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Godrej Consumer Products Ltd
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I welcome you all to the 4Q FY '19 post-results call of Godrej Consumer Products. We have with us the senior management team of the company. Over to Mr. Pratik Dantara of GCPL for introduction and opening comments.
Thanks, Krishnan. Good afternoon, everyone, and thank you for joining us today to discuss the quarterly performance. We have with us Nisa Godrej, Executive Chairperson; Vivek Gambhir, Managing Director and CEO; V. Srinivasan, CFO and Company Secretary; and Sameer Shah, Head, Finance, India and SAARC and Investor Relations. Like all the previous quarters, we'll now have Vivek share his thoughts on our performance and then we can open up for Q&A. Over to Vivek.
Thank you, Pratik. Good afternoon, everyone. It's a pleasure to be speaking to all of you. As you would have seen from the results, it has been a relatively weak quarter for us. In the fourth quarter of fiscal 2019, our India business remained soft on account of a general slowdown and tepid consumption, on liquidity pressures that we saw in the channel and the adverse impact of the delayed summer for a lot of our portfolio, particularly with soaps and the HI portfolio. In International businesses, Indonesia continued its strong profitable growth momentum. Africa had a soft performance, but sequentially our sales did improve versus quarter 3, so it is heading in the right trajectory. But the slowdown was led by a temporary sales pressure that we saw in Nigeria -- because of elections, the markets were closed for 2 or 3 weeks because of elections -- and a gradual recovery in South Africa. The big challenge this quarter was our Latin America performance, which continued to be impacted by some very adverse macroeconomical environment and hyperinflationary environment situations. And I think we have put in corrective measures in place to be able to turn around the performance at this year. On the innovation side, the momentum continued very well. Mosquito incense sticks have been scaling up quite well in the pilot markets. We have been very pleased with the initial results that we've seen in our pilot launch and, therefore, we have decided to scale up the launch in a much more aggressive manner towards the middle of quarter 1. And in Indonesia, the innovation momentum continued with the long-lasting paper doing very well. And we've also cross-pollinated the Stella car twist from India to expand our presence in the Air Freshener category. Across the board in Africa, a lot of activity has happened as far as new launches are concerned, both in dry hair and wet hair. And these new launches will really fuel a lot of the growth that we're expecting next year -- or this year in Africa. For fiscal year 2020, we are planning for much better sales growth in India on the back of continued focus on innovation and some significant enhancements that we are making in our go-to-market model. On Indonesia, we are hoping to sustain our momentum, and in Africa, the focus will be on profitable sales growth that improve both sales and profits. And in Latin America, we are working hard towards ensuring a meaningful turnaround. Because this is the first call that we have in this fiscal year, we will also spend some time towards the end of the call providing you with an outlook for our various geographies. So let me turn quickly to the slides and just give you a quick review of the highlights. On Slide 3, on our overall sales performance, as you can see, the comparable net sales growth was 2% for the quarter. For the year as a whole, the constant currency comparable growth was 8%. The net profit reported was a 52% growth in net profit. And for the year as a whole, the net profit reported was 43%, so very strong reported net profits. So the net profits this year -- this quarter, in particular, if you look at Slide 4, was driven by a certain amount of MAT credit that we had received. And Srini and Sameer can talk to you more in detail about those if you have any further questions on the exceptional items. On Slide 5, if you take a look at our adjusted EBITDA margins, the margins are looking very healthy both in India and Indonesia. In Africa, we do see significant opportunities to drive margins up. And you will see better margin performance this year, given the fact that last year was a year of a lot of investments that we made, along with some cleanups that we had to do. Those investments in infrastructure and people and talent building and some of the cleanup that we had to do with inventory are largely all over. And so on the back of these, I think these investments that we've made, this year should be a much better year as far as Africa profitability is concerned. On Slide 6, generally across all the balance sheet parameters, I think the team has done some very good work to make strong progress. Working capital has reduced from 15 days to 10 days. If you recall, that was one of our big priority areas, and so we have made significant progress in that dimension. From a -- return on capital employed, that was another area of focus for us. And there, again, you can start to see us making a decent amount of progress. While more needs to be done, it is trending in the right direction. And our net debt to equity is also in a very comfortable range. So on Slide 8, if we start talking a little bit about India, generally, as we mentioned before, it was a flat quarter. It was a weak quarter. And in many ways, the results came as a surprise to us, too, as well. For the year as a whole, the growth was 7%, largely volume-driven, to 6% growth for the year, along with very strong 14% profit growth. In some ways, this was a story of 2 halves because the first half of the year went very well for us. But particularly in quarter 4, the market conditions, whether it is the slowdown in consumption or whether it was the channel liquidity that we faced, came as a surprise. We are still hopeful that this was a temporary situation with market conditions, and we are still quite hopeful that postelections, you will start seeing consumer sentiment and consumer consumption again heading up in the right direction. In the meantime, I think we've spent the last couple of months taking some very significant course corrections as well. And we've reflected a lot as a team. And we've put in a strong plan in place for fiscal year '20, and we do expect to come back very strongly this year. If I take a look at Slide 8, the other important point I want to just mention is that as we look at the slowdown in FMCG growth, the slowdown in FMCG growth unfortunately was most pronounced in the South, which is also our largest HI market and overall 27% of our business. And so we also got impacted a fair amount by the exposure of both our category and our business towards the southern part of India. On Slide 9, if you take a look at our growth rates, as you can see, generally, on a 2-year CAGR basis, both Soaps and Hair Colours seem to be doing quite well -- reasonably well. I think the problem for us and the challenge for us, clearly, has been in home insecticides. And again, there, we've been talking about it for the last couple of quarters on some very strong corrective actions that we have been already been putting into place, and there are a few more actions that are planned this year. That should put us back on a recovery path as far as HI is concerned. So on Slide 10, we talk a little bit about our HI business. We recognize fully that this has been a challenge persisting for quite some time now. Clearly, I think there have been 3 big drivers of the challenges that we've been facing. The first has been, I know, a very significant growth in incense sticks. And apart from incense sticks driving a certain amount of penetration growth and new category recruiters, incense sticks has also been impacting some of our LV consumption as well, which is where we face challenges both in LV and in incense sticks. Our aerosol portfolio has continued to do quite well. And so the actions we've taken to expand the category and our presence, whether it's out-of-home, personal repellents, other roaches, I think they've been doing well. But the growth there has not been big enough to plug in some of the gap we've faced because of incense sticks and the reduced LV consumption. So apart from incense sticks, which will now get scaled up starting from June of this year, some other very exciting innovations are being planned for the remainder of this year. So we are very confident that this will be the year of turnaround for the HI business. So far, if you take a look at the category ex incense sticks, we have been growing ahead of the category. And on a MAT basis, we've actually been gaining share. But I think the challenge clearly has been to try and get our fair share with incense sticks, which in turn will also help the rest of the other formats as well. Later on in the year, as we launch some more innovations, we will really be able to also focus much more on category development. On Slide 11, not much to say. I think at an overall category level, this quarter, soaps showed lower growth, largely impacted by the late summer. The good news is that we've continued to gain share and continued to have our all-time share ever in soaps. On a 2-year CAGR basis, the soap growth has been a healthy 9%. On Hair Colours, our growth for the quarter was 7% in sales and the volume growth was fairly ahead of value growth. Our Godrej Expert Rich Crème continues to perform well. We are at our highest-ever exit market share in that category. We had a temporary consumer price off for a few quarters, and now that price off has been rolled back as well. We've -- we're focusing a lot on activations and media campaigns. The Nupur Herbal