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Godrej Consumer Products Ltd
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Ladies and gentlemen, good day, and welcome to Godrej Consumer Products Limited Q3 FY '21 Earnings Conference Call hosted by ICICI Securities Limited. [Operator Instructions] Please note that this conference is being recorded.I now hand the conference over to Mr. Manoj Menon from ICICI Securities. Thank you and over to you, sir.
Hi, everyone. A very good morning, good afternoon, good evening, depending on which part of the world you are joining the call from. At ISEC, it's our absolute pressure to host the Godrej Consumer management team on the 3Q FY '21 results call today. At ISEC, we have been long-term believers in the GCPL value-creation story. Particularly in the third quarter FY '21, it's been a good performance, particularly in those parts of the business where we would have wanted to see growth at consensus, we have seen that. And it's more important that this is given the market context in the delivery is how we see it.That said, over the course of the results presentation and the call, we would see clarity on potential for long-term double-digit volume growth in, let's say, India HI, and also the new management driven turnaround in Africa. There's a couple of things, if time permits, I would definitely want to engage with the management after we take the question queue later. Thank you, and over to the GCPL team.
Thanks, Manoj. Good evening, everyone. We hope that you are staying safe and healthy. We will be covering this evening the results for the quarter ended 31st December 2020. On the call from GCPL, we have Ms. Nisaba Godrej, Chairperson and Managing Director; V. Srinivasan, CFO and Company Secretary; and Mr. Sameer Shah, Head, Investor Relations.We will start with Nisa sharing her perspective on the business performance. Over to you, Nisa.
Thank you so much, Pratik. Good evening, everyone. I hope you and your loved ones and families are safe and healthy in these times, and thank you so much for being with us on this call today. In quarter 3, GCPL delivered a second consecutive quarter of double-digit profitable sales growth.Our overall sales grew by 10%, EBITDA by 13% and profit after tax grew by 17%, excluding exceptional items. 81% of our global portfolio compromises of Household Insecticide, Hygiene and Value For Money products, and had a combined growth of 14%.Hygiene continued its strong growth momentum, growing by 19%, and we look forward to strongly building on this category opportunity in the years ahead. Value for Money grew by 22%. Growth in Household Insecticides was at 5%.From a geography perspective, India recorded a sales growth of 11%, led by strong growth in Hygiene, including soaps and hair color, and steady growth in Household Insecticides. Overall, rural grew much ahead of urban. The scale-up of the e-commerce channel continues, and we've also seen a recovery in modern retail.Indonesia delivered a soft performance with a 2% constant currency sales decline. This was impacted by adverse macroeconomic factors, the gradual recovery in air fresheners and high competitive intensity in wet wipes. Our Africa, U.S.A. and Middle East business delivered profitable sales growth of 17% in constant currency terms. I'm very happy with the strategic focus and growth mindset Ganesh has brought to the team.We continue to have a strong balance sheet and remain more watchful on receivables management. Net debt-to-equity ratio continues to see a reduction to 0.14. I'm pleased to share with you that our teams remain resilient, and we continue to be agile in solving our consumers. We're using this crisis as an opportunity to digitize more rapidly and build further distribution platform.As always, our values matter [Audio Gap] remain very committed to enabling the safety and well-being of all Godrejites and serving our consumers and communities with our full hearts and minds. Thank you. I'm happy to take questions now.
[Operator Instructions] The first question is from the line of Abneesh Roy from Edelweiss.
Congrats on second quarter recovery. Recent pH controversy, how does this impact your communication? Do you see the big player making this as a serious issue medium, long term? And because this doesn't directly impact you, do you see this as an eventual opportunity also?
Abneesh, thank you for joining us. I don't think it really impacts us, and we continue to be very confident of our soap quality. In fact, a lot of soaps are not grade 1, and we are a grade 1 soap with very high oils in our soap. So I think we're very sort of confident of our strategy, and we don't see ourselves sort of getting embroiled in this pH story right now. And my sense is that it will blow over quite soon also, at least my personal opinion.
Right. And sanitizer sales have pulled off for almost every player, except 2 core players. How do you see taking advantage of this because many players are now exiting, would you remain serious in this, given 2 entrench players are already there?
I think -- so I think when we talk about hygiene, so everyone comes very quickly just to the sanitizer category. So one I would like to say that the hygiene trend is very broad-based, whether it's on handwash, soap, disinfectant sprays, toilet cleaners, we just had the world's largest master class in immunity and hygiene, and we'll see that play across a number of categories.In terms of sanitizers, I do think that we will play in the category, but we definitely won't play a sort of me too games. So you will see some amount of innovation from us in sanitizers. And we do think sanitizers, as a category, just even the basic hand sanitizer, will grow and penetration will grow. But I don't think we will play it just at -- without innovation. So you'll probably see quite a bit of innovation from us in that category coming.
