Godrej Consumer Products Ltd

NSE:GODREJCP

Earnings Call Transcript 2022-Q1

[Operator]

Ladies and gentlemen, good day, and welcome to the Q1 FY '22 Earnings Conference Call of Godrej Consumer Products Limited, hosted by Axis Capital Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Anand Shah from Axis Capital. Thank you, and over to you, sir.

[Anand Kumar Shah, Senior Vice President of Consumer]

Yes, thanks. Good morning, everyone. And on behalf of Axis Capital, I welcome you all to the Godrej Consumer's Q1 FY '22 Earnings Conference Call. Without further ado, I will just hand it over to Mr. Pratik Dantara, AVP, M&A/Investor Relations to do the introductions and take the call forward. Thanks, and over to you, Pratik.

[Pratik Dantara]

Thanks, Anand. Good morning, everyone. We hope that you are staying safe and healthy. We will be covering today the results for the quarter ended June 30, '21. On the call from GCPL, we have Ms. Nisaba Godrej, Mr. V. Srinivasan; and Mr. Sameer Shah. As a customary, we will start with Nisa sharing her perspective on the business and overview on how we are navigating the current environment.

[Nisaba Adi Godrej, Executive Chairperson & MD]

Thank you, Pratik. Good evening -- good afternoon everyone. I hope you and your families are safe and healthy during these times. Thank you so much for being with us on this call today. We've had a strong start to the year, delivering double-digit profitable sales growth. Specifically in quarter 1, we saw broad-based double-digit growth within the Home Care and Personal Care categories. Our overall sales grew by 24% with a 2-year CAGR of 11%. EBITDA grew by 29% with a 2-year CAGR of 15%, and PAT grew by 38%, excluding exceptional items. Home Care delivered a strong growth of 14% led by household insecticides. Air fresheners continued to witness sequential recovery. So the overall category continues to face headwinds due to its discretionary nature.Our portfolio in Home Hygiene is scaling up well. Personal Care continued its strong growth momentum growing by 29% led by Personal Wash and Hygiene and robust growth in our Hair Care portfolio in Africa, U.S.A. and the Middle East. We look forward to building on these categories in the years ahead. From a geography perspective, India grew at 19% with a 2-year CAGR of 12%, led by broad-based growth within the Home Care and Personal care cap. In Home Care, household insecticides delivered strong double-digit growth with a 2 years CAGR also in double digits. Home hygiene witnessed strong demand amidst the second wave of COVID-19. Air fresheners and fabric care witnessed growth on a low base. In personal care, personal wash and hygiene continued momentum with strong double-digit sales growth, 2-year CAGRs were also in double digits. Hair color also witnessed very high growth, but on a low base. Our innovation rate was in the high teens. The scaling of our e-commerce business continues well.Indonesia delivered a weak performance with flat constant currency sales growth on a base growth quarter of mid-single digits. Recovery has also been impacted by the second wave of COVID-19 and adverse macroeconomic factors. Our Africa, U.S.A. and Middle East business continued its strong growth momentum and delivered a profitable double-digit sales growth of 60% in constant currency terms. I'm pleased with the strategic focus and growth mindset of the team. Our consolidated EBITDA margins at 21.3% increased by 90 bps year-over-year, driven by an improvement in Africa, U.S.A. and the Middle East and Latin America and SAARC margins.In India, margins decreased by 110 basis points year-on-year driven by the lack between an increase in input cost and end consumer price increases. This was partly mitigated through scale leverage and employee benefit expenses and other expenses. We continue to have a very healthy balance sheet. Our return ratios continue to move up year-on-year, while the net debt-to-equity ratio continues to come down. We remain confident of leveraging growth opportunities to drive sustainable profitable sales growth across our portfolio in fiscal year 2022. I'm very proud of the exceptional agility and resilience with which our team is navigating the challenges of COVID-19 across geographies, ensuring seamless supply chain deliveries and responding to shifts in consumer behavior. We also continue to adopt a safety-first principle across our ecosystem supporting our team members, their families and business partners across to get fully vaccinated. As always, our values matter the most at this time. We remain committed to doing our best to truly live the Godrej way and serving our people and communities. Thank you.

