Godrej Consumer Products Ltd

NSE:GODREJCP

Earnings Call Transcript 2023-Q1

[Operator]

Ladies and gentlemen, good day, and welcome to the Godrej Consumer Products Limited Q1 FY '23 Earnings Conference Call hosted by Kotak Securities Limited. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Jay Doshi from Kotak Securities Limited. Thank you, and over to you, sir.

[Jaykumar Doshi, analyst]

Thank you, Andrew, and good morning, everyone. On behalf of Kotak Institutional Equities, I welcome you all to Godrej Consumer Products 1Q FY '23 Earnings Call.

I'll now hand over the call to Pratik Dantara, AVP, M&A and Investor Relations for initial introductions. Over to you, Pratik.

[Pratik Dantara, executive]

Thank you, Jay. Good morning, and welcome to the call. We'll be covering the results for the quarter ended 30 June 2022. On the call with me from GCPL is Nisaba Godrej, Executive Chairperson; Sudhir Sitapati, MD and CEO; and Sameer, CFO.

We can start. Sudhir, over to you.

[Sudhir Sitapati, executive]

Thanks. Thanks, Pratik. Good morning, everyone. I hope you and your families are doing well, and thank you so much for joining us on the call today. I will first start with an update on our quarterly performance.

On the face-to-face, Q1 FY '23 appears optically poor, but we are actually quite encouraged. We declined volumes 5%, grew by 8%, declined EBITDA by 13% and PAT by 16%. However, given the various COVID disruptions, headwinds and tailwinds of the last 2 years, we think that the right way to evaluate underlying performance is to look at 3-year's CAGR and how the trajectory is changing over quarters. Our 3-year CAGR of volume is 3%, sales 10% and EBITDA 5%. If one takes the core geography of India, we grew 4% underlying volume growth, 12% sales and 11% EBITDA on a 3-year basis. This compares favorably with the 3-year's CAGR of the prior 2 quarters of 7% sales and 0% EBITDA.

We are also quite happy with the quality of results globally. Our GC is contracted by 560 bps and our media increased by 140 bps, but driven by cost savings, we were able to limit our EBITDA drop to 420 bps.

Our performance has been largely driven by areas where we made structural interventions: media across the board; India, hair color; India, hair care and Kenya.

Our household insecticide businesses in India, while again having an optically poor 1-year performance, has significantly increased, improved its 3-year's CAGR trajectory versus the previous few quarters. Indonesia delivered a particularly weak performance with sales declining at 12% and EBITDA at 40%.

While again, here, this performance looks optically very poor, there are some green shoots. If one excludes the base of Saniter, which will reduce by Q3 FY '23 and look at sell-outs, we continue to and will continue to reduce stocks, including this quarter. We actually grew offtakes by 4%. The macros in Indonesia are also looking better.

Weak sales compounded by cost inflation and a 120 bps investment in advertising and promotion, which we continue, despite the gross margin fall has meant that EBITDA drop has been very large. While our strong market -- with our strong market positions, media investments resulting in recent share gains in Indonesia, and our determination to reduce our trade pipelines, we expect the Indonesian situation to start improving by Q3 FY '23 onwards.

GAUM continued its double-digit momentum on a 3-year basis. The dry hair category grew in mid-single digits, driven by a disappointing performance in Nigeria, while the FMCG category grew in high double digits. The growth flywheel in GAUM has started to move, but we need to simplify business and significantly strengthen governance, which we're working on. The EBITDA margin decline in GAUM was largely due to higher marketing investments.

Our prognosis for FY '23 remains broadly unchanged. We anticipate double-digit top line growth with low- to, if we're lucky, mid-single-digit volume growth. With inflationary pressures abating, we expect sharp margin recoveries from H2.

Our game plan is to enhance category development, driven by relevance, access and marketing investments and funded by a digitally enabled simplification of our organization. We have scheduled a slew of category development initiatives in Q2, which we believe will build relevance for our categories.

For instance, within household insecticide, where we are the market leader in India, we have recently repositioned Goodknight Liquid Vaporizer as a protector of sleep under the campaign, "Neendon ko nazar na lage", and relaunched HIT as well.

Within Air Fresheners to drive premiumization in the category and get nonusers to start using Aer Matic, based on the insight of when guests come home, your bathroom or room needs to smell good, we've launched a campaign which says, if rooms could speak, they would use Aer.

We have recently launched Magic ready to mix body wash in India with Shah Rukh Khan as brand ambassador, which we hope will not just develop the body wash category in India, but make a significant difference to perceptions and plastic usage in the country.

Our journey on simplification is making good progress. Our cost to serve is down 370 bps in Q1. With inflationary pressures abating, we expect that these controllable cost savings along with the marketing investment will give us significant fuel for growth and digital transformation.

Thank you very much. Happy to answer any questions you may have.

[Operator]

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

[Abneesh Roy, analyst]

Yes. So my first question is essentially on the steps which you have taken post joining. So essentially, past few quarters, numbers have been particularly weak in some of the quarters and your 3-year growth is still looking decent. So my question is based on the steps which you have taken say, better emotional messaging in your advertisement, better go-to-market, focusing on core and higher A&P also, the numbers, et cetera, obviously, we can't defer the impact of these steps because they optically weak. So my question is any anecdotal evidence or any initial case studies you can share in terms of all these 4, 5 steps, which can give us more comfort?

[Sudhir Sitapati, executive]

Yes. I mean, Abneesh, more than anecdotal, a simple way of looking at the numbers is to look at what was our trajectory pre-COVID and now we're in a post-COVID. And has our trajectory changed this quarter over the last few quarters is simple question to ask.

And our view, our -- especially if you look at India, where things are stable, Indonesia, we've been doing a lot of pipeline correction. If you take our last 2 quarters, our 3-year's CAGR was about 7%, and it's now moved to 12% in this quarter. So that in itself is quite encouraging for us because when you look at 3-year's CAGR polarity, we feel it's changed in Q1.

Anecdotally, a lot of the initiatives where we have put -- what have we changed? I mean, we have fundamentally increased our media spend. We have fundamentally simplified the organization. The media spend increase is evident to you in the numbers. Simplification of the organization results in cost savings. Those cost savings are, again, pretty evident in the numbers because if you knock off gross margin in working media, you will see that significant reduction in everything else, which is a cost to serve.

In terms of the media working apart from the polarity, the good thing is that where we have made interventions with hair color, with hair care, but even in HR, where we have significantly stepped up our media investment, we are seeing changes in CAGR trajectories.

[Abneesh Roy, analyst]

Sure. That's helpful, Sudhir. Two quick follow-ups on that. One is in terms of HI, seasonality is a very big factor for the industry, and we can't do too much about it. But this better emotional connect income for the advertising message and say in terms of more advertisement against illegal and maybe even more disruptive innovation because this is a tough category, very highly commoditized, could you tell us when do we start seeing more action here, for example, disrupting innovation? Is it more of the FY '24?