Sure. And last question, in fact, which Manoj already asked. So if you could elaborate on HI, are you happy with this growth given Q2 was disappointing? Customer is focusing on well-being, safety. So in that context, this growth seems lower than expectations. So what is happening here? And any comment on competition?
Yes. Yes. Sure. Sure. So if you ask me, am I personally happy with our HI growth is, that the answer is no. And I hope our HI brand managers and Sunil and all are listening into this call right now. I think that being said, we are still what I said at the beginning of the year in terms of HI, in terms of consumer demand, wanting to be more healthy, so we have seen a lot of penetration growth in the category. So there's been significant penetration growth higher than in any of the other recent sort of previous years.The other thing that we're seeing is that our premium formats are growing well, well in the double digits. So this would be sort of electrics and aerosols are growing well. I think in electrics, this new flash is definitely a transition for us to a much better machine. And we'll see that also play out over the next year.The other piece that again talks about the health piece for consumer is non-mosquito, so products like in cockroaches, rats growing very rapidly. This is in the high sort of 20. So we're seeing that sort of really take off. The real place where we're having a big issue, Abneesh, is this burning format. So that business is definitely dragging our whole HI growth down.We have thought -- and this in quarter 1, this illegal incense sticks were really very much on the back foot because their supplies and stuff were not available. They are back in the market now. So I think our side from the burning format still continues. And we still have some arsenal there in terms of what we're going to be doing in the next 6 months on burning formats with some other new products.I don't think our natural incense stick strategy has -- it has worked to a certain extent, but not as well as we had hoped. So I think this burning format getting a better fix on it is important, while at the same time, really concentrating on the penetration and premiumization in things like Gold Flash and aerosols. We launched one of our best products ever called Smart Spray in aerosols, which is a no-gas aerosol with very long-lasting efficacy. So we will continue to drive because penetration is still lower in the premium formats to drive that. And definitely, [indiscernible] the burning format.
The next question is from the line of Percy Panthaki from IIFL.
Again, a few questions on HI. So firstly, could you give some idea for this quarter what percentage of your machine sales are the Gold Flash machines? And what percentage of the refill sales are -- or liquid sales are the Gold Flash liquid?
Percy, this is Sameer here. So I think for competitive reasons, we would shy away in terms of dissecting within our electrics portfolio, what has been the mix between Gold Flash and kind of Active Plus refill. But as we talk, the saliency of Gold Flash has been kind of moving up. In terms of machines, I mean, just to give you some kind of data points, we have already seeded in close to 3 crores of machines, right? And in very short term, we are looking at seeding in incrementally 1 more crore of kind of machines, right? And once the machines are in, we do expect, I mean, kind of refills also, I mean to have kind of a strong presence. And by the way, I mean this quarter, last quarter, quarter 3, we did see close to double-digit sales growth even in the entire electrics portfolio. So the going over there has been quite robust. Of course, there's a little bit of setback, especially in the early part of kind of COVID environment. But we do believe that with the kind of product Gold Flash is in terms of its efficacy, it's a winner product, and we will see, I mean, premiumization upgrades, getting bigger, I mean, in electrics format with Gold Flash.
Sure. Secondly, on burning format, you had, I think, applied for regulatory approvals for incense stick with active molecules. So if you can just give some update on where we are in the process? And when are we likely to get approvals on that?And secondly, in this presentation, I see that in Indonesia, you have launched something in the burning format, which I think is sort of an upgraded version of the magic card, correct me if I'm wrong. Any plans to cross-pollinate this product into India?
Yes. So I think, Percy, again for competitive, we don't want to share. But I think both these answers are pretty obvious even to our competitors. So I think you could expect in burning format some sort of uncertainties, illegal incense sticks and some of these things are in our portfolio, as you said.
Yes. And I think just to add, Percy, I mean, as Nisa called out, the premium format, which is aerosols and electrics, have been doing quite well and with incremental innovations as well as some very disruptive innovations, we do believe that good momentum should largely continue over there.And kind of relating soft performance in burning formats, we will be tactically also addressing in very short term. We are looking at sort of driving our micro marketing initiatives, especially in coils, I mean, something -- I mean, which has worked very well for us in soaps, including some more kind of variance, right? And in medium-term, of course, we'll have some disruptive launches, which should kind of get even burning formats to kind of steady to respectable levels.