[Operator]

Ma'am, should we open for Q&A?

[Nisaba Adi Godrej, Executive Chairperson & MD]

Yes, please.

[Operator]

[Operator Instructions] The first question is from the line of Abneesh from Edelweiss.

[Abneesh Roy, Senior Vice President]

Congrats on numbers. My first question is on HI and there are 2 parts to this. So one is you've got a good benefit of the pandemic in India and now Indonesia in some parameters is even ahead of what India saw in May in terms of the pandemic. So any benefit you're getting either in Q1 or Q2? Second is on Maharashtra, what you have done in terms of the Jumbo Fast Card. So earlier, there was an efficacy issue versus illegal HI. So what is different this time? And any time lines you can share on the disruptive products which are going to come against incense stick?

[Nisaba Adi Godrej, Executive Chairperson & MD]

So let me answer that, Abneesh. I hope you hope you and your family are well. So I think in Indonesia, because of the second wave, we've definitely seen very high sort of pickup in hygiene category, especially in Saniter, in HI, we didn't see as much of a pickup in Indonesia like we saw in India. There's also some amount of destocking going on in many marts, so we will see -- watch to see what happens in quarter 2. July was a bit better in Indonesia starting off so wait and see that. On your question on Jumbo Fast Card so Fast Card -- so while -- why do we believe this is an effective product against illegal incense stick? So Fast Card burns for 3 minutes, it works like a economic aerosol. So it gives you a lot of active immediately, but what we found was that what consumers like about the illegal incense stick is that it burns for about 30 to 45 minutes. And then there's some residual effects. So the Jumbo Fast Card actually also burns for like 45 minutes to an hour, and then you have residual effects for about 4 hours. So it is a direct -- it is directly against illegal incense stick in terms of the job to be done for the consumer.

[Abneesh Roy, Senior Vice President]

Just one follow-up on this. So weaker HI in Indonesia versus India, that's because of the weaker FMCG sector performance there because of the GDP? Or in India, the new products are doing well? What is the -- or the base is favorable in India, that's why India is growing faster?

[Nisaba Adi Godrej, Executive Chairperson & MD]

So the India, the base is very -- Abneesh the base was very high in India, right? The base...

[Abneesh Roy, Senior Vice President]

4 year base. I'm saying 4 year base, I understand...

[Nisaba Adi Godrej, Executive Chairperson & MD]

Was the 26%. I think Indonesia does have its own level sort of, of feeds the macro impact. So I don't think you can directly compare to India in terms of what exactly is happening and the portfolio is also relatively different between India and Indonesia?

[Abneesh Roy, Senior Vice President]

Sure. My second question is, in the annual report you have mentioned FY '21 was the busiest year in terms of digitalization and digital native brands launched, et cetera. So 2 questions here. One, some of the FMCG companies are doing their own e-commerce site. And second, they are also investing in digital start-ups. So FMCG, B2C kind of a startup. So what would be your thinking on this from a medium, long-term perspective?

[Nisaba Adi Godrej, Executive Chairperson & MD]

So we -- I think we have a dedicated sort of e-commerce P&L. We've also got an entrepreneur in residents. We launched Goodness Me, which is a digital sourced brand. We have other brands also like [ breathe the plant ], which are very sort of digitally sourced. So we really feel that this is an opportunity, priority #1 is to double down in your core on this, but also to build sort of new consumer franchises through this.

[Operator]

The next question is from the line of Avi Mehta from Macquarie.

[Avi Mehta, Analyst]

I wanted to understand the gross margin comment, you pointed towards a lag between input cost pressures and price hikes. Could you help give some sense on the inflation levels? And what price hikes are still required to be taken? And a linked question, if you could help us understand from a cost control because that's been one of our traditional specialty. You've kind of been able to offset these pressures. Would you -- how would you look at EBITDA margin, operating margin on a Y-o-Y basis?

