light on what's driving this increase in the bottom line despite on the top line?

[Suvamoy Saha, executive]

Thank you, would you like to take that?

[Unknown Executive]

Yes, sure. Thank you for this question. As Suva has explained about the complete segment-wise revenue that where do we stand, major reason of our profit expansion is basically the softening of the raw material prices. So the zinc is a key raw material for our battery product where the -- there is a softening of the prices of the zinc and which has led to our gross margin expansion in the bottom line increase for operating margin. And from the -- below the operating market to the PAT level, if you see our bank charges, last year, there was a onetime amortization charges of [ Saba proceeds ] and the sales is not there. So these are the 2 major reasons whereby despite we are holding up that revenue, our bottom line and PAT has expanded.

[Rajesh Kothari, analyst]

I also noticed that there's a new line item in your balance sheet for intangible assets under development. So can you shed some light on that as well?

[Suvamoy Saha, executive]

What is here? Basically some software. This is basically [ income ] software because we are doing we have got in [ SAP ] implementation in the company, okay? So SAP, and we have taken a salesforce automation for the [ Bison ]. So these works are under progress once this is just completed, it will come in to the intangible assets.

[Rajesh Kothari, analyst]

All right. And in terms of the sale of PP&E, what exactly what assets did we sell this quarter?

[Unknown Executive]

Pardon, can you repeat the question.

[Rajesh Kothari, analyst]

On the cash flow statement, we can see some proceeds from sale of [ CP&D ]. So which -- what equipment or [ plant ] will be selling what we sell this half?

[Suvamoy Saha, executive]

Just give me a second. Just allow me a moment, please. In the meantime, if you have any other questions, so then that I'll hear this.

[Rajesh Kothari, analyst]

Okay. Yes. The last question I had was regarding the net cash from operating activities. This half, it's almost [ INR 100 ] crores compared to [ INR 17 ] crores for last year. So what has changed in -- is it led by the softening of the raw material costs? Or what is causing the [ INR 80 ] crore increase in operating activities?

[Suvamoy Saha, executive]

This is mostly because of the profit has increased and there is a last time onetime charge was there, which is not there. So -- and if you see our working capital also last year, it was disposes high, around INR 70 crores [ order driving fee ]. This year, we have hold managed to manage our working capital also. This all has led to our better cash flow, operating cash flow position.

[Rajesh Kothari, analyst]

Okay.

[Suvamoy Saha, executive]

I will get back to you just a moment for the mean time. So we'll get you connected.

[Operator]

[Operator Instructions]. The next question is from the line of Josam from Ambit Capital.

[Unknown Attendee]

I had a couple of questions. So I just wanted to understand where do our margins start to peak out. So we've seen a fairly decent 2-year journey with respect to margin expansion. But what -- when do you see your margins hitting a peak. And if you can give a color on that in what range it could be.

[Suvamoy Saha, executive]

So let's give you a [ like ] with respect to -- let's talk about the gross margin, which you're talking about, because of the zinc price reductions, we have got approximately 300% or gross margin, 300 bps our margin got improved, so -- and quite close to our bottom line. So as our [ expectation ] is always go to a mid-teen level of operating margin and which we are still holding. And as we have spoken about at the current year, we are looking for a double-digit operating margin to start with against 8.4% over the last year. So still we are holding on that.

[Unknown Attendee]

Okay. And we've seen a slightly higher CapEx in the first half. So just wanted to understand that.

[Suvamoy Saha, executive]

So -- so there are -- this is the technology investment going on in the company. We are implementing SAP, and we are implementing some software, which I've just now spoken about. So that is one of the investment going at this point of time. And we have given advances for some machineries and so [ that is the way ] so that investment looks like, it will be equalized maybe over a period of time.

[Unknown Attendee]

Okay. And I mean, Mr. Saha spoke about the RTM changes per se, right? And you wanted to understand that when do these changes get normalized and growth really starts to kick in. Will we see it come from Q4 or the next year? And I wanted to get an update if that main project when does that end? Because if I'm not wrong, your other expenses are slightly quoted because of that.

[Suvamoy Saha, executive]

So let me take this one. As I mentioned that even the RTM execution steps are completed sometime in March, but the first 2 quarters, we had to sort of contend with the changed scenario, which included our sales also getting attuned to that making our channel partners sort of aligned to that, and that has spilled over even to the third quarter. We feel that we're in the -- it is very difficult to say whether it will take 2 or 3 more months. But certainly, within this year, we will get all that sorted out. And I think we should be back to our growth momentum certainly from first quarter of the next financial year in the fourth quarter of this year. But third quarter will be muted as I already have indicated.

[Unknown Attendee]

And the main project?

[Suvamoy Saha, executive]

The main project is now completed as of the 15th of this month.

[Unknown Attendee]

Okay. And sir, if I may just be -- in one data question. So if you could just share the revenue and the EBITDA of different quarters. That would be great.