[Sudhir Sitapati, executive]

So Abneesh, the diagnosis of the HI, see that in our view, there are two things in the HI category that we probably need to do, which is our 2 core formats in HI, which is aerosol and electrics have relatively low penetration in India and Indonesia actually. And one of the ways of increasing penetration is just increasing media and distribution. We've done that. We are anyway seeing results on a more long-term basis.

The second in the case of liquid vaporizer in India, which has been a bit of an issue for several years, we have repositioned the brand in the previous quarter, where we moved into the Neendon ko nazar na lage. Our insight has been that perhaps consumers, this brand was created as meet that supplier Goodknight dose, and the name is Goodknight and good sleep. Perhaps we have moved a little bit away from that, and there was a little bit of hesitation among consumers to use liquid vaporizers to sleep at night when kids are there, et cetera, which is -- and therefore, we have taken a pretty strong shift from talking about efficacy and performance to talking about sleep of infants.

So I think a combination of these two, in our view, starting to yield results. I know it's not evident to you in the results because basically, during COVID, there was an unnatural increase in the use of household insecticides, which we're now clear to us that consumers were at home, they were very scared to go to the hospitals, et cetera. But over our longer-term trajectory, we are actually quite enthused by our HI performance in the quarter.

[Abneesh Roy, analyst]

Sure. Last question is on Africa business. So in FY '22 annual report also and today also, you called out two things, simplification and governance. Could you give us some steps on both these facts? And when do you see both these issues getting fully resolved?

[Sudhir Sitapati, executive]

See in the simplification part of the business, we have started the process there, which is to focus on the core of our business to reduce our SKUs, to put most of our investments in core market to start advertising, et cetera. So again, on the simplification journey, in Africa over the last few years, at least we've seen good top line performance, but relatively muted bottom line performance.

So I'm hoping -- I mean the top line performance, I think, will continue to be good. And I'm hoping that the steps that we've taken to simplify the business and governance. Governance is a slightly longer haul thing because it is strengthened, it's a cultural thing, and we've got to do it across and there are lots of investments to be made, but simplifications are relatively lower hanging fruit. So I'm hoping we should start seeing results pretty soon in terms of margin performance in Africa as well.

[Operator]

Next question is from the line of Vivek Maheshwari from Jefferies.

[Vivek Maheshwari, analyst]

My first question is on Indonesia. In your understanding, how much of the issues that you are seeing on the ground are right now, let's say, external factors? And how much of those will be something which are more internal and you would be able to address those in the next, let's say, couple of quarters?

[Sudhir Sitapati, executive]

I think, Vivek, in the case of Indonesia, there have been two sets of issues. One is that the -- in the past few years, the macros were indeed quite poor in Indonesia. And I think over a longer period, we've probably not invested enough in Indonesia. In both cases, we've changed. Our investment patterns in Indonesia have changed over the last 5, 6 months, and we are actually seeing macro improvements in Indonesia in the last few months. And the very first measure that we have of whether this is light at the end of the tunnel is to see offtakes. And that has actually been quite encouraging in this quarter, not spectacular, but encouraging.

I mean there is unfortunately been a very large pipeline buildup in Indonesia over the last few years, and that pipeline buildup will take up to, I think, the end of Q3 for Indonesia to really start optically looking good. But on Indonesia, I mean, there's some kind of life. I won't say it out of the woods yet, but there's some kind of life there.

[Vivek Maheshwari, analyst]

Got it. And when you say pipeline, sir, how are you ensuring that? Is it like cutting down on SKUs? Is it that the levels of push was higher in the past? How exactly that is happening? And is there something similar happening in India as well because our checks are suggesting that even in India, you have cut down quite a bit on SKUs?

[Sudhir Sitapati, executive]

No. I think in -- see, cutting down SKUs is a good thing to do in terms of simplification and structural costs. A lot of -- that's the thing we're doing everywhere. In India, we don't have an issue of inventory in the pipeline. So in Indonesia, we have that. For that we're just reducing our sales and only basically, if you have 90 days of inventory and you want to reduce it to 60 days, you're knocking out 30 days of sales.

[Vivek Maheshwari, analyst]

Interesting. And once -- just last follow-up on this. Once you think -- and I think you have indicated by third quarter, it should be done. After that, do you think Indonesia should ultimately get back to double digits in the foreseeable future?

[Sudhir Sitapati, executive]

I don't know about double-digit, Vivek, but I certainly get back to high single-digit growth. I mean -- see in our portfolio, I mean, Africa and India will probably grow structurally faster over a long period of time just in terms of the macroeconomics and so on. So I don't know whether Indonesia will get to fully double-digit growth. And I'm not -- I'm reasonably certain India and Indonesia will -- sorry, India and Africa will, but it will certainly not be where it is right now.

[Vivek Maheshwari, analyst]

Okay. And sorry, one more follow-up, given that you mentioned that point. The delta between high single-digit and double-digit, that will be -- that has to be bridged by macro factors or let's say -- I mean if you are saying that it can be high single-digit and not double-digit, you can actually look get into newer categories if macro is conducive, right? So what will create that delta between -- or bridge the gap between high single-digit to double-digit? Is it just the macro external factor or there can be internal factor which can push up this to double digits?

[Sudhir Sitapati, executive]

I think, Vivek, the honest truth in Indonesia, Rajesh has just gone there. And right now, our mandate is to come out of where we are, which we're having double-digit decline to bring this back to stable growth, recover a good part of our margins. We've got clear plans on India and Indonesia, Africa on how to kind of accelerate growth. I would say our step 1 for the next even 6 to 12 months is probably to get Indonesia back to a steady footing. And then we will think about what should we do in Indonesia, should we kind of get into new categories, et cetera. That's not what we're thinking about right now in Indonesia.

[Vivek Maheshwari, analyst]

Okay. Got it. That's fair. And the second and the last question on marketing spend. So it is very good to see you're talking about growth amongst various other things on the simplification side. But Sudhir, if I still look at your advertising spends and I know denominator is different given the inflation and the price hike that you have taken. But if I go back in the history, you were spending, let's say, in India business almost 11% kind of A&P or marketing spend that was and at a console level at about 8%. Are you happy with the current spending levels because absolute numbers in the last 5 years have also not moved a bit as much? So where do you think this number settles at -- from the current levels of about 6%, 7%?