[Sameer Shah, CFO, CFO of India & SAARC and Head of IR]

Avi, this is Sameer here. I think the input inflation is largely coming on from palm oil prices as well as crude prices, which are up on a Y-o-Y basis. We continue to take calibrated price increases. If you look at last quarter, the overall price increase in India was close to around 4 to 5 percentage. And if you double click across some of the subcategories, in categories like personal wash and hygiene, the price increases would be in high single digits to even double digits. So we would continue this approach of taking calibrated price increases. It has worked very well for us. If you look at our Personal wash & hygiene growths over the past 2 years they have been very strong. Market shares also has been very robust in terms of gaining market share in this category. We would in parallel kind of evaluate pricing opportunities in rest of the portfolio as well as work more hard on cost sale projects. And to answer your question on cost saving projects, historically, they have contributed anywhere between 2 to 3 percentage as a percentage point of sale. And part of that has got reinvested back for growth and part of it sort of flows to the bottom line. So that's the approach which we have [ and we ] expect any inflationary pressures to continue.

[Avi Mehta, Analyst]

Okay. And second was essentially on the HI side. I mean would it be fair to look at Jumbo Fast Card now as the key warriors for incense stick and hence the active base incense stick -- active ingredient based incense stick kind of takes a backseat here. Is that a correct readthrough? Or no? If you could kind of on that as well.

[Nisaba Adi Godrej, Executive Chairperson & MD]

I don't -- I think that's a bit hard to comment on, obviously, we have a slower strategy, but I don't think we want to give out place, give out our cards exactly on what we are planning on that but it's definitely one part of the tool kit to sort of fulfill consumer [ demand ].

[Avi Mehta, Analyst]

Okay. And lastly, if I may, on the Indonesia side, could you give us an update on how the situation has been on ground as of now? And how is -- how are growth rates? Have you seen some recovery could kind of give a comment on.

[Nisaba Adi Godrej, Executive Chairperson & MD]

We've seen a -- we've definitely seen a better July, although that we had a low base last year in sort of quarter 2. So I mean, if you see those FMCG sort of numbers there and the macroeconomic situation hasn't been particularly strong but we definitely feel -- you know Saniter has been a big success, which is the hygiene brand there and it continues to do well. But we are really focused on sort of deep diving because our categories are strong categories even during a pandemic in terms of really focusing on growth there. And I think if the deal comes in also it will be a big focus area for the rest of the year in terms of getting Indonesia to [ start on growth ].

[Operator]

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

[Harit Kapoor, Lead Analyst of Consumer Sector]

The first question is on the Africa portfolio. So obviously, we've seen an improvement on a year-on-year basis. But if you look at sequential margins at the EBIT level, we've not seen a material improvement there for this quarter. So I just wanted to understand on the Africa side, we have been obviously much lower than what we were in quarter 1 '20. Is there a gross margin led pressure here because your international gross margins are a bit lower. So I just wanted to understand what's happening or is it higher spends on brand investments that's kind of impacting the overall margin improvement?

[Sameer Shah, CFO, CFO of India & SAARC and Head of IR]

Harit, this is Sameer here. I think sequentially, the major reason for a drop in, I think, close to 100 bps kind of margins in Africa is because of offering marketing investments and that's the only reason. Also, you have to note that our Africa business has a strong seasonality in and around quarter 3 coinciding with the festive season, that is significant kind of scale which comes to play in terms of driving stronger margins. We are very much on track in terms of our journey actually for Africa cluster, which will get played out over next 3, 4 years in terms of us reaching to kind of mid to high teens margins. So there is, I mean, kind of inflation pressure over there. So we are mitigating it through pricing, we are also mitigating it through cost-saving programs. And we are very much on track in terms of our desired margin, which will be also I mean higher on a Y-o-Y basis or a full year basis, Harit.

[Harit Kapoor, Lead Analyst of Consumer Sector]

So Sameer, if I understood you correctly, the 2 key reasons for this quarter would be higher inflation and the upfront investments, right, for this quarter, specifically?