Right. And my last question on Indonesia, the wet wipes, you said there's a competitive issue there. If you can give some idea of the quantum that -- I mean quantum of that issue in terms of how much has your sales growth being dragged down by -- or rather if this issue was not there, how much sales growth would you have clocked this quarter?
Yes. I mean in terms of data, again, Percy, wet wipes is roughly around 14, 15 percentage of our overall Indonesian business. I mean the new player has sort of come in the market and he is sort of kind of adopting a price volume strategy at this point in time. So we have seen that in the past also, I mean, players coming in, but over a period of time, sort of maturing out in terms of, at least, not being a price warrior. We are, I mean, from our end, planning tactically, I mean, how do we address it as well as in medium term, how to kind of get back on growth, I mean, in sort of wet wipes. My sense is the growth would be at least kind of 3 to 5 percentage higher than what they have been had this wet wipes issue not being sort of there for us.
This seems to be a pretty commoditized category in Indonesia, isn't it? Because we've had, I think, 2, 3 years ago, also similar kind of heavy discounting, market share issues, et cetera, et cetera?
True that. True that. Of course, there has been innovation also, Percy, in this space over a period of time. But yes, I mean, it's like a pretty kind of competitive category. That's the way I would sort of put it here.
And Percy, another growth drivers for Indonesia is really building our GT much faster than we have in the past. I think that's a very big opportunity from us -- for us there knowing -- taking those earnings from India. And that also, I think, helps with some of these issues that happen in these long-lasting stuff when discounting is very [ little. ]
The next question is from the line of Arnab Mitra from Crédit Suisse.
My first question is on Africa where last couple of quarters you've seen a good recovery in sales, this quarter margins also have recovered pretty strongly. I just wanted to understand, are there any short-term factors which have helped us because we hear about this container shortage globally, and I know a lot of your competition is imported there? So I wanted to get some sense about the sustainable part of this? And is there any kind of gains you've got in the short terms, which could reverse as things normalize on the supply side?
Arnab, no, I think to begin with, we did have significant competitive advantage, especially in the early part of COVID. I think teams have done a good job in terms of retaining those consumers, right, continuing to invest in terms of creating strong brand equity as well as kind of executing. It's a very low-hanging go-to-market initiative, and combination of that has resulted in back to back 2 quarters of kind of steady-to-strong growth rates. I think the building blocks are still kind of getting kind of in place will also get executed over next 6 to 12 months. But we do believe -- I mean, the growth rates are sort of sustainable in medium terms. Some of the markets, especially kind of West Africa as well as parts of South Africa have been doing quite well. The point is to kind of continue this momentum and sort of also build on some, again, kind of opportunities in medium term.So yes, that's the way, I mean we are kind of looking at, I mean, multiple markets in Africa over a period of time. And also, in some other markets like U.S., I mean, we are seeing a lot of good news with sort of partnership, which we have stuck with Walmart on kind of hitting our hair extension category, which, I mean, strategically over a period of time could be a big bet, right, because hair extension in U.S. is more than $1 million size category. Yes, I mean, building block, I mean sort of getting in place, getting executed, and we remain relatively kind of confident of continuing this momentum in medium term, at least?
Yes. I think like Sameer mentioned, partnership with Walmart in the U.S., I think that's an opportunity that's come because they want a certain type of partner and they want supply chains actually from Africa for these products versus just sort of Asia. So these are 3 advantages yet to kick in. It could have been -- we know that in dry hair, there are sort of shortages in certain products, and we are actually ramping up local manufacturing to meet those. But we feel that some of these advantages should also play out in the medium to long term.
Okay. That's quite helpful. And my second and last question was on the India new categories that you entered this year some of the segments in home care, like floor cleaners, toilet cleaners, dishwashers and things like that. So I mean, as a bucket, if you were to take all of the things, all new categories that you entered this year, if you could give us a sense of how much does it contribute to revenues today? And specifically in the home care categories, what is the initial feedback that you have in terms of your product acceptance, distribution and things like that?