Based Powder hair has been scaling up well. And we've just launched the Godrej Expert Easy 5-minute hair color shampoo. The -- this is an important launch for us, where the effort is to make coloring as easy as shampoo, very quick, colors in 5 minutes. It's enriched with the goodness of amla and shikakai. And it's very affordable at INR 25 for 20 ml. So that was a quick snapshot of our India business. Turning to the International business on Slide 14. As you can see, it was a mixed performance where the business delivered a constant currency sales growth of 10%, though we did see a lot of margin pressures, primarily driven by our Latin America business and to some extent by our Africa business. Indonesia continued to perform well. Slide 15 just details the performance by our various clusters, and Slide 16 talks about the margins in a little bit more detail. But as you can see, the biggest margin pressure we saw was from our Latin America business, just given the hyperinflation environment that we've been seeing there. We have taken a lot of corrective actions and, again, in Latin America, the good news is that the brand equity and shares are holding up quite strong, but we've taken some very significant measures in terms of cost optimization. Those efforts have already been taken over the last month or so. And so going forward, from this quarter onwards, you should see a much better performance on the margin front from Latin America. Slide 15 (sic) [ 17 ] talks about our Indonesia business, 14% growth in constant currency. The growth was led by our Insecticides business. And we've maintained our leadership position, continued to gain share, along with strong growth there. The adjusted EBITDA margin also expanded significantly, led by our cost savings program and scale leverage. In Latin America -- in Africa on Slide 18, I think the big challenge continued to be in South Africa. Aside from South Africa, our business grew in the high single digits in a constant currency basis. Nigeria was impacted temporarily by a few weeks of shutdown due to elections. But the Darling relaunch, the scale up of wet hair, all are progressing very well. We've launched a new fast fashion model for innovations, which will accelerate the pace of inventory, that should -- pace of new product development and better manage our inventory across dry hair. There is a lot of activity happening to create a lot of naturals-based wet hair products as well this year. So if I look at the NPD pipeline and all the investments that we already made in infrastructure and talent, I feel that the worst is behind us as far as Africa is concerned. And this year as a whole, you should see a much better performance from our Africa cluster for FY '20. If we take a quick look into our outlook for the year, as I mentioned to you, I think the team has spent a lot of time over the last few months putting together a very strong plan for the year. And the team is very charged up to be able to do things to get our performance back on track after a difficult quarter. In India, the focus clearly will be on Slide 20, I'm talking about this, to drive ahead of category growth across all our categories: soaps, Hair Colours and insecticides. This year will be the year of revival for the HI category. A lot of our success has been on accelerating innovation-led growth with NPD, so we'll continue to scale up some of our launches from last year, along with a few other launches that we have planned this year. The third area of focus for us will be is that we're clearly seeing strong growth now from our emerging channels, particularly in modern trade. And we've always done well in modern trade. And our salience in modern trade is higher than the salience of the FMCG industry. But along with modern trade, whether it is cash and carry, I think there's a lot of investment that's been happening in being able to perform much better in a multi-channel approach. And a lot of our focus has been in terms of being able to try and drive multiple channels with differential service offering and differential strategies across these channels. And I think the work's been all done. We should start to see results happening this year. The other, I think, big area of focus has been something which we call conquering middle markets, where historically we have analyzed information and data at a micro level. For the first time this year, our planning has actually happened at a micro level, where brand tasks had been handled at what we are calling micro markets. These are almost at the district level. And if you prioritize these markets, and we've had a very clear playbook in terms of media, activations, sampling, distribution, shopper inciting, with the right levers at those micro markets. And our belief is that this kind of micro planning will allow us to be far more targeted and far more agile in our go-to-market strategy. The final element of India which has gone well for us, and it's par for the course, is to continue to find opportunities for us to scale up our cost savings program, which we call Project Pi. As far as Indonesia is concerned, on Slide 22, the focus will be is to continue driving value sales growth driven by marketing and strong NPD. Last year was the most active year as far as new launches in Indonesia are concerned. We intend to sustain that to fast-track growth in emerging categories like hair care, fabric care and car cleaners, along with driving the core. There is a fair amount of cross-pollination happening between India and Indonesia, and we do expect further opportunities to cross-pollinate products across both of these geographies. Last year, we started on our [ straw ] program called Project Rise to be able to build on our general trade expansion. And this year, the pilots have worked well for us. And this is the year where we will look at significantly accelerating Project Rise. Alongside Indonesia, we are looking at opportunistically investing in a few Southeast Asian markets to be able to scale up our exports growth. And depending on how this year goes, we will evaluate next year to see if we can further scale up these Southeast Asian markets. The other parts are very similar to India, which is: how do we leverage analytics for dialing our sales execution; how do we continue the cost savings program in Indonesia to ensure profitable growth. In Africa, as I was mentioning to you, the focus will be on driving aggressive sales growth across all formats of extensions, along with focusing on braids, to also focus on a lot of other hair extension formats like crochets and weaves and wigs. The Darling relaunch started in Nigeria and Kenya last year. Later on in quarter 1, the Darling relaunch will happen in South Africa. And like it did for Kenya and Nigeria, we expect a lot of positive momentum coming from the Darling relaunch to be able to improve our performance in South Africa. In the wet hair portfolio, a lot of the building blocks, a lot of the scale-up, while it's underway, our wet hair portfolio, in terms of products and the infrastructure, is looking stronger by the day. And so along with distribution in wet hair and new launches that we will have in Nigeria and Kenya and South Africa, across relaxers and treatments and nourishment and styling products along with the more naturals proposition, there's a fair amount of activity you will see in this category. We'll continue to invest selectively in some of our smaller categories like soaps, hair colors, skin products and air fresheners. As we are building a broader pipe for distribution, there are lots of opportunities for us to be able to drive the products in other categories as well. And that process because the emphasis is looking better now, will get more intensified. To be able to enable all of these to happen, the go-to-market platform is critical, whether its salon networks, expansion and distribution, Darling experience booths, all those works started year and we continue driving momentum with them this year. There are some smaller markets in sub-Saharan Africa where we are seeing a decent amount of growth. There again to an exports model without much investment, we will try and fast-track growth in those markets. Then finally, as I mentioned to you before, I think the key in Africa is -- along with driving sales growth -- is to actually improve margins. A lot of it will come from scale leverage, along with the portfolio mix because as we expand more into wet hair, it will drive higher gross margin. So portfolio mix and improved sales will ensure better profitability. But along with that, we'll continue working very hard in terms of our fixed overheads and managing our costs to deliver a stronger profit this year. Finally, on Latin America, as I mentioned, the situation has been quite turbulent. The biggest focus will be to turn around this business. And the most important priority will be to improve profitability by some very intense cost reduction programs. Along with that, we do see some opportunities to be able to scale up growth in some of our exports markets. We have a presence in Peru and Uruguay. From a profit perspective, it helps improve the margin. The brands are very well-known there. And then in terms of, I think, go-to-market route to model, a lot of changes are being made to improve route to market, optimize trade spends, et cetera, to be able to deliver a stronger profit as far as Latin America is concerned. So that's the overall summary for the quarter. This was definitely a weak quarter which fell short of our expectations. But the team has a lot of conviction and confidence that we have put in some strong corrective plans in place to be able to reverse the trajectory and deliver a much stronger performance in fiscal year '20. The team will now be very happy to answer your questions or take your feedback.