[Sameer Shah, CFO, CFO of India & SAARC and Head of IR]

Yes. If you are baselining it with Q4, I would attribute it more to the higher upfront marketing investments a little less to inflation because we had inflationary pressures even in Q4. I mean, it's not that inflationary pressure kick started only in Q1.

[Harit Kapoor, Lead Analyst of Consumer Sector]

Got it, got it. And the second question was on the India business. So from a home care perspective, I know you have big plans in home and hygiene. We've see some of the competitors who got in, in this segment about 6 to 9, 12 months, anywhere between 6 to 12 months back have kind of retraced a little bit in certain categories. So just wanted to understand how are you looking at that space, especially on the Home Care side, your commitment to this space, et cetera. Does it differ in terms of product categories that you're going to look with some focus -- not focus on others. So just wanted to know, given your start in the launch versus now, how are you thinking about it?

[Sameer Shah, CFO, CFO of India & SAARC and Head of IR]

So, Harit...

[Nisaba Adi Godrej, Executive Chairperson & MD]

Go ahead, Sameer. No, no, Sameer go ahead.

[Sameer Shah, CFO, CFO of India & SAARC and Head of IR]

So Harit this continues to be a very strategic portfolio for us, right? The entire kind of hygiene space, one of our most innovative product powder to liquid hand wash has been a big success, right, over the last 15 to 18 months and we continue to invest in terms of creating awareness for the product as well as creating a stronger brand equity. The rest of the portfolio beyond hand wash is also are kind of steady. I'm sure you are aware, we also launched somewhere during the middle of last year, the home cleansing range under brand ProClean and that is also off to a good start. And we will see a lot more I mean, from our end in this space. It's not just a tactical kind of strategy from our end to kind of to get into this category but more structural in nature and which in turn is kind of part of our larger expanding the total addressable market strategy over a period of next 4 to 5 from India.

[Harit Kapoor, Lead Analyst of Consumer Sector]

Got it. Got it. The last thing, if I may, was on the sequential movement in working capital days. Anything to read into that the increase or just not much?

[Sameer Shah, CFO, CFO of India & SAARC and Head of IR]

Yes, I think we need to kind of dissect working capital into 2 components. One is the reported working capital, which is what we had shared and then there is core net working capital. The difference between both of them being the structured vendor financing, 2 things. One is directionally we are taking call to kind of reduce down our structured vendor financing, because it's no longer EPS accretive, especially in this low interest rate kind of regime. So we are kind of going to pull down and that's going to be the big reason for kind of drop in our overall net working capital. However, the core net working capital continues to be extremely robust. In fact, even in Q1 on a Y-o-Y basis, our core net working capital has come down by 5 to 6 days. The other piece also which got played out from net working capital perspective in Q1 was a higher buildup of inventory because of second wave and lot of related uncertainties, we were very upfront in terms of ensuring that we have adequate inventory right from raw materials, packaging materials to even finished products. So directionally, the inventory values also moved up. So it was kind of driven by both your structured vendor financing as well as upfront buildup of inventory.

[Operator]

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

[Vivek Maheshwari, Equity Analyst]

Two things. First, on the A&P spends, what is your outlook on the A&P spends, which have come down quite a bit?

[Sameer Shah, CFO, CFO of India & SAARC and Head of IR]

So Vivek, this is Sameer here. I think if you look at A&P spends in India as a percentage of sales in Q1, they are hovering around 5 to 5.5 percentage mark, right, which is relatively lower as compared to our average percentage to sales. A couple of things. One is, in the month of May, we had taken a pause because of second wave and all uncertainty that has resulted in a relatively lower A&P spends. The other piece is to look at A&P spends aggregated with trade investments, especially with customers and more so with the pricing investments because we are also taking calibrated price increases at this point in time and not passing on the full input inflation to the end consumer. So when you look at basket of all 3 put together, which is advertisement spend, trade promotion spend as well as pricing investment, the aggregate basket has gone up as a percentage of sales, and the increase has been much beyond the overall sales increase. So it's more of balancing also at this point in time. And maybe in medium term, because we are in high input inflation environment is something which we will keep on kind of working towards.