Yes. So I can't give you exact numbers, again. But I think we are -- there are particular categories in Hygiene where we are very excited about. One is the Godrej brand name, as you know, is extremely total strong, which gives us an advantage. In some of them, we really cast a very good formulation. We also think some categories are on that cost. So penetration sort of take off and that we can rely with our distribution sort of build it well.So I think Hygiene -- I've been watching this news or people keep asking, is hygiene of it's high. I think sanitizers offsets first quarter sort of high and there was a glut in the market. But I think the consumer's awareness on taking care of their health has fundamentally shifted. And in that the consumption basket has also shifted. So I think for a company like us, that can be really advantageous. And another example of that, I'll give you, in Indonesia, which has been sort of difficult year, they built this new brand called Saniter, and they're doing a fantastic job with it. And it's actually nothing -- not really built on hand sanitizer, correct? So biggest category that they've built is the sanitizing space because we have an advantage both from hit aerosols and from seller space. So we have a cost advantage, and we've done a great job there. Now we're going into bath soap, a category that's very big, we know well in India. We see an opportunity in the market there. So I think Hygiene as a category is in brand well positioned. In Hygiene, there's a very strong opportunity going forward.
The next question is from the line of Vivek Maheshwari from Jefferies.
My first question is on the -- can you just talk about the gross margins and EBITDA margin the way in which you see it in the next few quarters?
Vivek, so yes, I mean, in India, we have seen gross margins decline and that's largely driven by in contraction in soaps gross margins, which in turn is driven by the high palm oil derivative prices and the lag between increase in input cost and increase in end consumer pricing. So we are quite calibrated in terms of our pricing approach, and that has paid off very well. I mean you look at our performance over last 2 to 3 quarters, I mean the growth has been in double digits. Over last 2 quarters, the growth has been in mid-teens, and we continue to gain significant market share. And this is in the context of category generally seeing uptick in consumption because of higher hygiene needs. I mean there has been increase in frequency of bathing. There has been increase in frequency of hand washing and also very small players are quite stressed because of increase in commodity costs and they normally operating on vapor thin margins.So we will definitely continue with this strategy in very short term. What we will also do in parallel is something what we did in last quarter itself, right? I mean, so the gross margin kind of contraction will be sort of mitigated through cost-saving program. We saw that in India, wherein the overall EBITDA margins declined by 70, 80 basis points. And then by leveraging our global portfolio, we sort of ensured that at global consolidated level, the overall EBITDA margin [ expand. ] So we will continue, I mean, to kind of have that strategy, where we sort of prioritize kind of growth over margins, especially in soap category. But at overall profitability level, there should be multiple levers to ensure that we do see at least margin maintenance, if not expansion in short term.
I see. And just a follow-up here, Sameer, in the context of, let's say, the low A&P base that you have started in fourth quarter last year. And of course, some part of that was -- is understandable. But let's say, in the context of A&P expenses, I would imagine, will move up, do you still think that margin should sustain?
So we'll see, Vivek. I mean in very, very short term, if there is a very serious trade-off in terms of growth over margins, I mean, we will skew more towards growth. At this point in time, there are no such very serious sort of trade off, right? But we will continue to invest, I mean, because medium, long term, I mean, investing on new product launches, investing in creating kind of brand equity has always kind of paid off, right, I mean, through sustainable growth. So that's the way we will continue our approach even on A&P investments. I mean in very short term for margin maintenance, the last thing which we'll do is kind of tinker around with A&P spends.
I see. I see. Okay. And the second question is on HI, the burning format, what Nisaba mentioned about, it hasn't worked out as well. And I remember that you have had done a lot of work on the product and the value that you are giving to the customer, et cetera. What is the reason you think, is it the pricing which was an issue? Is it, let's say, active ingredients not being there? What is the issue? Why would you say today that the product has not worked out despite you taking all the efforts at that point of time at the time of launch and thereafter?
Yes. So I wouldn't say the product is not -- it's a natural product. So it's -- some people will use their -- absolutely, like, love it. But the natural product does not view the lockdown, efficacy of [indiscernible] point of view. We did know that, that was -- there's an active incense stake that was the challenge, but that was our best option at the time.We will now go in with other burning formats that sort of take on the sort of incense stick with efficacy head-on. And we know -- look, I mean in a way, I tell people that we launched Fast Card. We had such an amazing run with it. And it did really well, and then this illegal incense stick is almost like Fast Card 2.0 to the consumers, the better version, it works better for them, right?But we will have 3.0 and 4.0 and 5.0 of this version. We are restricted a little bit by the Indian government in terms of registration, time lines and stuff. We have been below our own expectations, and I think this is something that we will not give up until we get sort of right. And we have a lot of confidence in our -- both in our product prowess and our distribution to get this right.
I see. Sure. And is there a challenge to -- from an HI margin perspective, is there also a challenge that, on one hand, you have to target the illicit market and where price points will be far lower, and on the other hand, you have your own, let's say, priorities on the margin. So is that also what makes the...
You know the way I think about it, no, because see, almost like 75% to 80% of our portfolio is...
Nisa ma'am, sorry to interrupt you. Ma'am your audio is not coming clear.