[Operator Instructions] The first question is from the line of Abneesh Roy from Edelweiss.
Yes, hi, sir, my first question was on neem incense stick; high single-digit market share, which is a good start. My question is, are you already seeing repeat purchase? Why have you gained this market share? Is it largely because of better distribution because illegal may not be available everywhere? Because in terms of efficacy, still illegal is much better in terms of killing the mosquito yours doesn't kill. Second question is when do we see pan-India launch? You mentioned a few states. When do we see a pan-India launch?
Hi, thanks for your questions. This is Nisa here. So I think, like we mentioned before, we've been working on a lot of natural and plant technologies for our product portfolio for a long time. And actually, as a -- we move faster now because of these illegal incense sticks. What we've been really surprised with, actually, is that in consumer testing between the illegal sticks and these natural-based sticks, their purchase intention and their total -- the likability of the product is as good as the illegal incense sticks. And I'll just try and explain this to you. The illegal ones are very highly dosed with all sorts of things, including pesticides that are totally banned for in-home usage, and they don't create a drop-down effect. But the way most of -- the way the natural incense stick works, it works by repelling the mosquito through smell. Both these technologies are used across insecticides. And for the consumer, what really matters to them is that there's no mosquito around, not necessarily that the mosquito is dead at their feet. So that is the insight on the natural incense stick. So it does repel very well. I think the other piece that seems to be working very well is the -- and I hope people will take a look at our incense sticks and even use them -- is that they last much longer. So they are 3 hours versus 3 -- half hour, 45 minutes for incense sticks. And you are right about things like availability also. We are, in terms of our legal interventions and stuff, have definitely stepped up fee and these -- but I think as a consumer -- I think at the end of the day, you don't win by legal action, you win the consumer's choice buying at the store. And I definitely think this is going to get a lot of traction.
And Abneesh, I think, as you were asking, repeat rates have been very good.
Yes, so it's [indiscernible].
So it's not just about these trials, but a lot of this data comes from repeat rates. And clearly, I think we will now -- it will be multiple states in the next phase of launch. And then I think, depending on how those states do, I think very quickly we can do a pan-India launch as well.
Yes. And Abneesh, I think the trick is that it's not just natural, it's the natural -- it's this particular formulation that works really well. And I have to be totally honest with you, we also didn't think naturals would work as well as an active-based product. But we've been very happy with lab results and what consumers are telling us.
And I have 2 follow-ups here. One is, of course, when you say, FY '20 in HI, you plan to grow faster than category, does it include incense sticks? Because...
Yes.
MAT basis, you have said ex of incense stick you are growing faster, And secondly, they also include [indiscernible].
I think that's the hope. Let's see how well incense sticks scale up. But I think if the incense sticks do well, clearly, I think from a planning perspective, we would want to grow faster than the overall category, including incense sticks.
And last follow up on incense sticks again. At 15% illegal, it's already quite high. We don't see this much of illegal in a lot of the other categories. So will it be fair to say that almost it's stabilizing now? And now it can start coming down, illegal?
That's the effort. Because I think there are 3 different areas of -- areas that we have been focusing on. One is to be able to work with the government authorities to be able to actually go to the illegal factories, pick up the illegal samples and start shutting the factories down. The initial focus of that was largely in Andhra Pradesh. But recently, we've been doing it in other parts of India as well, so Jodhpur, Gujarat, Maharashtra, some other states as well, we have been focusing on that piece. The second is actually to be able to -- and that's where our work is happening with our industrial association. The second is actually to be able to actually influence the sellers and to be able to tell them that what they're selling is illegal. And whether it's wholesale markets, et cetera, there are drives happening in various parts of India, which are, I think, showing results in terms of being able to alert the channel that this is an illegal product. The third is actually influencing the consumer and driving awareness, which is happening a little bit more through digital campaigns, et cetera, may even happen through print over time, and that will probably take some more time. But while it's hard to say that the illegal part is now plateaued, I think we're making it far more difficult for them. And I think our belief is that as long as we can make it far more difficult for illegal incense sticks to continue growing, along with having a much stronger product that's actually available in the market, I think the combination of these hopefully this year should allow us to be able to...
Yes. And I think -- Abneesh, I think one of the reasons we've not been able to react as fast and hard as we would like is -- and rightfully so, that everything in this category has to be registered, correct? So we have the Central Insecticide Board, and obviously, all good companies follow the rules to the T. So I think we've had our hands tied. We feel that we are -- because of product rolls that we might have done in the past coming through registrations and all, very soon we feel that we will have our hands untied this year. So I think you will see not just the reaction back in incense sticks, but in other product categories. And I can't tell you 100% yet because we did tell you about Power Chip and some other things and they've not necessarily given us the growth that we had hoped. But I think we've taken a lot of these incense sticks -- one part is the illegal, but what is working for the consumer, correct? Obviously, the consumer doesn't have full information hereon that this is not natural, this is sort of illegal. But we really think how do we serve the consumer better and in a way to open the eyes in a certain way. So hopefully, with the hands being untied this year, we'll get this back. And I think this is GCPL's bread-and-butter main business. So I think just if people have confidence in this management team, I think all our hands on deck to get back growth and bounce back very strongly.
My last question is on hair color. So here the problem is in terms of market share. L'Oréal is claiming #1 in urban, and they have claimed 50 bp gain in market share, while GCPL, they say is down 230 bps, while you're also claiming that you're gaining market share in the Expert Rich Crème. So if you could say what is the actual numbers in terms of market share?
Nielsen would be the best case, honestly, to answer your questions. But as we do every time, I mean, we don't share, I mean, market share details. I mean, the share gains or loss -- I mean, as I think Vivek also mentioned, we continue to gain market shares driven by Rich Crème. In fact, we have gained value market share, which speaks for itself because of the recent price-off which we had. That means the volumes growth and volume market share gains even would have been more -- kind of stronger, right? So that trajectory for us sort of continues. And now you add to that shampoo hair color, which has got launched and also the scale-up of Nupur herbal-based powder should kind of accelerate the growth rates even going ahead.
One follow-up on shampoo hair color. It's priced very similar to the Crème at INR 30, which was at, in fact, INR 25. So what's the time period efficacy of this product? Will there be any cannibalization? Yes.