[Sudhir Sitapati, executive]

No. I mean, Vivek, this is an increased journey. I mean you see it's not prudent and this is a quarter in which we declined our gross margins by 560 bps. But despite that increase in our media spend by 140 bps, quite are not so, right, to spend this kind of media increase in a time of high cost inflation. If your asked question is, is this where we're going to end up at? No. I mean but we're going to do this sensibly because there's no point just generally increasing media, there are lots of other things that have to go with the quality of communication. We have to see what the return on media investment is, et cetera, et cetera.

But I think we should show a strong commitment of our business that regardless of gross margin, regardless of cost pressure, we feel that we will continue to invest. And we -- I mean we're already seeing green shoots. And as we see the return on investment on this media playing up, it will become more and more as time goes on.

[Vivek Maheshwari, analyst]

Okay. And just a follow-up on this again. Do you not think that time is conducive right now to actually spend so while gross margins are going down for you? So is the case with competition? And this is the time for you to basically maybe outspend some of the competition and basically gain share? So is that not a fair strategy given that you don't have any balance sheet concern, you don't have any other cash flow-related constraints?

[Sudhir Sitapati, executive]

Vivek, the core of our strategy is not competitive in share gain for GCPL. It's a strategic development. And therefore, we have to put whatever is appropriate for category development, see the results, modify it and then put more. So I mean there are obviously pockets where we are competing and et cetera, et cetera. But the thrust of our strategy is to develop the categories. And it is prudent. I mean, we can put, as you correctly said, it's not because of the balance sheet now, but one has to be prudent about how much one is increasing and the results one is getting.

I think it's -- I can just say that in quarter 1, I am personally, I know it's not easy to decipher it in the middle of all this data, but I am personally quite happy with the return on media investments that we have seen and in relationship with category development. And this is, therefore, a journey that will continue going forward.

[Sameer Shah, executive]

And Vivek, just to add to what Sudhir is saying, I think directionally, we will invest in the expansion in gross margins, which is expected to kick in the rest of the year in terms of either gaining market share, but more importantly, also driving category penetration.

[Operator]

Next question is from the line of Percy Panthaki from IIFL.

[Percy Panthaki, analyst]

My first question is on HI. So just like you've given the 3-year CAGR for the overall business in India at around 11%, 12%, what would be the 3-year CAGR in home care?

[Sudhir Sitapati, executive]

So Percy, we don't now declare HI results separately, but I think it's suffice it to say that there has been a significant polarity improvement in HI in quarter 1 on a 3-year's CAGR versus the prior quarters. So if you want...

[Percy Panthaki, analyst]

But I know we don't report HI, but we report home care. So home care 3-year CAGR, possible to give?

[Sameer Shah, executive]

Yes. So Percy, I mean just in terms of data and direction, I think the 3-year HI CAGR is close to double digits for us.

[Percy Panthaki, analyst]

Okay. Okay. Secondly, I just wanted to ask Sudhir, I think you were not there, so maybe Sameer can give a perspective across time periods. When this illegal incense stick problem had come up, immediately, we had launched a natural incense stick, we had also communicated that in due course of time, we would be launching an active molecule incense stick, but since the regulatory approvals, et cetera, take time, it would be maybe 1.5 years for the launch. But now it's been like over 4 years, so just wanted to understand what is the -- why is it that we have shared with that project?

[Sudhir Sitapati, executive]

I mean, Percy, as personal, we're, of course, working on burning formats and things like that. But I think our personal view here is that we have to continue to see globally the world is into aerosols and electrics. And our job is to develop electrics and aerosol. And when that -- so those 2 formats are compelling to consumers, then a lot of the proxies and illegal products will disappear. So rather than -- so our strategy continues to be category development with what we are good at, which is aerosol and liquid vaporizer.

We didn't had, of course -- we will figure out what to do practically. And I think Sameer gave you a sense of the numbers, which kind of enthused us. We think that, that is the right way to compete with the illegal incense sticks.

[Percy Panthaki, analyst]

Got it. Shifting gears to Africa, your margins are still in single digits. Can you give some road map as to -- by when we can reach that 15% kind of mark, which is a respectable margin? How long will it take? And secondly, what will be the drivers to go from this 8%, 9% to 15%?

[Sudhir Sitapati, executive]

Yes, I'll answer the second question first. I think there are two issues. Firstly, Africa has been a tale of 2 parts. Top line is being good. It's been driven, frankly, by FMCG growth and distribution improvements, right? So we are on a good journey there. Bottom line has been bad. Bottom line has been driven by two factors. The first is we constantly get governance fix like we got in the last quarter in Africa, which erode profitability. And two, structurally for the size and gross margin of the business, that business is too heavy, and it's too complex.

So what we're now doing is tightening the governance so that we don't have these onetime governance hits. But more importantly, simplifying the business, taking a look at our portfolio, saying which parts of our portfolio will be playing, which parts of our geographic portfolio will be playing. And if it means giving up some businesses in Africa, so be it. And that's the kind of strategy going forward. So kind of choiceful top line growth, definitely focus on bottom line. I hope we get to the numbers that you're talking to by 2025.

[Sameer Shah, executive]

And think couple of other -- Percy to this also will be favorable mix because our strategy is to invest slowly in FMCG, which is going to be a favorable mix from a gross margin perspective. And also, we expect a little bit of scale leverage cost saving programs to kick in to get to that 15%, 16% percentage EBITDA by 2025.

[Percy Panthaki, analyst]

So when you say FMCG, you mean wet hair care here?

[Sameer Shah, executive]

Wet hair care, household insecticide, soaps and hair colors, that's a basket of FMCG, which is close to 45% for overall [indiscernible].

[Sudhir Sitapati, executive]

But the core of the business, Percy, is wet hair and the next core will be household insecticide. So this is the 2 businesses there.

[Percy Panthaki, analyst]

Okay. And what really went wrong in dry hair care, what was the reason? I mean we were quite positive on this category when we did the acquisition in 2012. What went wrong here?

[Sudhir Sitapati, executive]

Well, I mean, in the recent past, I mean, there's a long history of our business in dry hair care. But in the recent past, it has been doing quite well in terms of top line, but not as well as we want in terms of bottom line for the reasons that, I mean -- so asking for historic reasons, Sameer is a better guide to talk. But in the recent past, the governance and the complexity reasons are the reasons why this business has a low EBITDA margin.

On a longer term basis, Sameer, you may want to talk?

[Sameer Shah, executive]

Yes. No. I think the shift in strategy is to sort of hair care extension cash flow, right, when we've to create the pool for investments for FMCG. I think the growth will come in from both the categories. And it's not about completely defocusing also hair extensions, but making it much more simpler than what has happened historically, whether it be number of SKUs, the number of new styles and then in terms simplifying the rest of the business operationally. So that's the shift in strategy. Otherwise, it's very much going to be integral part of the portfolio going ahead in Africa.