[Vivek Maheshwari, Equity Analyst]

Okay. Got it. Got it. And second, Sameer, can you give exact growth numbers for soaps, hair colors and HI in India?

[Sameer Shah, CFO, CFO of India & SAARC and Head of IR]

So Vivek, I mean, we had shared in our disclosure changes last time around that we would be sharing kind of directional growth. And I think the direction growths are sort of baked in. So to give you an idea, I think household insecticides had very strong double-digit growth and even the 2-year CAGR was in double digits, ditto was the case for personal wash and hygiene, in which actually bath soap is a bigger kind of contributor. And even hair colors has had a very strong kind of growth, although on a low base and 2-year CAGR there kind of also relatively lower, but we have seen sharp recovery in hair colors in June and July. So largely, all the 3 categories. I mean, some categories have been in kind of strong double digits and pretty well placed, at least on a 2-year CAGR basis, especially when it comes to household insecticides and personal wash and hygiene.

[Vivek Maheshwari, Equity Analyst]

Okay. Got it. Sameer, 1 suggestion, look, if you yourself analyze the last 12 quarters performance, the disparity between the 3 categories has been -- or 3 key segments have been very, very high. It will be useful if you keep the disclosure at the same level, I mean I think it will help allow us to appreciate your performance much better because when you say double digit, if everything is double digit, that doesn't really help because a 12% is also double digit and a 25% is also double digit. So my request is if you can continue with the same disclosure level, at least, at least in the presentation, I mean, you have a new segment that's fine. But if you tell the precise number that will really help because the volatility in your performance has been very, very high. And that will really help when the 3 categories are behaving very differently.

[Sameer Shah, CFO, CFO of India & SAARC and Head of IR]

So, Vivek we will mull over it, I mean, thanks for your feedback. I think the intent remains to sort of share a lot of details on our subcategory performance, including lot of initiatives so that external kind of partners like analyst investors get a good flavor of kind of what's happening in terms of building blocks as well as prevention performance. We will mull it over, Vivek. Thank you for your feedback.

[Operator]

The next question is from the line of Manoj Menon from ICICI Securities.

[Manoj Menon, Research Analyst]

Congratulations to Sameer on your promotion. Super happy to hear that news. I have only 1 question to Nisa and team. See, given the fact that consumers spent a lot much more time at home in the last 12, 15 months, et cetera. 2 sub-questions there. One on the insecticides non-mosquito products the portfolio, how that would have trended? And anything directionally which -- any insights or anything which could make this non-mosquito part grow faster? Secondly, the same question, if I can extrapolate to hair care also. While I understand that in India, a significant component of hair care is still out of home. But again, to sub -- was there an opportunity to actually push a little bit of more on hair care in the last 12 months or even in the next 3 months, 6 months? And again, any insights, which will allow these 2 segments to grow much faster versus the trend growth rates in the past?

[Nisaba Adi Godrej, Executive Chairperson & MD]

Yes. Manoj, thank you for your questions and hope you are well. I think in our non-mosquito household insecticides growth has actually been very robust. And this is -- we see great opportunity for this in our portfolio. And we see things like anything to do with cockroach, very highly correlated to advertising, correct, present the problem and present the solution to consumers. So -- and penetration is quite low in these products. So we see a huge advantage. We also see things like we could more effectively then compete against things like pest control because people don't -- can avoid people coming into their house. So I think this is definitely a growth opportunity. Similarly, in hair care, Manoj, penetration is sub-5% level. So great headroom with good products and good advertising, great headroom for growth. Correct? Hair Care obviously is discretionary during the pandemic. We've also seen that people have been doing more cleaning, I was cleaning my washroom with a fragrance, or floor cleaner 3 times a day. Then -- and I'm not having guests over, then hair care is becoming a little bit discretionary, but we do see it bouncing back. And we're very focused with having the right products, right advertising and right level of investment that both these areas are definitely very exciting growth opportunities.

[Manoj Menon, Research Analyst]

One follow-up, if I may. What I was just trying to get at was any incremental insights which you had picked up in the last 12, 15 months or which includes quantitative and qualitative both quantitative could mean, let's say, household penetration increase or anything of that sort?