So shampoo, I think, to begin with is priced at INR 25 and not at INR 30. Our Crème in a sachet is actually at INR 30. We're also launching it in South. And South, to begin with, is not one of our biggest kind of Crème market. So let's see how the response is in South. Coincidentally, South is also relatively big for shampoo-based hair colors. So let's see what are the learnings from South, and then you will evaluate to sort of...
And a big driver of Crème has always been powder upgrades. And what we've seen is in the North of India, especially with sort of henna and other sort of users, the sort of conversion to Crème has been much higher. I think Northwest, East also tends to adopt new things faster than we see in the South. We've seen the Crème -- the stickiness to powder is stronger in the South than in the other parts of India. But what we've seen is that shampoo seems sort of very, very attractive and simple to them and they use it. So we feel that that will drive stronger upgrades than Crème has been able to. So I think that's the strategy there. It's not that you're going after the Crème market, but you're upgrading powder users. The same thing that we did a number of years ago in launching Crème. The idea was not to play in the Crème segment, but to really upgrade powder users.
We move on to the next question that is from the line of Percy Panthaki from IIFL.
Just a few questions from my side. So yesterday, we saw on one of the other FMCG companies with an international exposure took a goodwill impairment in one of the geographies because the currency movements had sort of quite permanently damaged margins. Now it seems that we are in a similar situation in Lat Am. Also in Africa, I mean, when you acquired the business 6, 7 years back, there was a 20% kind of margin expectation, which you had in your PPT of FY '12. And margins have gone down to 11%, 12%, 13%. So obviously, that business also on bottom line has probably missed the original sort of expectations at the time of acquisition. So just some thoughts on how you evaluate this issue of whether any goodwill impairment in Indonesia -- sorry, in Africa or Lat Am needs to be taken?
This is Sameer here. So as a good practice, we almost every year, I mean, do this evaluation in terms of impairment for all our investments as well as intangibles. So what I can share -- we had just done it actually a few hours ago in our board meeting today. So there's absolutely no necessity at this point in time to impair any of our investments, in any of our international businesses or wherever we have intangibles. We are far, far away from that -- I mean, from that at this point in time.
Okay, understood. Sir, second question, on Indonesia. Margins are at 31%, and although the Y-o-Y growth constant currency is healthy at 14%, since we look at 2-year CAGR for several of our businesses, I'm looking for 2-year CAGR here also. It's just about 4% kind of 2-year CAGR. So in this kind of situation, don't you think that with a 26%, 27% kind of EBITDA margin it's fairly healthy and anything over and above that can be sort of reinvested to grow the business faster?
Clearly, the margin expansion is not coming because of reduced investments that we're making in marketing. So if I look at the kind of A&P investments that are going on, this significantly increased it. What the team has done a very good job is through optimization of media spends, they've almost been able to double the GRP at the same level of spend and then they've added more spend as well. I think for us, the priority is absolutely clear. For new brands, new innovations, we will keep on ensuring the right level of marketing spend. Having said that, though, I think particularly as we look at GT expansion through project rights, GT, as we all know, tends to be of higher profit than modern trade. So the channel mix will hopefully allow us to drive profitable growth. And then there's always further cost-reduction opportunities that the team continues to have and they're working on. So at this stage, I think, suffice it to say, I think the focus is on driving topline growth, launching some new innovations, extending categories. And along with that, if we can drive profitable growth, that will be the intention. But we will not sacrifice investments for profit because as you mentioned, the profits are quite strong. But I do believe that for the year as a whole, while there might be some quarterly fluctuations, for the year as a whole, we should be able to deliver profitable growth.
Okay, sir. And very lastly, over the last 12 months, what would be the industry growth in household insecticides, including and excluding incense sticks?
I have the number offhand, Percy, but if you just call up Sameer afterwards, we can just give that number to you. I don't have that with incense sticks.
The next question is from the line of Amit Sinha from Macquarie Group.
My first question is on HI again. And when you say that you will have more options in hand to counter the illegal incense stick growth, are you referring to active-based incense sticks of yours? And -- or you have more products in pipeline to follow up?
I don't want to speculate too much on the specifics right now. But yes, the active incense sticks, long-lasting paper. And it's not just about incense sticks, as I mentioned to you, we also had a challenge when incense sticks have been impacting some LV consumption as well. So from an LV perspective also, as we look at various things, there are a bunch of innovative areas. So across formats, across the various things in the category, I think the product pipeline is looking pretty healthy.
Yes. And the way we look at it is: what is the consumer problem that we're trying to solve? And the consumer, if you see in this category, there's a lot of dual usage between sort of products. Burning formats [ are ] liked very much because we don't want to sleep with them because they don't like smoke and the risk of fire. So we really -- I think we asked ourselves the questions, why have these incense sticks when we can, as a company, say they're illegal, they are very harmful to health because you don't know actually what you're breathing. That's why insecticides is actually regulated, the reason why some good companies that you've done toxicity, you've done a bunch of things. But that put aside, the consumers obviously want this high dosage, they want this idea that it's sort of natural. So I think we've gone to -- back to the drawing board and relooked at our whole portfolio. Because at the end of the day, this is a category that we do know very well. We have strength in this category. So I think you will see, not just in incense sticks for an incense stick, but a broader strategy coming. And like I said because of registrations and stuff, our hands will be a little bit more untied now. Obviously, we can't tell you exactly what we're going to do, but hopefully, you will see it play out during the year.
Fair enough. I think my question was also -- and just to follow up on that. So basically, I believe that main -- one of the main issues in the category and why we lost market share is mainly because of the efficacy of the organized [ test ] product versus the incense sticks which are available. So are we saying that the new products which we will launch in the quarters or years to come will have a better efficacy compared to, let's say, the coils portfolio of ours.
See -- yes, I think we'd be really stupid if we weren't doing that. So that I will -- that we will admit to you that that will be coming.
Amit, there are 4 things which are important in this category from a consumer prospective: efficacy, convenience, safety and affordability. And consumers will choose one or multiple products depending on what they're trying to optimize for. So as we look at the portfolio, I think as Nisa was mentioning, there are different products in different formats which are going to address all 4 of these user consumer needs.
Right. But see, I think in the liquid, we have already launched a product, which was much higher in terms of efficacy last year. So just wanted to understand that -- how has been the kind of performance of that product. And if -- I agree that there are various factors, but clearly in terms of illegal incense sticks, I think one of the bigger things to kind of -- which has taken away market share is the efficacy itself. Yes?
No, I think the one we launched last year was definitely -- it's more efficacious, the consumer feedback has been positive, and that has been a replacement product actually for the current -- sort of current LV. Even say -- I can't speak about this quite openly -- is that Power Chip actually, which was a lower-priced coil upgrade, is actually a very efficacious product, and in consumer -- in our consumer user tests and all, came out very strongly. It's come out very strongly in multiple researches in other countries also. The problem that we've faced is that people were peeling off the -- I don't know if you've seen the product, people were peeling off the cover on the chip, which you're not supposed to do. And once you do that, efficacy is -- this unfortunately did not come out in our research. It was a miss for us. We have corrected this so that they can't pull off this label now. If you use that product, it is very, very efficacious, more than some of the other current products in the market. That being said, this is not -- you can't come with one product and then just pray. So there is -- and look, we understand efficacy, what is really efficacious and stuff. So it's not just high dosing in these incense sticks that get you that efficacy. So we have products that have been registered, and you will see some of them this year, of course, in burning and in electric format.
