Zydus Wellness Ltd
NSE:ZYDUSWELL
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Zydus Wellness Ltd
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Ladies and gentlemen, good day, and welcome
To Zydus Wellness Q4 FY '24 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. Karan Bhuwania from ICICI Securities. Thank you, and over to you, Mr. Bhuwania.
Thank you, Nirav. Good evening, everyone, and welcome to Q4 FY '24 Results Conference Call of Zydus Wellness.
From the management today, we have Sharvil Patel, Chairman; Mr. Tarun Arora, CEO; Mr. Ganesh Naya, Director; Mr. Umesh Parikh, CFO. I would now like to hand over the call to Dr. Mr. Arora for his opening remarks, post which we can open for a Q&A session. Thank you. Over to you, sir.
Good afternoon, and welcome to the post results teleconference of Zydus Wellness Limited for quarter 4 financial year 2023, '24. Like Karan mentioned, we have with us Dr. Sharvil Patel, Chairman; Mr. Ganesh Nayak, Director; and Mr. Umesh Park, CFO of the business.
During the quarter gone by for the FMCG sector witnessed a gradual uptick in demand and growth in rural demand, which is -- which started converging with that of urban demand. So we have seen some green shoots, like I've mentioned in the last quarter as well.
Most of our company's portfolio has seen demand recovery, which was further fueled by the demand of summer-led brands like Glucon-D and Nielsen in the anticipation of good summers. The company further expects demand to pick up in the hope of good monsoon and improvement in macroeconomic factors. Most of company's portfolio has seen positive volume momentum. As a result, the company registered consolidated net sales growth of 9.6% on a year-on-year basis, of which 5.5% is due to volume.
The Personal Care segment continues to register strong double-digit growth for the quarter, with both Everyuth and Nielsen portfolio witnessing a good demand traction. The Food & Nutrition segment also turned positive and reported a mid-single-digit value growth for the quarter on a year-on-year basis. Both Complan and Sweeteners portfolio have seen positive revival in demand. For Nutralite value brand, growth trails the volume due to market-driven prices.
The company's research and development capabilities continue to be on the forefront, helping the company to launch new products and extensions, namely Glucon-D [indiscernible], electrolyte energy drink, a ready-to-drink format for on-the-go consumption in a couple of states.
The company also extended its Sweeteners portfolio with a launch, I'm Light, a unique formulation of sugar blended with [indiscernible] to offer consumers 50% less calories than regular sugar, and new range of products under sugar-free delight range for the international business.
We continue to witness gross margin expansion with an improvement of 377 basis points on a year-on-year basis for the quarter 4 of the financial year, contributed by calibrated price increase taken earlier and efficient hedging strategy for key commodities.
Let me take you through some other highlights of the consolidated financial performance of quarter 4 financial year 2023, '24. Our net sales grew by 9.6% to INR 7,780 million. We reinvested some of the gross margin expansion into brand building, as a result of which advertisement expenses grew by 41.6% year-on-year on a lower base of brand investment last financial year.
Other expenses grew by 9.3% year-on-year basis. EBITDA grew by 12.2% year-on-year to INR 1,622 million.
The company reported profit before -- sorry, profit after tax of INR 1,503 million. Adjusted PAT after eliminating exceptional items and onetime deferred tax assets impact in comparable quarter of previous year grew by 24.7% on a year-on-year basis.
Coming to the annual consolidated financial highlights. Our total income from operations increased by 3.2% year-on-year to INR 23,279 million during the year. Our EBITDA was down by 8.6% year-on-year to INR 3,082 million. EBITDA margin as a percentage of total income from operations stood at 13.2%.
The company reported profit after tax of INR 2,669 million. Adjusted PAT after eliminating exceptional items and onetime deferred tax assets was down by 9.1% on a year-on-year basis.
Net debt stood at INR 77 million. Our consolidated CapEx for the year was INR 489 million.
With that, let me share some of the highlights of operations for the year gone by, which will also cover category growth, market share numbers as per March 2024 report of Nielsen and IQVIA.