And also, it's a category where Group 2 market's and all, influence work, I mean, ina much better than pure kind of media investment, whereas FMCG is a classical FMCG space where the media investments along through to market, do get us some profitable, sustainable sales growth.

[Operator]

Next question is from the line of Gaurav Jogani from Axis Capital.

[Gaurav Jogani, analyst]

My first question is with regards to the launch of the body wash for the [indiscernible] front. I mean, I think of what would be your easy customer here [indiscernible].

[Sameer Shah, executive]

Gaurav, sorry, we can't hear you. I mean there's a lot of echo coming in. Can you...

[Gaurav Jogani, analyst]

Is it better now?

[Sameer Shah, executive]

Yes, it's much better.

[Gaurav Jogani, analyst]

Yes. So my first question, sir, is with regards to the body wash segment of the INR 45 that you have launched. Sir, wanted to understand who would be our target consumer segment in this launch that we're targeting. I mean while the mass or the mid-premium guys would be using soaps and it's only the top-end guys who are using the body washes, so what kind of strategy you'll be targeting here?

[Sudhir Sitapati, executive]

Gaurav, I mean, look, the body wash offers some significant benefits to soap for everybody, whichever high income or low income. I mean the reason that only high-income consumers in India use body washes are the price index to soap is 1:3. So bringing the price index to 1:1, we are hoping that body wash becomes a mass market offering. So this is -- obviously, it's a game-changing innovation, but it is a mass innovation aimed at mid-income and low-income consumers.

[Gaurav Jogani, analyst]

And sir, my next question is with the last 2 [indiscernible] activity over the past 4, 5, 6 months. We have been kind of taking the price profit down. So for example, we see hair colors as we have introduced...

[Sudhir Sitapati, executive]

Gaurav, it's not very clear.

[Gaurav Jogani, analyst]

Sorry, sir. Now is it better now?

[Sudhir Sitapati, executive]

Yes, much better.

[Gaurav Jogani, analyst]

Yes, apologies again. So sir, my question is with regards to, again, the price/mix that you have even taken down over the past 5 to 6 months in terms of with the hair colors growing the INR 15 launch or, for example, even this body wash launched for INR 45 or the HI fees that we have done, the relaunch of the older version. So how is it expected to impact our margins -- margin profile given that this will be a bit lower price point products?

[Sudhir Sitapati, executive]

I mean, look, the margins, firstly, in India are healthy, and I think a lot of analysts rightly say that we should invest in consumer value. And therefore, our #1 priority, as I've said before, is to drive volume growth back. But having said that, while this may be lower than some of -- they're generally accretive to the company. And if you get volume growth, with the kind of leverage you will get, it's very unlikely that they will have an impact on margins.

All the -- they're all structurally and fundamentally high margin, they may be slightly lower than what we are selling today in the market, but you're better off setting a lot more at 70% gross margin than a lot less at 80% gross margin, right?

[Operator]

Next question is from the line of Shirish Pardeshi from Centrum Broking.

[Shirish Pardeshi, analyst]

I have two questions. One is on India business. And when I see that you have reported on Slide 13, personal care growth at 25%. So I just wanted to understand what is the price and volume in personal care?

[Sameer Shah, executive]

Yes. So I think, Shirish, for competitive reasons, we don't share the parts of categories on a unit basis, but the [indiscernible], I mean, if we double click personal care, in soaps I think a good part of growth is pricing-led, but equivalently in hair colors, which is the other kind of beauty component in personal care, a good part of growth is actually volumes-led. So I would say the UVG would be kind of reasonably kind of steady over there.

[Shirish Pardeshi, analyst]

But at least for India business, will you be able to share what is the volume growth?

[Sameer Shah, executive]

Yes, we have done that, Shirish. On the same slide, actually, you see India's UVG on a Y-o-Y basis has declined by mid-single digits. And on a 3-year basis is actually close to mid-single digits positive.

[Shirish Pardeshi, analyst]

Okay. My second question is on the margin front. I mean, yes, we know Indonesia will turn around after quarter 3 onwards, but I'm not saying in terms of guidance. But the bigger thing which I'm seeing, and I think some earlier participant also raised this. The ad spend, right now, we are seeing, on average, we're doing about INR 200-odd crores. But in the past, we used to do about INR 250 crores to INR 300 crores. So I do get what Sudhir has offered saying that we want to be very competitive and we've got the benefit. But it's just not the advertising. But if you can spell out, what is exactly the spend? I mean are we spending more on category development in terms of the below the line? Or do you think ad spend is not materially going to help at this time, and maybe in future, we will look at it?

[Sudhir Sitapati, executive]

No, no, ad spend is going to materially help in this time, and it is helping in this time. So quarter-on-quarter, we've increased our ad spend by 150 bps, which is a pretty significant jump for a quarter versus a quarter. I mean we may not directly go back to the peak quarter that we've ever had before. So we're also constantly iterating.

Bulk of this is in mass media, which is largely on television and then on digital, which is basically on YouTube and OTT, and it is largely towards category development and focus on the core. So the other big difference is that this kind of media increase is not spread out over a huge number of small projects, that's spread out over market development on the core of our business. So even qualitatively, the way we're spending money is -- big money is on a few big things.

[Sameer Shah, executive]

And also the BTS spend, what you are referring, the below-the-line spend, we should actually come down in the quarter, which is reflected in the overall cost to serve by 350-plus bps. So the strategy is to kind of have more of media investment and reduced on promotion spend and other aspects of the consumable spend to increase that going for investment.

[Shirish Pardeshi, analyst]

So Sameer, how do we should model? Is that about 7% for full year is a good enough thing? I'm purely asking from the modeling purpose.

[Sameer Shah, executive]

I think it's difficult to give the guidance on that, Shirish, but Sudhir did mention in his opening remarks, right? I mean even as of today on a full year basis, we do expect, I mean, say, conservatively our margins at overall level will be maintained. But what will be more important over there is the quality of profit, right? They will significantly improve in terms of gross margins going up, in terms of ad spends going up, the cost to serve are coming down. So that is what we are being imposed about. And net-net, I think on a full year basis, at least sitting over here at this point in time, we do believe that we'll be able to maintain our margins, if not in the next quarter.

[Operator]

Next question is on the line of Sheela Rathi from Morgan Stanley.

[Sheela Rathi, analyst]

My first question was with respect to the category developments which you have talked about, Sudhir. So I understand around HI what the plan is. But on the personal care side, do you think that we will be expanding this category beyond body wash? Are we thinking about going deeper into the personal care category in the course of next couple of years?

And as sub question to that is, do we have a plan around our distribution target, which we plan to reach in the next 2 to 3 years? This is across the spectrum. So this is my first question.