Got it. The second one from my side is, in the India business, it looks like the strategy has been to kind of step up on promotions. And there has been some curtailment in the A&P -- in the advertisement spend side. So should we expect a similar kind of a strategy going forward in FY '20 as well?
I think the strategy, Amit, is going to be broadly driving sales growth at much more faster pace than actually what we were seeing in FY '19. There will be a mix of tactical strategies, whether it be consumer offers or price-off, as well as the medium-, long-term investment drivers of kind of media spend, awareness campaigns as well as trade inputs. So I think it's going to be, I mean, all rounded kind of investment strategy to drive much stronger than FY '19 growth in FY '20. So it's sort of one sort of -- of course, I mean, in a span of 3 to 4 months or in a quarter, you'll always see some mismatch in either of the line items. So for example, in quarter 4, one of the major reasons for our gross margins drop is the price-off, right, which we had actually on creams, which we had on soaps and which we had on liquid vaporizers. But some of them are temporary. Some of them have been rolled back, some of them will continue. So you will see a blend of all of this investment. The objective is to really aggressively invest to kind of get stronger growth. And if in short term it comes at the cost of profitability, I think we're pretty much geared up for that.
Is it fair to assume that the volume growth is priority and pricing growth will take a backseat?
Yes, I would agree. So at least at this point in time and with the going in strategies which we have for actually a couple of quarters, volume growth will be the priority, which will precede over pricing.
Next question is from the line of Arnab Mitra from Crédit Suisse.
A couple of questions. On insect repellents, I understand what you're trying to do on incense sticks. My question is that if you're able to execute well and the product is accepted well and it becomes a large format, what does it do to the value that you realize from a customer? I mean, in terms of -- if there's a 3-hour mosquito repelling usage, is the value that you derive is significantly lower than an LV because it could be actually a downtrading format from an LV if it's a big success? So how do you think of that? Or is it that your first task is to get this up and only then you kind of think of the mix impact?
First task is to solve for the consumers' need, like I said, connected to what a lot of consumers, even before insects -- incense sticks came, which is where you saw the big rise of Fast Card. Fast Card got to INR 100 crores in a year, was based on the fact that in the evening at around 6:00 p.m., they wanted a top-up format, correct? That is Fast Card was a poor person's aerosol. So even aerosols are used with LV. So there is, especially in high mosquito infestations, you want this instant repellency or instant kill while you put your sort of LV machine on. Obviously, if these products are effective, you might put your LV on an hour or 2 later. So there -- I wouldn't say that there is sort of no impact, but there is a different sort of consumer need between electrics and the burning format. And the burning formats don't solve for those needs. That's why you saw, over quite a few years, very, very strong upgrades from coils to electric. I think we have been looking at the electrics portfolio from an efficacy point of view, saying is it possible that you don't need dual usage and you can only use a single product, which obviously grows revenue very strongly and grows the profit pool very strongly. So we are sort of looking at it. It is not in our interest for the market to become 100% incense stick saliency market even if we sort of own that. But we have to offer the consumer all formats that they want and they need. And hopefully, your better, more profitable C-4 formats, the ones that they continue to strongly upgrade to.
And I think as Nisa was saying, over time, clearly you will start seeing consumers using, as they are already, using multiple products for multiple needs. There will be a need for the evening. There's a need when you go to sleep. There's a need for outdoor as well, right? So all throughout. So I think idea would be let's look at all the consumer needs, look at all the occasions and find the right kind of products with the right efficacy, the right price points for the consumers to be able to pick and choose what products that they would actually end up using. Because I think in the past, as you mentioned -- we were talking about, look, can we upgrade consumers from coils, and coils has still been a fairly sizable part of the market even after a lot of work they're doing. So I think consumers are going to need various products, various formats at various price points.
And Arnab, just to add, here and now, definitely incense sticks will also drive penetration, right? Penetration is still very low in household insecticide category, whether it be rural more so and maybe a little less than urban. So the task is to kind of increase penetration, and then over a period of time have consumers upgrading to more profitable formats.
Sure. And secondly on the overall mosquito infestation as a problem -- and I'm sure this question has been asked to you even last year -- besides the incense stick issue, now that it's been 2 years of relatively soft growth, do you see a headwind for the category overall with less amount of mosquito-borne diseases, all the...
No. Obviously, this is something that we look at it even on a 20-year basis. Bill Gates has said he's going to eradicate malaria completely and stuff. But if you actually follow the science and the news of what's going, this is not actually progressing very fast because even though there's a lot of research going on, climate change is actually creating more breeding and more issues. And I actually feel that this incense stick is giving you an idea that people have a very big problem and that they want higher efficacy drop-down sort of products. I don't think the incense sticks would have grown at this sort of -- illegal sort of product like this without any sort of top line marketing without that people do have serious infestation problems and they are looking for solutions.
Sure. And last question on the other segment in domestic that...
[Operator Instructions] The next question is from the line of Aditya Soman from Goldman Sachs.
Just one question from my end. I mean, just following up on the previous question, is the sort of increased prevalence of room air conditioners and even fans being a deterrent for consumers to use -- I wouldn't say deterrent, but being a factor for consumers to use less of, say, LVs? Because that would be a typical LV consumer that's moving on to using an air conditioner.
I should -- I will check with Godrej Appliances, what the -- what is the incident -- I mean, what's the penetration of air conditioners. But I think incidence -- if you live -- I mean, I live on a very high floor, and for someone who is in my business, it's very depressing because you don't see any mosquitoes on the 45th floor and it is air-conditioned, but when I go to my father's house, very air-conditioned also, and they are all over the place. So I think infestation is -- you cannot -- if an area is infested, it's not going to be effected by the air conditioner or fan. Obviously, fan being on will distribute them a little bit. With an air conditioner, they can -- it doesn't sort of really affect them. So I don't think that is the -- I don't think it's mosquito infestation going down. Actually I think that is almost an advantage with the kind of analytics and data and access we have today, is to get actually more into micro-marketing and sort of being able to where dual products are needed and start making sure consumers understand that they -- if they have this sort of very intense product, how to -- what are the products that work for them. So I think it's really what area of a city you live in. In Bombay, if you live in Juhu, there is a lot of still water all over the place, like people have serious problems, versus if you live in a very high-rise tower with not much infestation in the lower level. So that's not the -- I think the -- for us -- so basically, to your question, no, not air-conditioning and fan and their penetration is not an issue. The advantage that we should do it with the kind of analytics, the kind of data, you can know what is sort of malaria and dengue infection in 0.5 miles sort of radius, how do you take that into micro-marketing, micro-targeting with digital and the sort of new tools that we have.