[Nisaba Adi Godrej, Executive Chairperson & MD]

So household penetration, so in household insecticides, household penetration has actually gone up across all categories, correct? So even in electrician staff, we are seeing people -- we are seeing this need to protect themselves, correct? And we're seeing household insecticides also do well because we have this full sort of portfolio of products. I'm just -- I was commenting that the low penetration in the non-mosquito segment also gives you a lot of headroom and sort of many years of growth. Hair care I explained qualitatively what we've seen happen in COVID, no guests coming and using a lot of other cleaning products. So it's become a little discretionary to me. We see that trend reversing as things sort of open up and with the -- we have the right product, right advertising. We're quite excited about the relaunch of aer pocket where we've made it sort of power pocket, which is -- and it has some germ kill ability, lasts longer. So that's important. I think also in air care as travel improves and we have a new launch lined up for cars also at a very interesting price point. So yes, I think with the right product portfolios and the right advertising and investment, both these categories have long-term growth opportunities.

[Manoj Menon, Research Analyst]

Sure. And lastly, on HI launch, which you had done in Africa a while back. I just saw you mentioned in the presentation about Nigeria, et cetera, but some commentary would be helpful.

[Nisaba Adi Godrej, Executive Chairperson & MD]

Yes. So Manoj, I'm glad to report on that, that things are really, really well in Nigeria, well beyond our expectation. And this is something that we do have to really strongly build out on because the incidence of malaria and things like that is highest in the African continent actually. So -- and we are quite a disruptive product. So we're looking forward to good growth and building that category out.

[Operator]

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

[Aditya Gupta, Associate]

First one on the innovation pipeline. So generally, from a product being in the concept stage to a commercial launch is there a ballpark number you can share how much time does it take for a commercial launch, and then maybe to take it national for it to become meaningful in the portfolio?

[Nisaba Adi Godrej, Executive Chairperson & MD]

So we saw in the pandemic we were doing it literally in 4 to 6 months. It really depends by category correct, because say in something like household insecticides it is one of the issues we had with combating illegal incense sticks is that you have a 3-year registration. So your product might be ready, but then it sits with the CIB to get registered for 3 years. So the -- from sort of ideation to end date really depends on which category it is for us.

[Aditya Gupta, Associate]

Got it. And given that you've been launching new products across the home cleaning segment and is there a potential for the contribution from this new pipeline to increase from the mid-single, I think, where we are to maybe...

[Nisaba Adi Godrej, Executive Chairperson & MD]

Yes, most definitely. I mean we've seen with Saniter in Indonesia become a very big brand for us. So I think we've seen magic sales as part of our sort of overall personal wash and hygiene grow. So we definitely see -- I've been commenting in terms of sort of resurgence of household insecticide one of our key categories, which is about 30% globally and that hygiene is also 26%, 27% overall for us. And there many opportunities to grow this category for us given the pandemic.

[Aditya Gupta, Associate]

Got it. Just 1 more on A&P spend again. If I look 3 years back in the India P&L, this number used to be north of 11%, 11.5%. And even if you leave out the first quarter in fiscal '21 before the 9-ish kind of a number. I think it's a play between gross margins and EBITDA margins like you mentioned earlier, but is there a structural savings of 100 basis that you guys have squeezed out? Or if GMs go back to earlier levels again, this number is likely to go back to -- I mean, yes, 11% kind of a handle again?

[Sameer Shah, CFO, CFO of India & SAARC and Head of IR]

Aditya, this is Sameer here. So no, I think by our kind of growth vectors, which is innovation and creating a strong kind of pull for the product, we will continue to invest. I mean very smartly on advertisement spend. And by no way sort of measure to reduce on A&P spends to kind of manage quarterly margins because it doesn't work on the medium to long term. I think what is important to note here is it's a little bit of balancing right, especially in Q1. We will see I mean A&P spends moving up. But yes, over a period of last 12 to 18 months, we have also again done very serious kind of cost-saving program, especially on A&P spend in terms of reducing down [ CPRP ] in terms of having a handy mix between traditional channels to digital channels, right? And also having overall mix between kind of print as well as in media. So all those will kind of come to play, but we will continue. I mean that with is the right kind of quantum of investment to drive our growths in the medium to long term.