Can you hear me now?
Yes, ma'am, a little better than before.
Okay. What I was saying is that as long as our portfolio in HI is really in -- 75% above is in the sort of premium format where margin is an issue. But in India, you have to pay both the premiumization and -- premiumization, penetration for the premium products, but you have to pay the mass volume by a mass player also. So we have to get this burning format right. And don't forget we're also the biggest coil player. And that's also something where you will see some innovation and strategy from us on coils.
The next question is from the line of Prasad from Bank of America.
Yes. So a couple of questions. So firstly, the balance sheet is now almost deleverage with net debt-to-equity at about 0.1. Historically, we have built businesses at such times through inorganic route. So in this context, would you like to comment as to if the company is exploring such routes gain? And if so, what are the criteria at this time?
Sure. So I think I mentioned on a few calls before. One, at the current stage, my focus and the company's focus definitely been on organic growth and making sure that it's been double-digit organic growth...
Nisaba ma'am, sorry to interrupt you once again. Ma'am, your voice is coming a little distorted. Please stay connected, I'll call you back.
No. But can you ask other people if they can hear me?
Yes. I think Nirav, we can hear her very clearly. I don't know about others.
Yes. Nisa, I think you are audible.
Yes. Nisa, I think you can go ahead, please.
Am I still on the call?
Yes, ma'am.
Okay. So yes, coming back to M&A. So definitely organic lows is our focus. But we do know that inorganic as we did grow 5 years ago very significantly with inorganic growth, and we have a lot of learnings from that time. So in India and Indonesia, we definitely look at interesting acquisition. We might get interesting acquisitions, say, Bangalore also. So we've seen markets like Bangladesh, Nigeria, Indonesia -- I'm sorry, Bangladesh, Nigeria and South Africa with the potential to be like our Indonesia business. So in India, Bangladesh, Indonesia, we will actively look, and we are actively looking [ organic growth. ] In Africa, like I sort of mentioned before, I do feel that the right to do in organic before that happens, the current business sort of growth and margins need to be stronger. So yes, we are already looking at M&A.
Okay. Okay. Second question on Indonesia and Africa separately. How much of the revenue was from direct 2020?
Sorry, Prasad, your voice is echoing. Prasad, this is Sameer here, can you just repeat your question, please?
Yes. There is echoing from other line, I don't know why. So the question was more from Indonesia...
Sir, one moment. Sir, go ahead.
Yes. Hello? There is still the echo.
Sir, one moment. Sir, you may go ahead now.
Echo is still there, but anyway. So in Indonesian and Africa, what's the percentage of direct...
I'm sorry to interrupt. Prasad, the echo is coming from your end, sir.
[Technical Difficulty]
The next question is from the line of Amit Sachdeva from HSBC.
Is my voice clear?
Yes, Amit, it is clear, but fortunately, the echo is still continuing.
Yes, echo, I could hear myself also...
Can I request operator or ISEC team to revisit this and correct this please.
Sir, 1 moment. Sir, the echo is coming from Nisa ma'am's line. I will call her back. [Operator Instructions]Ladies and gentlemen, thank you for your patience. I now hand the conference over back to Ms. Nisa. Ma'am, please go ahead.
And I totally forgotten what question we were on. What was the question, Sameer? Did someone remember?
Yes, I think we had Prasad asking 1 question, but he was requested to go back in the queue and we had...
We have Amit Sachdeva on the line.
Yes. I think we can go ahead with Amit's question first and then have Prasad coming back in the queue. Sorry guys for the glitch.
Yes. And my apologies since it seems to be me causing it.
Amit, please ago ahead.
And a very good set of numbers in Africa, so congratulations for that. So just 1 first question is on soaps business. So obviously, there's a clear inflation, which is necessitating price hikes and constraining some amount of gross margin expansion at the domestic level. But having come this far in terms of marketing mix, entire soaps business, how do you feel conceptually? Whether this inflationary environment suits you better or some amount of deflation helps you more, as you sort of maximize, optimize EBITDA growth and gross margins and also volume growth, as a strategic construct? Why I'm asking this is that given that the base of this year will be very high, and we are going into the next year with some amount of inflation building up, how we should sort of anticipate like next year for soaps?