Without going in too much of the details on what attracts mosquitoes, it's actually far more driven by the carbon dioxide that we exhale, along with our body smells. And so I think those...
That's why some people get more bitten than others.
Yes. Which is why those things don't change too much with fans and ACs. But that -- those are, frankly, the 2 biggest reasons for what attracts mosquitoes to certain people.
So my question was more from a perspective that you could just shut the windows, which let mosquitoes inside, if you use an AC. I mean, like you mentioned between the 6:00 and 9:00 period that was a key area. But yes...
So actually practically, if you see as a consumer, I want to add one perspective to it. The awareness of what one mosquito can do to you or your kid, creating a disease like a dengue, you wouldn't want to take the chance. And people in this segment who have fans and air conditioners would prefer to keep a safety net on through an MP or any other product rather than let that risk kind of take on.
Enough about fans and mosquitoes. Let's move on.
We are happy to talk about it all day.
The next question is from the line of Latika Chopra from JPMorgan.
My first question was if you could share the progress or share some numbers around how some of the new segments have behaved, like air care, hand wash, professional hair color segment. Have they become sizable enough to give -- to provide more details here?
So Latika, I mean, as you're aware, we kind of cocktail everything into the Others segment, which has been consistently growing at close to 20%, 30% a year. What I can share with you is air fresheners has been doing quite well quarter-after-quarter, year-after-year. We have become the market leader, but -- I mean, it's not just the market leadership position but the huge growth opportunity which this category has, even over the next kind of 2, 3 years. And you'll see a lot of action from our [ brands ] driven by new product launches and leveraging brand equity and distribution to kind of continue the strong growth momentum. In this quarter, we also saw a little bit of favorable extended winter impact in our liquid det portfolio, which is more positioned as winter care. So we did see again a very strong kind of growth in this quarter, something which you'll not see, I mean, normally. But yes, I mean, we have been on the other side of kind of season in a couple of our categories. In these categories, we had a favorable impact. Hand wash is doing quite well. I mean, we will share a little bit more details at the right point in time in terms of market shares, in terms of how it's evolving. Male grooming at this point in time, internally we have decided to kind of keep it more restricted to alternate channels as well as premium-generated outlets rather than taking it to the mass. Maybe during the course of the year, we will evaluate taking it to general trade and maybe mass at that point in time. So -- and of course during the course of the year, as we've shared in the outlook, you will see us with multiple more launches in existing category and maybe in adjacency.
All right. And secondly, on Africa business, is it right to expect that FY '19 was the worst in terms of profitability, and probably now you have a certain comfort from Darling relaunch and wet hair care scale up that margins should start looking up from FY '20 onwards?
Well, absolutely. I think you know both -- some of these were conscious choices that we made to invest ahead of the market in infrastructure, brand building. The scale-up of wet took longer than what we had expected, compounded with the significant I think downturn that we saw in the South African market. But I think given the kind of building blocks we have to put into place, I think for the year as a whole, we are very confident that this was probably the worst is behind us. And FY '20 as a whole, there might be quarterly fluctuations a little bit, but for the year as a whole, I think FY '20 should be a much stronger year for Africas.
The next question is from the line of Prasad Deshmukh from Bank of America.
Two questions. Firstly, you talked of some liquidity pressures in the channel. Could you just give some color on what these pressures are? And what gives you confidence that they are likely to ease in FY '20?
Prasad, it's Sameer here. So I think where it is coming out is largely from channel partners in terms of new liquidity crunch or pressure. And as a result of which, they are basically postponing or delaying their purchases. And then in turn, of course, I mean distributor and wholesalers and the retailers eventually. So that's what is something happening over last sort of 3, 4 months. Lately, I mean, at least the understanding basis discussions which we all had with channel partners is there's a lot of uncertainty in the run up to elections. Also as a result of this, they're a little shy in terms of committing, I mean, or having sort of upfront investments in their purchases from most of the companies. So the thinking is that hopefully this uncertainty level will actually -- should kind of subside once the election outcomes are out. And then I guess this liquidity thing I mean should -- if not completely, partly get kind of addressed. So that's our take on that.
Okay. Second question is actually to you, Vivek. So when you came into the company at that time, you started this 3 by 3 strategy and the whole growth, in last 5 years, has been basically the result of this. Now in the last 2, 3 years, we have seen home insecticides actually not going anywhere. We have also had a situation where Indonesia for the last 2 years has not -- is actually a drag. In this backdrop, do you think that we should -- with the situation we're having -- adding couple more categories at the center of the strategy and not just like seed the categories like air freshener and so on in all those business, but aggressively pursue growth in maybe a couple of such categories?
Yes. You know, but I think it's a great question, Prasad, which we think a lot about. And I think strategically, if you look at the way 3 by 3 is evolving over time, first of all, as I mentioned to you, while we've had 2 bad years in insecticides, we've had...
3 bad years.
3 bad years, we had 15 very good years as well in the past as well in insecticides, right? So I think for us, there's a fair amount of learnings that we've had. Structurally, we've seen some challenges in new [indiscernible] emerging, but insecticides will get back on the track. But across the board, if I look at all our categories -- today, for instance, air fresheners is meaningfully large. Liquid detergents is also meaningfully large for us. So as we continue the journey from say, bar soaps to personal wash, which includes liquid soaps, we've started with hand washers, there could be other liquid soaps that we end up doing, that journey continues. I think with insecticides also, whether it's outperformed other pests, over about 12% to 13% of our business today is other pests. So that journey will continue as well. There's still a lot of penetration growth again in these categories. So Prasad, even in the core, whether I look at liquid soaps, whether I look at insecticides or even hair color, first of all, there's tremendous opportunities for us to drive growth through penetration. But along with that, I think we are creating a lot of other growth factors. These get lumped into, say, personal care or home care. But within these, there are definitely new growth factors that we have been creating, which I think are of fairly decent size now.
Yes. And I think whether it's like in hair color, we've also expanded into hair care with BBLUNT or Godrej Professional. If you look at something like HI, we've also expanded into -- and we're market leaders in hair care in India, we were in Indonesia always. So we see these -- so we see it much more as home care now. We also have this niche sort of [ laundry ] play. So we are definitely looking at what is our next HI also in terms of category size.
Yes. Actually, the questions were more from the perspective of the 3 categories which were focus areas for you. There, you went like -- organically as well as inorganically -- tried and built a portfolio, which eventually delivered growth over say 3, 4 years. Now in air fresheners or say, even BBLUNT, beyond more than retail, I doubt whether it is available that freely. So the question from that perspective, are you going to be very aggressive? Like, okay, if tomorrow there is an opportunity in air fresheners, organic opportunity, are you going to look at it? Or just because it is not a part of 3 by 3, you will not look at it?
No. But we bought -- when we bought in Indonesia, Stella was air fresheners. We bought it inorganically, the company. There was that -- and previously in Sara Lee, we -- without joint venture with Sara Lee, we had some air care knowledge. And that brand is Ambi Pur, that stayed with us. We sold it to P&G. So air care, I'm just saying that HI right now is much bigger than after air care. But the way we look at it internally is home care, correct? HI plus hair care plus some other opportunities that we are working on.