[Sudhir Sitapati, executive]

See, in personal care, we have 2 businesses which are large today, one is soaps and one is hair color. I think soaps is not a category development task. It's a market share task. The category development task is really in hair color, and that's going to be the focus of our development. And one of the things that we have done is to launch an access pack and that is yielding good results so far. So I would say that while, of course, we've done Magic Bodywash and that's kind of something that is -- can really do well for us. I would still see a focus of our personal care business in the next short term will be in developing in Crème market and hair color.

What was your second question?

[Sameer Shah, executive]

Distribution.

[Sudhir Sitapati, executive]

Yes. Sorry, on distribution, I think in India, our distribution of soaps is very good, and that's the lead category and all the category development categories are a subset of soaps. So given the fact that our focus is on category development, it is not as much of going to new outlets as much as taking these categories like aerosol or liquid vaporizers to outlets that we already cover. So it is to leverage our distribution for category development.

However, in Africa and Indonesia, I think there is definitely a very strong drive in Indonesia to improve our GT distribution and in Africa to increase our general distribution, which is today very, very wholesale focus. So I would say Africa followed by Indonesia are our distribution priorities. India is much more about being more efficient about using what we have for category development.

[Sheela Rathi, analyst]

My second question was on the media sense. I know there have been a lot of questions on that. But just wanted to confirm, have you called out that ad spend would be double-digit as a percentage of sales over the next 12 to 24 months?

[Sudhir Sitapati, executive]

No, we have not called this out. I think you see many companies in personal care globally do spend those kind of amounts in ATL. I don't think one should have a target spend on ATL, I mean, that's not the right way of doing it. I think I want to keep us sort of saying that into one too low and one too high. And then one has to constantly increase it, I trade it and see what the return on investment is, right? Because it's not just an ideologically thing that we want to spend so much money we've got. So it's not proper for us to go directly from A to B because this is the right amount to be spent in personal care. So you constantly do. Like this quarter, you've got 150 bps. We may be on that kind of rhythm for some time.

And if we don't see good results, sort of titrate a little bit and say, "Hey, what's going wrong, which you see good results and create it a bit more." So I think that's probably how we will phase out our media increase. I think it's fair to say that we will continue to increase our media spend but probably not right to give a number and then we'll get to it.

[Sheela Rathi, analyst]

Right. And this will not be at the cost of margins, I would believe?

[Sudhir Sitapati, executive]

Sheela, I mean, the other way we think about this is that our #1 priority is volume growth. We should do what it takes to get to volume growth, especially in core markets in India and Indonesia. And at the same time, we're putting a lot of work on cost. You can see it in our results. This time we knock off gross margins, you knock off media, and you'll see how much savings we've got, some of those savings are onetime like bonus provisions. But even otherwise, the savings are quite high.

So I think these are two separate tracks that we're on, volume growth driven by investment and kind of ruthless cost savings. And whenever they add up to, they add up to because -- and I suspect they will not add up to massive gross EBITDA dilution.

[Sameer Shah, executive]

And I think just to add, Sheela, in medium-to-long term, we don't think so that the increase in ad spend will come at the cost of margins. Especially in the rest of the year, we do believe, I mean, our gross margins have bottomed out. We will see gross margins maintenance took expansion. But in very short term, like I mean the most in Q1 if we are going to invest, we will not shy away either, right, even if it comes at the cost of margins. Because the benefit of higher kind of media spend will result in sustainable UVG in medium-to-long term.

[Sheela Rathi, analyst]

Understood. So the third question was on just, how do you see the future, say, in the next 3 years? Because especially when we are talking about simplifying Africa business, electrifying Indonesia business, do we have a number in mind in terms of what the share of India business would look like in the next 3 years? Will it be higher than where we are now? Or will it be a similar to the current level?

[Sameer Shah, executive]

Well, I think there are two ways of looking at it, Sheela, right? One is the share of India business from a revenue perspective and then share of India business from a profitability perspective. As we have called out, I mean, Africa is equally important. We do expect, I mean, sustainable sales growth has been demonstrated, actually since last 7 and running quarters. The profitability is something which kind of scale up over the next 3, 4 years over there.

India, I mean, we do expect, again, a sustainable, profitable sales growth. In Indonesia, I mean, maybe after a couple of quarters, should be on kind of gradual recovery. So we don't have any such, I mean part kind of ambition in terms of what should be India see in terms of revenues or profitability, but it's very market specific. And in the past, we had also highlighted that within our portfolio, 80% kind of savings comes from the big 4 markets, which is India, Indonesia, Nigeria and Bangladesh, and we'll continue to overhead, I mean, in those markets, geographically.

[Sheela Rathi, analyst]

Understood. Yes. And my final question was with respect to the dividend policy. How is the company thinking about paying out dividends starting this year? Or what's the plan there?

[Sameer Shah, executive]

See it's a Board decision at the end of the day, Sheela. I mean, thinking -- I mean, at least over the last couple of years was to use the free cash flow towards retiring our debt. I mean, while it net debt, we are in net cash, I mean, vis-a-vis. But there's still a gross rate. So we'll keep on evaluating multiple options of using the cash flow, either retiring the debt or rewarding the shareholders through all the possible options during the course of the year.

[Operator]

Next question is from the line of Avi Mehta from Macquarie.

[Avi Mehta, analyst]

Just two questions. Sudhir, on this HI focus, does the focus on communication entail more market share gain kind of court process rather than category development? Would that be a right way to look at least in the near term?

[Sudhir Sitapati, executive]

No, Avi, I don't think so. I think that especially the HI solution is a combination, frankly, of 3 things of relevance, which is communication-driven; trial, which is sampling-driven; and access, which is to get the right price points in the categories that we operate in. We have started off and it's most visible because of media spend, et cetera, on relevance. But this communication that we are doing is not -- if you see, for example, Google is the latest Goodknight communication, it is not market share kind of communication, it is growing the pie kind of communication.

[Avi Mehta, analyst]

Okay. No, the reason is when you kind of mentioned it, you said that to counter the instance this is how it felt that you're trying to gain share from incense sticks through this communication versus if I remember in the earlier conversations, you said you want to develop the base and the product development would allow us to expand the category to that extent. So that is where...

[Sudhir Sitapati, executive]

That's what you're saying. No, no. I think if that's what you mean, we see this category is 75%, 80% penetrated in India. A large amount of it is coils and incense sticks. And when we say develop the category, I mean, develop the category for aerosols and liquid vaporizers, not to win share within liquid vaporizers and aerosol. But to really upgrade people from burning formats into these formats is the consumer task. If you're seeing share of overall HI, then the answer is yes. Because there aren't that many people in India, we don't use any HI through the year. So in that sense, yes.

[Avi Mehta, analyst]

Okay. Got it. Got it. That's clear. And the second bit, I wanted to just clarify this. In Indonesia, you said change in investment patterns. Was this more just that there was lesser marketing done on the core, and that's what you're changing? Or is there a divergence or a difference in the way marketing is being looked at now versus even pre-COVID?