Thanks, Amit. And I think on a lighter note, we would love, I mean, both the kind of environment to sort of be beneficial to us. But historically, I mean, we have always gained significant market share, especially in high inflationary environment because that's where a lot of the small local players [indiscernible] because they typically operate on wafers and margins and in high kind of inflationary environment, I mean kind of move away temporarily from the category.But having said that, we have always called out that we are a distant #2 player. We continue to gain share and this is not phenomena of last 2, 3 quarters. This is something which has been kind of going our way over the last 18 to 20 months. The micro marketing initiative have worked very well for us. So I think continuing in a steady state performance in soaps even next year is the way, I mean, we are sort of planning for at this point in time. And despite having kind of a base, I mean, the way you sort of called it out, we don't expect any sort of mismatch between what should be a normative volume growth, value growth, I mean, in soap category for us even in the next year.
Sure. So if I read correctly, maybe you're looking for still like a double-digit soaps growth, maybe like a mid- to mid-teens type of thing? Or I'm not asking for guidance, but I'm just thinking of how we should think about domestic business and maybe flat margins, that's a good scenario for you?
Yes. So I think, I mean, not getting into guidance, Amit, but there will be some carryforward pricing also, right? I mean it's not sort of one-off cost. definitely, next year, there will be some carryforward pricing impact. We will continue to gain market share, I mean, that's for sure, right? I mean -- and that's the way we are kind of planning on multiple initiatives within soap category.I did call out earlier that in very short term, if you have to prioritize growth over margins, especially in soaps, it's a no-brainer, we will prioritize growth, but we will sort of mitigate the soaps gross margin whole through other revenues, whether it be driving favorable category mix, whether it be cost-saving programs or even leveraging our global portfolio, rather we will we think of overall profitability and balancing kind of growths and margins in this way.
Okay. Very clear, Sameer. Second, very quickly, if I may, ask on Latin America? The growth has been very impressive. If I may observe on the constant currency terms, this looks like a structurally business on a roll, it seems. And we get to sort of discuss less of it, but why margins are so volatile in that business? If the business even in local currency is structurally growing it so impressively, why margins are all over the place for that business? What would be the sustainable margins? And how should we think about this? And -- so just help me understand that, please?
Sure. No, I think Latin American business has been kind of very robust for us over last year to 1.5 years, right? Typically, this used to be the cluster or a bunch of countries which were in mid-single-digit EBITDA margins. It's actually an inflationary economy, right, Argentina. That said, we do see, I mean, some part of growth also driven by kind of inflation, but there is also very robust volume growth, right?I think the intent is, I mean, again, on average annualized basis to have double-digit margins. And we think we're very much on track. There is scale leverage sort of playing in our favor. There is also stringent costing program which is sort of playing in our favor. So we should continue to see again this steady-to-strong performance holistically in Latin American business even in medium to long term.
Sure. No, that's very helpful. And are you planning to bring any more products from there other than the current soap that was inspired by Lat Am? But are there any more cross-pollination opportunities exist from that business?
Yes. So we continue to explore, I mean, multiple cross-pollination opportunities, obviously, not just on Lat Am to any other countries within our kind of pool, but across kind of countries, right? So we very much continue to work on this potential cross-pollination and in turn kind of growth opportunities.
Yes. I think in hair color, there's a lot of sharing on formulations and different types of sort of innovations and stuff which go from different teams to different teams.
[Operator Instructions] The next question is from the line of Shirish Pardeshi from Centrum Capital.
I have 2 specific questions. In the domestic market, we have reported 14% growth on soaps. Can you help me to understand how much is the price and volume? And if there is any price increase that has happened and affected in the quarter which is gone by?
Yes. So I mean, good part of growth, I mean, I would say 2/3 would be sort of volume and 1/3 would be price, Shirish. I mean that would be the composition, I mean, in the overall, soaps value growth.
What I wanted to understand, the follow-up on that, we all know that the inflation is inching up because of palm oil and PFAD, has it covered the price increases what we have effected? Or it's not yet covered? Or you will take some more price increases going forward?
No, Shirish. I mean even if you look at category level, I mean, the overall increase in PFAD, PKFAD has been anywhere between 30 to 50 percentage, right? So we would be theoretically looking at 30 to 50 percentage price increase on soaps, I mean, which is not practical. So we'll have to be sort of calibrated. We'll have to have pack/price mix architecture through which we play this pretty shortly, right? As again, we called out earlier, we would want to gain market share. We want to continue this momentum. We are seeing kind of tailwinds in category, opportunity to gain share even from small local players. So we'll have to balance both, right? Such that we continue on this strong growth momentum as well as in parallel, have an eye on how the overall margins are shaping up for the global business.
Sure, Sameer. My second and last question on the Indonesia business. I see that there are challenges, and we have come over every time we have some other issues crop up. What I really want to understand, now we have gone into Saniter Health Soap. So is that the growth, which is the formula, which one can look at the growing Indonesia business? And more specifically, how big is and what is the winning thoughts we have about launching our Saniter Health Soap?