Prasad, the evolving interpretation of 3 by 3 is actually now personal care, hair care and home care. And with these 3, I think actually are much broader now. And within these, I think the focus will be again on categories where we have a clear path towards leadership and where we can really come up with differentiated products. But across these, I think we are very open to..
Yes. And don't forget the exciting part is, if you look at some of the slower growth in our bigger categories, but in others, you're growing at 20%. And others together is, what, 700 crore, 800 crores. It's not small. So you're saying to foresee something like aer pocket. In air fresheners, it's very well GT distributed, and the majority of sales would come through general trade, not modern trade.The exciting thing there is that 5% penetrated, correct? More money you invest, the more it grows. So these are like emerging categories, correct? And the same way we saw emerging categories, people build in face wash or other things, we are now building these categories out. I just want to mention one more thing. Hair care just globally is a much bigger category than household in size. The size by a big, big margin. So I think that's a good point to note. No one built it actually out in India and it's very [indiscernible].
Sure. Just as one more question. As a category -- just one more question. As a category growth, home insecticides, last 2 periods, what is the number? And that's the last question for me.
So we'll come back to you, Prasad. I don't have actually all the insecticides order category growth. But I mean I can just estimate that over last 2, 3 years, it's a bit [ incense ]. The overall growth there will be high single digits, thereabouts.
The next question is from the line of Krishnan Sambamoorthy from Motilal Oswal Financial Services.
Yes. You had a bit of a self-imposed moratorium on big ticket acquisitions over the last year or so. A, an early look on this whole strategy or the time frame that you are looking at.
Yes. I still would not look at any big acquisition, simply because as we've talked before, our return on capital is on the lower side, largely driven by Africa. And I think within India and Indonesia, we are open to small bolt-on acquisitions. We haven't found anything interesting yet. I think there is still plenty of opportunities that we have to drive organic growth for innovation and penetration in the categories that we are in. So the bulk of the focus and attention of the team will be on driving organic within the portfolio. But if there are small acquisitions that we find in India and Indonesia, we're open to it. Proactively, we're not looking at any large acquisitions at this stage.
Okay. Just one more question. You mentioned about disruptions on account of elections in Nigeria. What causes these disruptions? And is that also an indication that there could be some disruption in some region in any category in India, given what's happening in India as well?
You know what tends to typically happen in situations like that is that, if the market gets shut for a few weeks, people then go back to their villages to vote, et cetera. But it's not more than a 2 or 3 weeks. But what ends up happening is that that month's numbers get significantly affected. I think India is far more mature where I haven't seen any instance of markets actually being closed for even a day, actually. We may have pockets of markets getting closed in India. But generally, I think India is far more evolved and stable. In parts of Africa, typically you might find that because of -- I think some election-related violence and all, some of the major markets can get shut or supplies get impacted. I think it's -- if the markets can remain open, other times, trucks find it difficult to move, et cetera. Happens for a week or 2 or 3 and then it gets back to normal. But it does have an impact at least for that particular quarter. But the things will come back to normal again.
The next question is from the line of from Kuldeep Gangwar from ASK Investment Managers.
Just one question regarding this deferred tax credit which has been taken in this particular quarter. Can you please just give some highlights, like how such a big number has come?
Yes, Kuldeep. So as you know, there were fiscal incentives that the government of India has given. And many of the FMCG companies had opened up production centers in some of these geographies, where there is still fiscal incentive. So once the MAT requirement came up that you have to pay minimum alternate tax, the provision was that for 10 years, whatever MAT you pay in excess of normal taxable profit would be available for you to set off. Now this regulation of 10 years usage has increased last year to 15 years. And secondly, post-GST, many of these incentives were grandfathered, and you didn't have any opportunity for further unspecified period of tax-free profits from these geographies. And therefore, when we reassessed the potential for us to utilize some of the credit that we had accumulated so far, it came out that we won't be able to do that in the foreseeable future. And as per the requirement of the standard, we had to account for it in this year.
So it's across most of the FMCG company which will be having this benefit, will be doing the same exercise?
It depends on their tax profile. Yes.
No. I'm saying having this MAT benefit available to whichever FMCG.
Yes. Yes. It will depend on their tax profile. As I said, depending on how much of their profit came from some of these geographies where there was this [ fiscal ] benefit.
The next question is from the line of Harit Kapoor from Investec Capital.
This is Harit. Just 2 questions. Firstly, on the Africa piece, I know you said that the focus in the wet hair is more on the natural side. I just want to understand if naturals is picking up there as well? Or do you also have to kind of relook at the way you do dry hair as well in that market?
Can you repeat the ...
No. The focus is both on relaxers and in naturals.
The same thing on dry hair.
Has there been an impact on dry hair...
No. So naturals, I don't think has an impact on dry hair because dry hair is not chemical-based. It's an extension you put on to your sort of current base. From straightening technology, you do need a certain amount of chemicals to straighten your hair. There's definitely been a big movement -- more in the U.S., but also on the African continent -- for women to keep their texture natural, which means not to necessarily use a chemical straightener to get it blown straight. But straight as a style or manageability of hair is sort of very important. So in our wet hair, what we call wet hair portfolio, we sort of cater to every need, both to chemically straighten your hair with a sort of safest, most protective solutions. And then for cleansing, for styling, for a whole host of other things. This category is much, much more the -- what you do with your hair is actually much, much more complex than say what an Indian woman would do with their hair. And style, style is almost like how clothing and fashion works in the rest of the world.
And now just to make it clear since this is very complicated. Just because the...
How complicated is the category?
Do not -- just because someone is going natural, it doesn't mean they don't get extensions. It's about relaxed versus nonrelaxed hair. But a lot of women who want to go natural will still use hair extensions.
Yes. Actually, hair extensions, if you talk to a woman from Africa, they call it protective styling. So the word protective means it protects your natural hair. Their natural hair is also very, very dry. So if you put it into an extension, it's almost like covering your own hair with protection from like, say, when it's winter or cold or from the sun.
Understood. My second question was on the India piece. So in an environment where you are looking at volume growth as the key priority, and pricing is not as import -- I mean, is secondary, would it be safe to assume that, even from an operating margin standpoint, you'd look to maintain margins and keep looking to drive any cost benefits into driving volume growth? This is specifically for FY '20.
Yes. I think -- it's Sameer here. So I think the thought process is to drive stronger volume growth. Honestly, at this point in time, there are no serious trade offs on a full year basis for us to come out stating that we will not see a profitable growth. I think we'll kind of take it away, kind of evolve for a period of time. So yes, I mean, no reason to believe that why at least we should not be able to maintain our margins. But again I mean if, at that point in time, in those categories, we see growth opportunity coming at the cost of short-term kind of margin pressure, we are kind of geared up for that.
The next question is from the line of Binoy Jariwala from Sunidhi Securities & Finance Ltd.
My question is on HI and the soaps incense in India. On HI, what would build personal repellents within the HI portfolio? And second is that how do we plan to scale the non-mosquito HI portfolio going forward for the next 2, 3 years?