[Sudhir Sitapati, executive]

No, Avi, Indonesia -- I mean, as I told you, there are two issues. But since you're asking the question on marketing, was a more acute symptom of overall company was that the overall ATL spends were way too low in Indonesia for a very long period of time. As a consequence, EBITDA was very high and the consequence growth has been not very good in Indonesia for a few years. So that is a structural change that we are doing. Like we're doing everywhere else in the world, in Indonesia, it's the most acute. So that's what we're changing in Indonesia.

[Avi Mehta, analyst]

So if I were to extend this further, the normalized margin, would you have a thought in mind of where you would want Indonesia to be? Because obviously, the 22%-odd that we saw even pre-COVID was on the back of very low ATL. So is there a number you have in mind...

[Sudhir Sitapati, executive]

Pre-COVID, Indonesia was at running at 26%, 27% margins, I guess -- so it's not 22%, there's very high margins. There have been quarters in which it's crossed 30% and all. But I think that, again, is not probably the right question. I think the right question to ask is, what is the amount of media investments that we need to put that media investment, whatever the consequence on EBITDA is. And then at the same time, ask the question the cost savings possible.

So again, on Indonesia, I mean, the nature of businesses if you ask me that we're operating in Indonesia, if we're efficient about it, can operate with higher ATLs roundabout the EBITDA that we're operating at without being exact about it. So in other words, there's enough scope for efficiencies even in Indonesia for us to fund significant ATL increases.

[Operator]

Next question is from the line of Alok Shah from AMBIT Capital Private Limited.

[Alok Shah, analyst]

My first question is, Sudhir, in the previous quarters, I think in the 4Q conference call, when there was a question on HI, you said that you will discuss that in detailing 1Q. In this presentation in the conference call, what you understand is about the new marketing message, et cetera. So am I missing something about your or is my understanding correct so that the change is largely on the marketing piece?

[Sudhir Sitapati, executive]

No. I mean I didn't quite get the first part of your question. I think on HI, so let's ask the question, what is that we have changed in our HI business, what is it that we will work towards and what are the early results, right? So that's probably the good way of looking at it. And let's look at India because Indonesia there's a lot of noise around the data.

I think we have increased our marketing spend. That's a fact. We have changed the positioning of Goodknight. It's a significant change moving it from efficacy and performance to good night sleep. We are doing a reasonable amount of trial generation, and we are figuring out what to do to make the premium parts of this category more affordable. This is what we are doing and what we are trying to do.

The result that we can measure given the various bases of HI in COVID, which we've been saying for some time that COVID had a massive tailwind on household insecticide. Our -- we can look at our market shares, which we are enthused by, and we can look at our 3-year's CAGR versus our trends in 3-year's CAGR.

And as Sameer said that our structural growth rate pre-COVID in HI used to be in the low single digits. We are now in -- the 3-year's CAGR of this quarter has gone to the high single digits. So there has been a polarity change, whether it is only a 1 quarter phenomenon. So optically, while HI looks and home care looks like poor results. This has been a pretty significant polarity change. We'll wait for 1 more quarter because on HI, I don't want to call it victory too soon because we've done it, but we'll wait for another quarter, which is this quarter, and see if that polarity continues, which is our 3-year's CAGR momentum has moved up. If it's moved up 2 quarters in a row, which are generally not COVID quarters or no external change, then we can say, yes, what we're doing is working.

[Alok Shah, analyst]

Got it. And, Sudhir, my follow-up to this is that in terms of your marketing message moving away from efficacy to the new message. Now I'm clear maybe this is my understanding could be wrong. But when this illegal incense sticks came up, it was more about problem solving in terms of efficacy, right? People found a product with an immediate solution. So do you think that efficacy, you can match up on the efficacy using the LV assuming the time that it is to burn and spread across in the room. And the efficacy is not a problem, but the communication was the problem statement and that is what we are trying to address.

[Sudhir Sitapati, executive]

See, we have 2 brands in our portfolio, HIT and Goodknight. If you see our HIT communication, which I've not spoken about in detail, actually ratcheted up positioning on instant efficacy. So consumers have two big needs in this category. One is instant efficacy. And we've got a brand HIT, which is going to do that single-mindedly. And they have another need in the category, which is to see while at night, which Goodknight is going to do. So what we are now doing is both brands have clear roles to play, 1 on efficacy and 1 on good night sleep. And these are the two big needs in the category. If you've asked yourselves, sometimes you'll find mosquitoes in the room, you want to kill them immediately, you need efficacy. Sometimes you just want to sleep well and not have that noise of mosquito coming in the middle of the night and sitting on your hands. You need a good night sleep, which is what LV is. I guess that's a change because the 2 brands are taking fundamentally different positions, which is what I get good positioning is about.

[Alok Shah, analyst]

Okay. And my second question is on the formative liquid body wash that you launched. No, you already had probably liquid hand wash soaps. What are the learnings from that and you're gathering in the consumer feedback? You find that your consumers need to mix it using in the right proportion, et cetera, to get the efficacy? Was that not an issue? And if that was and how will you sort of address that in the body wash because this plays a larger part of your overall hygiene versus just the hand wash?

[Sudhir Sitapati, executive]

We launched hand wash 3 or 4 years ago, and we've been quite enthused by the response of Magic hand wash. We've taken a pretty strong position, especially in volume and usage terms in the category. I think #2 in terms of volumes now in the hand wash category. And we've done a steady game, and we find that consumers are willing to go through that slight bit of effort of getting their the recipe right as it were because of the big benefits that they get in value.

So the hand at the end of the day is 1% of the body. The body is 99%, right? So if hand wash we can have a pretty significant business in 3, 4 years, if that same hypothesis works on body wash, that's a huge benefit. I mean it's a huge market that we are playing in.

So I mean, again, on innovation, I think Magic Bodywash is a good illustration of innovation, right? It's not that as a company, we're only doing category development but not doing innovation. But we are doing innovation that can become massive for us. So these are not incremental innovations. These are innovations that can game-change the category. Of course, with all innovations with the risk associated, how much time it will take should we build it into the business case. We don't build in these numbers into our annual plans and so on because we know that innovations take time, but we'll be patient and persistent. Because fundamentally, we think that if you can give a body wash at the price of soap in India, there is no reason why the market over a period of time shouldn't upgrade in a pretty large sense.

[Alok Shah, analyst]

Okay. No, fair enough. Fair enough. And my one last question for Sameer is that the investment in subsidiaries this time around has gone up largely to Mauritius Africa holding. So any specific reason for this increase in investment? This is what I wanted to know.