Yes. So I think there are multiple growth vectors to Indonesia. And again, to kind of set the context, I mean the overall FMCG space in Indonesia over last 2, 3 quarters has sort of declined by high single digits to low double digits. So in that context, I think the performance is kind of not that bad. But of course, there are some areas which we need to sort of double-click upon.In terms of growth potential, I mean, as Nisa called out earlier, the entire hygiene scale up has been phenomenal, right? I mean the entire kind of play, which started 8, 9 months back, has been pretty kind of interesting and meaningful now in terms of being kind of key growth pivot over a medium, long-term period of time. There are opportunities in terms of white spaces even within the existing Household Insecticides category because our play is largely into aerosols and electrics and now in volume format.So the long-lasting kind of paper which we have launched recently gives us a meaningful presence, right, in the burning format, which will be more than 1/4 of the overall category in Indonesia. We need to sort of tactically navigate through the challenges in wet wipes and then continue to, last but not the least, build on the go-to-market opportunity, especially on the general trade, which is only 1/3 of our overall business, but for the industry, this could be anywhere between 50 to 60 percentage thereabout.So there are multiple kind of growth levers, and we remain extremely optimistic in terms of medium- to long-term growth sector, I mean, in Indonesia. And we have seen Indonesia over last decade or so has been a home run for us, whether it be kind of strong sales growth, whether it'd be kind of margin scale up, we remain quite kind of confident. And in the very short term, we would work towards kind of getting it at least in positive kind of growth zone, right, I mean from what was a very marginal decline, at least in the last quarter.
And on Saniter soap, is that to improve the distribution because, I guess, health care is a bigger opportunity, and there is a penetration which is happening. So is that the thought? Or we have...
Yes. I think there's a cap -- so I think it's a large bath soap and soap in general is large. And the bath soap is not the only launch, we have some others also happening in the personal wash category. We feel that there is a space for a brand like Saniter, and we believe we have the strength of the company to go into that market with us. So ever thinking has come from, and we see that the demand for health soaps is quite high.
[Operator Instructions] The next question is from the line of Alok Shah from AMBIT Capital.
Congrats on a good performance. I have 2 questions. So first is on the Africa cluster. Can you elaborate if the strong growth is essentially backed by distribution-led initiatives, whether the rain selling now is happening versus the prior periods? Or is it purely market share gains-led growth that is coming? That is number one.
I think it's a mixture of a number of sales, correct. And definitely, I think distribution has been a big push across the different geographies. And we are looking very closely to how much direct distribution versus wholesale distribution. We've had our market share gains. Although in dry hair, Nielsen doesn't cover it, so we do our own sort of market share estimation. And we've also had some good success, especially in West Africa with new category development, whether it's in dry hair with the restyleables, with HI. So I think it's a mixture of factors playing in.
Got it. Got it. And my second question is on the India HI business. I wanted to check how is the innovation pipeline now? What would be the time line for the launch? And specifically, I would ask, if there's some breakthrough innovation that you are closer to launching, and that can...
You guarantee [indiscernible] are not on this call that I'm sure, I'm happy to share it with all 200 of you. Yes. No, I can...
In terms of broad innovation pipeline, at least...
Yes. No, I think the innovation pipeline is pretty strong, correct? And innovation for us is both in the active molecule side and on the sort of product delivery side. So whether it's on naturals or an active base, I think 1 thing we can be assured of is the product pipeline. And you will see more stuff coming from us next year also. We've actually had a number of launches this year also, correct? I don't know if people have picked up on it. But we talked about Smart Spray. We've done Roach Bomb in cockroach. Like I said, this non-mosquito portfolio given the health sort of concerns people have is really sort of moving fast. So we will double down in all these.One sort of big pivot for us was this personal repellent. Like I've mentioned many times before that in other markets, personal repellent tends to be 25% to 30% saliency. Like in Indonesia, I think it's, like, close to 30% saliency, when India is like 3%, 4% saliency. And this year, that business has taken a real beating because of -- so the people not going sort of out-of-home and stuff. So that's something that we really need to raise the rest. But again, we feel that as kids go back to school and people go out fully -- I think the kids back to school really will be a good opportunity to reignite that business.
Right. Right. No, I was just trying to ask because if till now we have been talking about competition from the illegal incense sticks, et cetera. But if tomorrow, one of the competition were to heat up or some new player were to enter, how is it that we are planning to hold that tough? Would it be more through innovation, new launches? Would it be more through ad spend, promos? Or how is it that you would look at this category...