[Suvamoy Saha, executive]

So in this quarter, Bibek, would you like to answer that?

[Bibek Agarwala, executive]

Sure. I'll do that. So in this quarter, our revenue from batteries is holding around INR 246 crores, flashlight INR 42 crores and lighting is INR 85 crore, okay? That is with respect to our profit revenue. And with respect to battery as your overall profitability, batteries are holding around INR 46 crores operating margin INR 47 crores, flashlight [ INR 4 crores ], and lighting is around INR 4 crores negative.

[Unknown Executive]

And just to answer one to that question has been asked in between. There's about the profits from the sale of assets. It is actually a INR 20 lakh in we sold our old [ cars ]. So there are a lot of pool car that there, and we have actually liquidity results and that is mostly from that.

[Operator]

The next question is from the line of Ana Vi an individual investor. [Operator Instructions].

[Unknown Shareholder]

My first question is, I would like to know what is the time lag between [indiscernible] to drive sales or ability in normal times and in these challenging times because of new route-to-market. That's my first question. The second question is...

[Suvamoy Saha, executive]

Could you please repeat your question? I didn't understand that.

[Unknown Shareholder]

See, in the last quarterly call, I remember discussing this point that the [ teacher ] sale has shown a jump. And with some time lag, sooner or later, it will also show up in the sale of Eveready primary. Now obviously, I understand that because of the [ party and ] Euro market, it didn't reflect the growth in [ tertiary ] sales that you are seeing is probably not reflecting. Either my understanding is wrong or there is a general time lag and right now because of new route-to-market, the time lag is longer or maybe this is not the right way to interpret, how soon the tertiary sale growth in case of battery could be reflected in [ the Eveready's ] pricing numbers. Is that the right way to interpret it? Or am I...

[Suvamoy Saha, executive]

So let me try to answer your question and then you tell me if you -- if I have been able to clarify properly.

See, normally primary sale to secondary sale to tertiary sale, there is very little time line. The whole process is determined by tertiary sale. Because the consumer buys something that gets demanded from the distributors and in the distributor mix and order and requisitions that stock from the company, right? The time lag, even realistically, the time lag is quite minimal. But what happens sometimes as it has happened in our case. Due to the RTM revamp, there were islands of overstocking, understocking, et cetera, which disrupted this flow a little bit. As a result, while tertiary continue to be strong, and obviously, the tertiary is being fed by the secondary channels. It didn't finally result in a primary sale. And that resulted -- that was the -- that got manifested in still showing flat because we only record the primary sale. We do not record thereafter. We track secondary sale. We track tertiary sale but we do not record what is recorded is what we sell to our distributors. So again, to come back to your question, there is really hardly any time lag.

[Unknown Attendee]

Got it. That would be clarity for my first question. I'll just speak another question. For the last couple of quarters, management is guiding that whole year operating margin is double digit, right? Now, obviously, so far, you have exceeded that, I mean, the operating margin, right? But historically, we have seen that the fourth quarter, rarely -- I mean I think last time, we barely breakeven operation because -- and I suspect sales are generally lower in the fourth quarter because of stability higher. However, you would not probably reduce your advertising and promotional spend. So chances are we would barely breakeven. So with that, do you still post operationally at a whole year basis, you would do double-digit OEM?

[Unknown Executive]

I'll take this answer. You're absolutely right. But we also learn from how things are going on. As of now, you are seeing that over 12% growth again, we are setting and our first half is always higher in the second half. So we are very conscious about that, and we are constantly monitoring. Last year itself, we started advertising before that earlier, we are not doing. So we have taken account of that. And still we believe that the way we are focused on our margin expansion is the growth ambitions and cash flow generation. So we still hold that by the year-end, we'll be able to get the double digit.

[Operator]

[Operator Instructions]. The next question is from the line of Alisha Mala from Envision Capital.

[Unknown Attendee]

Just wanted to track this change in distribution network and the route-to-market, which, like you said, you're a [ booking ] or lining out. Is this large complete? Or what is the time frame we expect that the challenges that we're facing or we will be able to overcome them?

[Suvamoy Saha, executive]

Alicia, I had explained in my earlier remarks and also in the answer to one of the questions, we completed execution steps on the RTM in March of this year. In the quarters thereafter, namely the first and the second quarter and even in the current quarter, we are having to sort of realign ourselves, the whole channel structure and our sales internally. Increased new -- sort of kind of structure that we have built. And we don't think that it will take us too many months ahead to get all the fixes. And we are quite confident that certainly by the end of this year, the RTM chapter would become completely stabilized.

[Unknown Attendee]

Okay. No, while I did get that, I was just trying to understand on what kind of challenges we are facing and to a separate question. Will it be possible for you to share what is the current distribution network that we have? What was it earlier in his change [ where it is ]?