[Sameer Shah, executive]

No. So this was largely to kind of support some of those operating entities because of the very tight liquidity challenges, which they are facing on ground. Also, the way this works out is that a good part of this dollar come back from the local entity to the operating entity because there are a lot of intercompany payables. And in process of doing that, we also end up saving a bit on the ForEx cost in some of the entities on ground.

[Sudhir Sitapati, executive]

But Sameer, is it right to say that structurally, this is not putting new capital into Africa, it's African, they are to going back to Africa. So one of the general principles that we are operating with is no new capital to Africa.

[Alok Shah, analyst]

Okay. So there is the capital which you bought back in the day to repatriation and which is again getting used. Is that?

[Sudhir Sitapati, executive]

Yes.

[Operator]

Next question is from the line of Latika Chopra from JPMorgan.

[Latika Chopra, analyst]

I heard your comments on some of the categories. I just had a two follow-ups. The first one was on HI. It seems that you are reducing your focus on burning formats and incrementally, the focus is on the premium side, which is aerosols and vaporizers. So is it fair to assume that probably the next big intervention that could possibly come in this category from you are the lower price points in these premium factors? And the second part was if you could want to share some thoughts on the non-mosquito part of the business? That seems to be doing well. What more can be done there? That's the first question.

[Sudhir Sitapati, executive]

Yes. No, I mean, Latika, actually on question one, definitely aerosol and liquid vaporizer is where our focus is. And we are appropriately playing within burning formats were required with like, for example, a Jumbo Fast Card, which we've dropped to INR 10, et cetera. And we will definitely work towards market developments on these categories. It's not correct for me to say what exactly we will do in the future. But definitely, price is a dimension in India on development of all categories so that we will do.

I think on non-mosquito, the big area of development is cockroaches for us. And cockroaches penetration in India is very low. So we will -- while we are solving mosquito, the second big insect that we're working on is cockroach, and there also are seeing very good results. There are a few others that exist, but I would say that we would first win in mosquitoes then in cockroaches and then go on to the others.

[Latika Chopra, analyst]

Sure. And then the second one was on hair colors. This INR 15 price pack, is it now nationally launched? And any initial learnings here that leading to new consumers into the category for you? Is it leading to market share gains? Or is it -- are you seeing some cannibalization versus the earlier SKUs that were present?

[Sudhir Sitapati, executive]

So to answer your first question, yes, it is national. The response has been for a quarter and as we can see in the personal care results, the response has been quite encouraging. In general, what happens when you launch a democratized part is it actually takes time to build. It doesn't happen overnight. So initially, you will have a lot of excitement. And actually, the cannibalization is not usually at least from my past experience massive, and it has not been in this case either as I thought it would be.

But these things are, again, examples of category development. It's not just that you launch it and forget about it. You have to go into rural outlets. You've got to go and market template into the outlet and say INR 15 hair care available here. So it's a hard journey, and I think it's begun well. I think the numbers are pretty good. It's begun well, but it's certainly, none of these things are magic bullets, Latika, so this takes that time.

[Latika Chopra, analyst]

Sure. And then the last one is for Sameer, you called out very specifically 2025 margin expectations for Africa. Just looking at how you're trying to focus on volume growth for the India business, and clearly, there is a little bias also towards some of the premium formats in HI. We used to do like mid-20s margins, 25% over a couple of years before COVID. Do you think those kind of margins are something that you would like to achieve over the next 3, 4 years for the India piece? Or we are, as a company, pretty okay to operate at low 20s for a while and just concentrate on building top line?

[Sameer Shah, executive]

I think a couple of things, Latika. One is what will be very important is the quality of profits and not just the margins, optics, right? We definitely do all sorts of look on gross margin. We will see, I mean, meaningful reduction in cost to server and will see increase in marketing spend. At this point in time, we remain relatively confident that in a market like India, we should reach to kind of mid-20s in terms of margin profile.

[Operator]

Next question is from the line of Sumit Agarwal from ICICI Bank.

[Sumit Agarwal, analyst]

Just one thing that I wanted to understand was the company. Is the strategy in terms of what you guys are looking at for the strategy? Do you look -- are you looking for you being a mass category or looking for to premiumized brand also? Because what I see is every time there is a to and fro in terms of your strategy. First, in HI, it was incense sticks, now we are aerosol, which is slightly on the premium side. Sir, Godrej No. 1 on the soap side, do you -- it's more of a mass side. You tried on the Cinthol to premiumize. Similarly for hair color, it was Crème, then you've move to power, then there was some focus on the powder side, then again on the Crème but with a lower price points. So what's the strategy in terms of where do you want the Godrej brand to be? Is it a mass product? Or is it a premium product?

[Sudhir Sitapati, executive]

No, I think there are several questions that you're asking. So let me answer them.

[Sumit Agarwal, analyst]

Yes. So there are a lot of to and fro in the strategy that you guys have been adopting in the last 5 to 7 years. I agree you are new, but probably Sameer has been there. So if you can talk about -- both Sameer and you can talk about how you are now going to take it because you have not been very successful in taking the brand to a premium side. Godrej No. 1 was a good soap brand, say, 7 or 10 years back, but now it's considered to be a lower-end brand similarly for other categories that you have been there.

[Sudhir Sitapati, executive]

No. So listen, I have not been in the company, but I mean there are many things that are said about the company and have criticized. But I don't think that, by the way, the company has been doing and growing even some outside on this particular one. I think it has been a company that has broadly been democratizing beauty and hygiene businesses as simple as that. Now it is an assumption to say that aerosol is premium and this and that. I think our focus is on the value of the Indian market. It is to take great products and to make them affordable. And that is true about everything that we're doing -- done in the past. And some exceptions maybe like rebrand, et cetera, and we've kind of -- no longer in that business.

But the vast majority of our business has been looking at middle and lower-income India and democratizing great products. So I think that's broadly been pretty consistent, by the way, about the company. I mean even in aerosols, the strategy is not to premiumize from aerosol into more premium aerosol. It is to make aerosols more. Because aerosols have natural benefits to consumers in terms of efficacy, in terms of usage. And to figure out ways in which we can make the aerosol format more accessible and more democratic to everybody. So I would firstly say that there is clarity in our business that we have a democratization business, and we're going to democratize products in India.

And I would say it's been done reasonably consistently in the past. Now to come to the questions on brands and where they are, we are a company with several brands. Godrej No. 1 is certainly playing in the kind of middle of the market. It's been consistently gaining share, and it's been doing quite well. I mean -- and the brands have different roles. And I certainly don't agree with this thing about Godrej No. 1 being a premium brand in the past and now a mass brand. I think it's a loved brand for a whole host of consumers in North India, in particular. And it continues to do that and it continues to do well.