I think it's a mixture all, correct? And I think the thing that we're most focused on is how do we -- we are -- frankly, we have about 50% of the category. So it's really -- and in the premium format, much high -- like very high shares. So really, it is our job to be educating, marketing to consumers, getting them to sort of upgrade, convert and giving them that value for money with efficacy and protecting them from these diseases and mosquitoes. So -- and as competition -- I always encourage good competition that serves the consumer well. It keeps us all on our toes. And if that were to happen, we will -- there's that competition many times. So we will think at this time how to serve the consumer better.
The next question is from the line of Percy Panthaki from India Infoline.
My question is again on the Indonesia business, especially the GT rollout. I've been tracking GCPL since long. So basically, we have been now talking about this for almost 5 years. So just if you can give me an idea of what progress has happened on this point of GT rollout over the last several years. I mean, some point-to-point data you can share, let's say, your direct reach now versus what it was 2 years ago? Or any other kind of data, which would help us understand what is the progress on this point?
So I think to begin with this has been kind of a structural growth pivot for us. I think in terms of data points, say, 2 years back, you'll be reaching out to 80,000, 85,000 outlets. And now we reach out to close to 120,000 outlets and the intent is to reach out to close to 200,000 outlets. I think what also happened is because of COVID at least over last 8, 9 months and extreme social distancing on, this took a backseat, right? Because we could not get feet on ground, we could not connect with kind of channel partners, and hence, there was a little bit of pause in the journey, but now we are again back to sort of having this kind of build up on. In fact, there are more than 10, 12 new initiatives which we are sort of working with. And we have called this out, I mean, again, in the past that general trade is around 1/3 of our business, whereas for other companies within Indonesia, this will be anywhere between 50 to 60 percentage. So it remains a big kind of growth vector. And also, it's something which will result in kind of a favorable impact on the margin. But it's more of a growth kind of initiative, I mean, than anything else. But that's where we are, I mean. So yes, I mean, over the last 9, 10 months...
Percy, I think also -- Percy, if I can add to that. Thank you for the question. I think our portfolio also for GT has improved quite significantly in the last 2 years. I'll even say something like this, but so for the long-lasting paper and stuff, early GT is the market for it. So I think we have a better portfolio of products and this push now hopefully post the pandemic gets stronger.
Right. Which brings me to my next question, which is on the portfolio for Indonesia. You've launched a soap organically, what's your sort of medium-term objective in Indonesia as far as categories are concerned? I mean, would you like to become a broad-based diversified FMCG company in Indonesia. And if so, would it be largely organical? And also, which are the other categories over the next 3 years or so, where you think it is adjacent or you have some right to go into those categories on your own or through an acquisition?
Sure. Thanks. Thanks. I think, like we said, someone asked the question on M&A, so we would definitely and we are tracking other companies in Indonesia. So we would look at bolt-on acquisitions for that business. I think organically, actually, the categories that we look at are quite global also, right, where we have some level of product and [indiscernible] strength. So I think bar soap is something that we sold quite successfully in India for many years. And we saw the opportunity at this time given some of the market shifts we're seeing.I think we see Hygiene, both in home care and personal care, as sort of very interesting categories. If you look at in what I mentioned in Saniter was doing early well is sort of a disinfectant cum freshener sort of spray. So I think things in the home care area, we already have HI. We have air care. We're looking at these other home care sort of potential between both Indonesia and India very seriously. We have fabric care in India. We have a bit of a fabric care business in Indonesia. So we look at scaling those businesses up. So wherever we feel that we have a product differentiation advantage to offer the consumer, we would definitely look at those areas and build on our strength. Hello?
Percy, do you have any follow-up question? Hello, Percy?
Yes, sorry. Sorry. I just wanted to ask you on your hair care business. You launched 3, 4 years ago in Indonesia. What's the kind of success that you've seen there? And what percentage of the sales does it contribute today?
So that business, actually, frankly this year is surprised all of us doing extremely, extremely well. And we've had good momentum there with sachets hair color, we're also launching shampoo hair color there. So we see that as a good opportunity. Also interestingly, it has quite a bit of a fashion business in Indonesia, not just grey coverage. So that's also definitely a good pivot of growth.
Ladies and gentlemen, that would be the last question for today. I will now hand the conference over to the management for closing comments.
Thank you, everyone. With that, we would like to draw this call to a close. Thanks for your participation and have a great evening. Stay safe and stay healthy.
Thank you, everyone. Thank you for being with us. Bye.
Thank you all.
Thank you very much. On behalf of ICICI Securities Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.