[Suvamoy Saha, executive]

Yes, I'll certainly do that. So we were working with 5,000 distributors at one point of time. With the size of a turnover, the 5,000 number was certainly too excessive. And as a result, the company was actually trying to service remote areas directly where the service efficiency is simply lacking. Even in the larger towns, we had far too many distributors driving the business among themselves and did not much business sense for them to be -- being totally engaged in that kind of small turnover. So what we have done is we have brought that number down from INR 5,000 to INR 1,000. So this has given rise to a lot of consolidation in the main towns, meaning, say, our town had 8 distributors, we have cut that down to, say, 2 or 3 or 4. And then we have replaced that entire small dealer network we had in the rural side or the -- in the remote areas, by a superb infrastructure where the superb has now been the distributor directly with the company and all those small dealers become his subdealer.

Now these have meant, where did the challenge lie. The challenge lies in pruning that number down to 1,000 from 5,000 main selection, bringing some people changing some people, et cetera, et cetera. There is a human element to it and also root issues relating to working with new parts, people working with new enhanced territories, in large territories. So these lead to some amount of, I would say, gaps and with many of those, they have gone very smooth. With some of them, we have found a little bit of challenge, which we are hiring out. So as I said, the first 2 quarters did that. And so at the end of the first half, we had a revenue growth of 2.5%. This quarter, and the second quarter was flat. This quarter is also going to be muted. But I think we will see positive development from the fourth quarter. So I answered your question?

[Unknown Attendee]

Yes, perfectly. Sir, my next question is on the A&P side. I believe you were mentioning all or that we believe this all that we would want the number to be seen 78% of revenue. But earlier in the call, we did mention that we've done a little bit of rebranding and it's new campaigns also. What was the ad spend during this quarter and where do we expect it to be next to?

[Suvamoy Saha, executive]

So the -- this quarter, we went to something like 12% of the revenue. That was because this quarter was when we launched our Ultima and Ultima Pro, the latest technology generation batteries, which was addressing the premium segment. That was sort of accompanied by quite visible campaign, both on TV as well as in other media, which is why the percentage-wise, the cost shot up, but that will normalize. In the next 2 quarters, that will normalize. We are guiding -- we have said this earlier, we would come down perhaps this year to a 10% kind of level. And then maybe in the following years, you would -- as [ startover ] increases, maybe you would go down to something like 8.5%, 7%, something like that.

[Unknown Attendee]

Got it. And just one last question. Any revenue aspiration that we would like to share for next year or maybe for 3 to 5-year goal that you may have?

[Suvamoy Saha, executive]

So we have all along said that this company is currently diverting its existence of growth. And -- but for whatever that we have discussed and explained during this call, we have gone into a situation where we have not been able to meet that operation. We would certainly like to go back to that double-digit growth acceleration for the next financial year. So that is guidance at this point of time. We cannot give you an exact number just at this point because there are durables which we need to figure out. But certainly, a double-digit growth would be something that the management team would certainly chase.

[Operator]

[Operator Instructions]. We'll take the next question from the line of Rishabh [ Somani ] from Earth Ranges.

[Unknown Attendee]

I wanted to ask you regarding any debt guidance that Eveready is having right now.

[Suvamoy Saha, executive]

Okay. So at the beginning of the year, our total net debt was INR 367 crores. And happy to say in the first half, we have reduced the debt by more than INR 53 crores. So now our net debt stood at INR 314 crores during this whole half year. And so we look forward to the year definitely to go less than INR 300 crores and depending on the business requirement. So the debt reduction journey will continue because always we would like to have a less update for us, and that's the way we stand today.

[Unknown Attendee]

So are you -- are we planning on making debt fee essentially over the coming years?

[Suvamoy Saha, executive]

Of course, yes, yes. So our exploration has to make 2 to 3 years. The company should go for a [ day ] for the company. There is no reason for a company we hold the highest market share. The market share to have any debt in the market. So we are really working towards that. And if you see today also, we are the holding highest market share in the company despite of revenue plan, and we are continuously doing this debt reduction quarter-by-quarter. First quarter, it is more than INR 25 crores. Second quarter also, we have done a INR 25 crore plus debt reduction, and we believe that the journey continues.

[Operator]

Ladies and gentlemen, that was the last question. I would now like to hand the conference over to the management for closing comments. Over to you, sir.

[Suvamoy Saha, executive]

Thank you, everyone, for taking out the time to join us on this earnings call today. I hope we have adequately answered all your questions. If you still have any more queries, please reach out to our Investor Relations team, and we'll be happy to address them. We endeavor to interact with all of you every quarter with this quorum. Thank you once again, and look forward to connecting again in the next quarter.

[Operator]

Thank you, members of the management. Ladies and gentlemen, on behalf of Eveready Industries India Limited, that concludes this conference. We thank you for joining us, and you may now disconnect your lines. Thank you.