So I mean I'm quite happy by the way to take criticism. But I don't see a major yo-yo in our strategy, it's been consistent on democratization. I mean democratization doesn't mean if you go to aerosol and take liquid vaporizers and make it accessible and relevant for low income. Democratization in is a good product. It has to do with the consumer you're talking to, right? And that consumer has been a medium-term consumer low-income consumer.

[Sumit Agarwal, analyst]

Okay. Sir, one more thing, air purifier brand, you have done a fantastic job in creating this brand. How quick is this air purifier brand now for...

[Sudhir Sitapati, executive]

I don't think we can share the numbers of the category because we don't share specific category details. But I think the air purifier, again, is an exciting category, right? Maybe you see it's a category that across the world has pretty high penetration and very high consumption. And in India, our job is to democratize this category. So it goes back to your question on are we premiumizing air purifier? No. We are taking the air category, which is a great benefit and trying to see how we can make it accessible to all. We are bullish about the future of the air category both in India and Indonesia for that matter.

[Sumit Agarwal, analyst]

Okay. And any other -- see, apart from this powder hand wash and the powder body wash, are you looking for further category additions in this FMCG side? Or you would first look at the powder body was and then add on?

[Sudhir Sitapati, executive]

See, I think it's not proper for us to say what we will do in the future, but I think it is enough to say that bulk of our energy and effort will be on category development. And when we do innovations, there will be few heavily supported and hopefully game-changing. But the vast majority of our efforts will be going behind developing what we already have. We won't be in a hurry to keep launching things without having the space within the P&L to support these and to do them properly.

[Operator]

[Operator Instructions] Next question is from the line of Dhvani Shah from Investec Capital Services India.

[Harit Kapoor, analyst]

This is Harit from Investec. So I just had two questions. In your release, you had mentioned that you expect a recovery in consumption with inflation coming off, just wanted to get your sense about whether you're already seeing this on the ground. And any early signs, especially on the consumption side, inflation probably hasn't come off so much for the end consumer. But any on ground trends that you're seeing even post Q1 that you can kind of just talk about, which is specifically for India?

[Sudhir Sitapati, executive]

Yes. No, I think I was just talking to Sameer, as I told you, we are quite enthused with our Q1 3-year's CAGR, which is the right way to look at it. A lot of the cross questions on what's happening to the rural slowdown, urban slowdown. My answer is look at the 3-year's CAGR on rural and urban and you'll find them pretty similar. So I do feel like given the fact that polarity has changed a little bit in Q1, I'm sure some of it has to do with consumption coming back in India. So it's hard within the quarter to judge when you see a green shoot, is it because of your action or is it because of a macro trend. Often, it's a combination of the two. And therefore, I would say that Q1 certainly is more -- I'm more bullish on consumption of the country than let's say it was in Q3, Q4.

[Harit Kapoor, analyst]

Got it. The second question is on Africa. So I had two questions here. One was on the change in mix side. So when you invest in FMCG in Africa, I think one of the elements was also higher marketing spend because competitive intensity in wet hair is probably very different from dry hair is. So just wanted to know in terms of interplay, does a higher gross margin get offset by the higher marketing spend that you have to put on this category?

[Sudhir Sitapati, executive]

See again, in the wet hair categories that we operate in Africa, the consumer task in market development, it's not competitive intensity as much as to drive the categories themselves. And category will require high media and the FMCG, especially personal care categories operate with high GCs and high ATL investments, and they generally tend to have EBITDA that starts coming with scale and leverage. So we have to look at these 2 businesses separately in Africa, one, which is a relatively low gross margin business, which is dry hair which has to get driven through efficiencies; and one which is a small but high gross margin FMCG business and especially wet hair, which gets driven through media investments.

[Harit Kapoor, analyst]

And just a follow-up on Africa. You said that apart from getting the whole compliance element correct, et cetera, there is also -- there will be some pieces that you'll have to maybe look at reducing focus on certain smaller markets that continued focus on the larger pieces. I just wanted to understand if there is any kind of correction that we can expect in Africa, not like Indonesia, although I think that size of corrections is larger. But something like that even in the quarters going forward as you kind of realign your business there.

[Sudhir Sitapati, executive]

I don't think we will expect a correction like we have seen in Indonesia and Africa because Indonesia was a unique issue with a market slowdown, plus a few mistakes on our part leading to very heavy inventory buildup which had to be reduced. I don't think that's the problem in Africa. The African issue is slightly different than which we'll have to rationalize our portfolio, rationalize some of our operations to simplify our business, but that will not have a kind of impact on top line, the way the Indonesia corrections in the last 1 or 2 quarters and this quarter is having.

[Harit Kapoor, analyst]

On margins, Sudhir, you can say any onetime kind of impact you might have to take write-offs, et cetera, over the next 12, 18 months, some small cuts here and there, which could come through?

[Sudhir Sitapati, executive]

I mean I don't think anything of -- I mean difficult to now judge the future on what will happen. But as I see it now, in the foreseeable future, there's nothing in Africa that we'll have to surprise that is there. But one of the things about surprises, you never know, right?

[Operator]

Next question is from the line of Ashwani Agarwalla from Edelweiss Mutual Funds.

[Ashwani Agarwalla, analyst]

Sir, got a few questions. Are we planning to develop more of the product since we have our distribution network? Are we planning to go more into detergents, toothpaste and shampoos categories, which we are not still catering to?

[Sudhir Sitapati, executive]

Thanks, Ashwani. No, listen, again, it's not proper way to say what we will get into and what we won't get into. But I guess the answer remains the same that our business is going to focus on the core and on category development. And a few blockbuster innovations where we genuinely believe we can solve a consumer problem in a differential manner. I certainly -- I don't think we will get into categories for the sake of getting into categories.

The Magic Bodywash is a good example. It's not an entry into body wash, but it's a very differentiated entry into that category. But those will be few and far between, bulk of our resources will be on developing what we have.

[Ashwani Agarwalla, analyst]

Okay. And in terms of soap, we got only 2 products, as it Godrej No. 1 and Cinthol. So any plans of using a body wash for these 2 soap or introducing any kind of a winter soap? Because people would use this soap for summers or non-winter season, but in winter, they would switch to another soap. So why leave the customer for that period as well?

[Sudhir Sitapati, executive]

Yes. I think both Godrej No. 1 and Cinthol together, we have a little less than 15% of share in the market. So we have a long way to go on these brands and there are a lot of tailwinds and a lot of momentum. So again, I guess the answer is the same, which is we've got a lot of ground to cover on what we have before we start thinking on new things.

[Operator]

As there are no further questions, we have reached the end of our question-and-answer session. I would now like to hand the conference over to Pratik for closing comments.

[Pratik Dantara, executive]

Thanks, everyone, for joining the call. If you have any further questions, do reach out to the IR. Thank you.

[Operator]

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