[Operator]

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

[Harit Kapoor, Lead Analyst of Consumer Sector]

Yes. Sorry, I just had a follow-up. So I just wanted to understand your outlook for the year for margins. I know it's a tough one because you have several moving parts. But is the thought process that in spite of the sharp price in the sharp iron inflation, you can look to maintain the margins in a certain band the way you have done in quarter 1. Is that the way to look at it?

[Sameer Shah, CFO, CFO of India & SAARC and Head of IR]

Harit, this is Sameer here. So I mean it's very dynamic, right, at this point in time to call out as to how the margins will evolve in turn, it is dependent on kind of input inflation and how the second wave or third wave eventually kind of turns out to be. Honestly, quarter 1 template is perfect template, right, I mean does see a gross margin contraction, scale leverage, cost save program, mitigated good part of it. And then whatever was the kind of remaining whole got mitigated by leveraging the overall international kind of portfolio. Let's see, I mean, on a full year basis, where we end on margin. I think the focus internally is more in terms of driving kind of sustainable, strong, hopefully double-digit kind of sales growth. And my sense is, if that happens, assuming an normative inflationary environment, we should be there on margins. I mean we are not too overly worried at this point in time, taking a little larger time period of 9 to 12 months, and there will be significant scale leverage also, which will sort of come in. So we are -- at this point in time, not too overly worried on our full year margin, we'll see, I mean, how it shapes up over a period of time.

[Operator]

[Operator Instructions] The next question is from the line of Vishal from PhillipCapital.

[Vishal Gutka, Research Analyst]

Congrats on a good set of numbers. I have 2 questions. First question is on Mr. Magic handwash. If you can point some more color what is the size as of now, a distribution reach and how much more room to be covered? And how is the new campaign of 1 handwash equal to 3 soaps working for you? And second question is on Jumbo Fast Card, pricing of Jumbo Fast Card versus illegal incense sticks and your incense stick as well?

[Nisaba Adi Godrej, Executive Chairperson & MD]

I didn't get the one on Jumbo Fast Cards; at the end I didn't hear. On Magic hand wash, I cannot give you the details for competitive reasons which you asked for, but it is doing very well. We've got very good volume sort of market share. And we continue to focus on the insights that hand wash is more hygienic to use, more comfortable to use than bar soaps and this price point is definitely a disruptor.

[Vishal Gutka, Research Analyst]

Anything you can provide on distribution side? What is the reach as of now for Mr. Magic?

[Nisaba Adi Godrej, Executive Chairperson & MD]

No, sorry, I can't share that.

[Vishal Gutka, Research Analyst]

Okay. And the second question was on the pricing of Jumbo Fast Card versus illegal incense sticks and as well as your incense stick. So what is the pricing differential that is there?

[Nisaba Adi Godrej, Executive Chairperson & MD]

The pricing is similar.

[Vishal Gutka, Research Analyst]

That means INR 10 or INR 15 for 10 cards or -- if you can elaborate.

[Nisaba Adi Godrej, Executive Chairperson & MD]

It's INR 15 for 10 cards. Yes, these illegal incense stick don't have a very fixed MRP because, I mean, they...

[Vishal Gutka, Research Analyst]

Margins are very -- trade margins are high.

[Nisaba Adi Godrej, Executive Chairperson & MD]

Yes, yes, yes.

[Operator]

Thank you. I would now like to hand the conference over to Mr. Pratik Dantara for closing comments. Over to you, sir.

[Pratik Dantara]

I'd like to thank everyone for joining the call today. With that, we'd like to draw this call to a close. Stay safe, stay well. Thank you.

[Anand Kumar Shah, Senior Vice President of Consumer]

Thank you. Ladies and gentlemen, on behalf of Axis Capital Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.