So I think we would shy from actually sharing specifics of saliency of personal repellents, I mean to our overall housing insecticides business, though the non-mosquito part of HI portfolio has been doing quite well over last many years now, actually. And there are plans which we have in place to have new launches to kind of [indiscernible] it.
Are we aggressively looking to energize this portfolio in the next couple of years? Or it's going to be a natural progression?
No, we will see, I mean, growth getting -- I'm assuming, I mean...
On HI?
Yes. I mean on the non-mosquito part of HI portfolio. So I mean, we would love both mosquito part of HI as well as non-mosquito part of HI to grow kind of at a stronger growth rate, but at least over last 2, 3 years, the non-HI -- non-mosquito part of HI portfolio has done quite well. And as I mentioned earlier, we do have kind of strong plans in terms of continuing the strong growth momentum even going ahead.
We also have a naturals portfolio that we will be launching beyond incense stick, and it'll be both a [ March end ] and also at a very sort of premium end. And we do in that also -- besides our other cockroach, rat, other products, we will also be addressing other insects in that portfolio.
Okay. Understood. And on the soaps part, are there any distribution gaps that we can address over the next, in the next 2-, 3-year time frame that can really drive volumes?
Absolutely. I think we have 2 ways. Certainly, what we've been doing with, number one -- and that's been quite successful for us -- is looking at additional expansion opportunities from a coverage perspective. I think the second big thing will be, as I was mentioning earlier on, is that as we apply our micro-planning approach, what we will find also is opportunities to, within our existing coverage area, to be able to deepen that and distribution as well. So personally, I think both in terms of more wide -- more newer state geographic expansion as well as, within our existing coverage area, optimizing distribution are opportunities that we definitely see in the soap category.
Anything to quantify on this?
I wouldn't want to, at this stage, give you any specific numbers.
Understood. Okay. And lastly, on bookkeeping questions, could you quantify the amount of cost savings that we did -- we closed this year with, at a consolidated level and as well as India level? And second is on the debt repayment plan for FY '20?
I think directionally cost savings were down -- have been pretty more level both in India and Indonesia. And on average, we have been getting 2 percentage of our sales to quantum to cost savings, both in India and Indonesia. It's going to get scaled up in Africa and U.S. cluster this fiscal year, which is also going to be one of the key pivots to our profitable growth and ambition over there. The debt repayment will happen with its own kind of schedule. So we do have debt which is for a 5-year, 10-year or the payments are in every quarter. There will be -- This plan, at this point in time, the quantum of debt repayment in FY '20 is relatively lower as compared to the quantum in the subsequent years. So -- but we do have the flexibility of preponing or even postponing the quarterly payouts.
Can you quantify the debt repayment for FY '20?
Yes. So Binoy, as I said, I mean it's really evolving right, I mean. So we now have a number to begin with, but at the end of the year that could be in either of the directions.
[Operator Instructions] The next question is from the line of Kunal Vora with BNP Paribas.
Yes. Just like a bookkeeping question. I want to skip it for fiscal '19, and what are the plans for fiscal '20? What would be the main investments?
I think the investments would be towards expansions for new product launches during the course of the year. We're also planning to invest in R&D facilities. We'll be expanding our R&D facility in India business. And then there will be some CapEx towards ID systems. That's likely going to be what our CapEx is going to be in FY '20 in India. And again there is not going to be very meaningful CapEx in international business.
Sure, sure. What is the number for fiscal '19?
So for fiscal '19 in India...
INR 250 crores was the total CapEx in fiscal....
Yes. Overall consolidated level year.
Sure, sure. And like next year, can you provide a number or...
I think it should be around those range only, Kunaal.
2% to 3% of [indiscernible] .
Okay. 2%, 3% of the [ loan ]. And just one last question. 2 quarters back, you'd mentioned rural was growing about 6 [indiscernible] of urban; it should have slowed down. But how much has it slowed down now? How is it compared to urban now?
I think this quarter, honestly, I don't actually agree to looking at the rural and urban split. I mean, honestly, there is nothing much to choose between the rural and urban in this quarter. But if I look at trends of last 3, 4 quarters, the gap between rural growth multiplied to urban growth has sort of come down.
Sure, sure, sure. And any initial indications for this quarter like the -- quarter going on? Like, have things improved after March, or...?
Too early to call out. You need to have them call out those payments again, right? So we will keep it [indiscernible].
No. Like, actually, like the reason was that in January, in Jan -- the last call, Jan, Feb, like you seemed confident that this quarter will go well. But somehow in Feb, March, things slowed down. So just like wanted to get an initial sense of -- yes.
Too early to call out, Kunal.
[Operator Instructions] The next question is from the line of Binoy Jariwala from Sunidhi Securities & Finance Ltd.
The question is on the Lat Am business. Is that pricing now running in line with the hyperinflation? Or is it running at lag of hyperinflation in Argentina?
So what we have done is actually, over the last couple of months, we've taken some price increases, both in Argentina and in Chile. Too early to say, but the overall price increases are still tried -- trailing inflation because inflation is still running at about 45% to 50% levels, and our price increases have been somewhere in the [ 50s ] range. So still not at the point, but we are now taking pricing actions more aggressive than what we were doing about, say, a couple of quarters back.
So what is the plan to turn this geography around? How do we plan? Because I believe COGS would be the most important and critical component, right, if you need to improve profitability in this...
It's 2 or 3 things, right? One is, at an overall portfolio level, there's some higher margin incremental innovations that we can launch, which doesn't change the answer completely but provides more cushion for the business. Second of all, in Argentina also, upwards of 25% of the business now is exposed. [indiscernible] exposed meaningfully because that's higher margin. The third is actually taking a much more rigorous look at manpower costs and trying to reduce overheads. There is no silver bullet answer, but the combination of, I think, some portfolio changes to drive higher gross margin along with the expanding geographically exports which is higher margin, and a much tighter rein in terms of manpower costs is the way I think we will be able to improve the margins.
Is there a cost savings target for Argentina in specialty that you can share?
Because there are targets but because of inflation, they're pretty dynamic, right? And so I think on every quarterly basis the deal has. But there are certainly obviously certain aspirations we have that represent improvement. But not something I want to communicate because the situation is quite dynamic as we speak.
Oh, understood. And is it --- and last question is, is it possible to hold on to the 25%-odd Indonesia business margin?
I don't see any problem we devoted to that.
Because the outlook is specifically to drive sales growth, that's the reason I'm asking.
The reason is, as I mentioned, first of all, our expansion with GT, which will gain far more from momentum this year because last year was a year of experimentation and piloting, will enable us to actually drive higher profitability, and then there is enough projects that the teams will work on. It might be more backloaded this year because typically cost reduction projects tend to happen in the later half of the year. But for the year as a whole, while there might be some quarterly fluctuations, for the year as a whole, I think the team is feeling quite confident to deliver profitable growth.
Ladies and gentlemen, that was the last question. I now hand the conference over to Mr. Pratik Dantara for his closing comments.
Thanks, everyone, for joining.
Thank you.