We continued our thrust on marketing initiatives to grow the categories and increase market share for our brands during the year. On the personal care front, Everyuth brand continues to outpace category growth and has registered a strong growth for the financial year. The [indiscernible] category has registered a growth of 12.1% at MAT level. Everyuth scrub has maintained its leadership position with market share of 45.6% in the patient scrap category, which is an increase of 369 basis points over the same period last year. The [indiscernible] category has registered a growth of 14.5% at MAT level. The Everyuth [indiscernible] has maintained its #1 position with a market share of 80.2% in the lock, which is an increase of 174 basis points over the same period last year. Everyuth brand is at #5 position with number -- with market share of 6.5% at overall patient cleaning segment level.
Nycil brand has also reported a strong growth for financial year. The prickly heat powder category has grown by 3.7% at MAT level. Nycil has maintained its #1 position with a market share of 35% in the quickly heat order category. Nycil has recorded its highest house penetration at 8.5% at MAT February '24 level with its volume growth ahead of the category.
On the Glucon-D front, with continued marketing efforts towards driving growth and recruiting new consumers, brand penetration has grown by 62 basis points versus last year as on at Fab '24, as per [indiscernible].
The glucose powder category has grown by 4% at MET level. Glucon-D continues to maintain its leadership position in its glucose powder category with a value market share of 59.5% at MET level.
On the Complan front, the nutrition drink category has seen and started showing signs of revival in the later half of the financial year, with -- from a slow slowdown in the last year. The brand performance is a reflection in similar lines. Brand penetration has grown by 26 basis points versus last year to 29% as MET 29% as per [indiscernible].
We launched a new TV campaign with 2 popular celebrities, namely [indiscernible], which was backed up with our robust 360-degree campaigns across all medium. The category has grown by 6.4% at MET March level. Complan market share stood at 4.3% at MT level.
Sugar substitutes category has grown by 5.5% at MT March level. The sugar-fee brand continues to dominate sugar-free substitutes, with a market share of 95.9%.
Sugar fee green continues to grow at high double digit, led by volume offtake growth.
On the Nutralite front, the brand registered good volume growth during the financial year. However, the negative value growth due to market-driven prices, the brand has -- was supported by various customer engagement activities like chef needs and participation in food exhibitions.
The brand's digital initiatives like [indiscernible], the world's first [indiscernible] on Metaverse, received numerous awards from the marketing [indiscernible].
With the indicators of good summer season and a normal monsoon expected to augur well for the company's significantly contributing seasonal portfolio.
The recent introduction of hub and spoke will further strengthen company's supply chain capabilities and add to timely availability of company's production in the key markets. The company will continue to innovate further to meet the evolving consumer preferences.
Better macroeconomic indicators, along with company's resilient front end and back end, capabilities are likely to result into good growth for its brands in the coming quarter. Thank you, and we can now start the Q&A over to the coordinator for Q&A.
[Operator Instructions] The first question is from the line of Tejash Shah from Avendus Spark.
Congrats on good recovery and robust profitability after low. More importantly, the quality of many looks good [indiscernible]. Sir, just wanted to know, you called out in your presentation, opening remarks that there is gradual progression in selected consumer space. So just wanted to know more insights on constituent of this progression and also sustainability of the same.
So I think what we're seeing is some categories are showing better resilience and better response, namely especially the Personal Care spaces, with both the brands we've seen over the whole financial year and even now a good response from the demand side. Similarly, some of the other factors, which is running across our food and nutrition portfolio, we are seeing far better pull from a consumer side. And across channels, therefore, we hope that this will build as a lot of people are talking about in the industry as well that it can build up as we see.
Sure. And sir, we are in the middle of very good summer season. So how is the retail uptake? I can understand that perhaps fourth quarter had some element of stocking up before the summer. But what's your sense on [indiscernible] on retail uptake? Is it in line? And can we expect a good start of this fiscal year?
Yes. Hopefully, yes, because it's still part of the quarter gone by. So, so far, we've -- whatever we've seen is a positive movement from the retail.
Sure. And sir, cost portfolio because your market share slide on both Nycil and on Glucon-D still is showing a downward trend, so just wanted to know, is it that market is actually being better or slightly there's a lag in this number will show up in coming quarters in terms of market share gain for us?
So I think there is some bit of catch-up for Nycil specifically in the personal care space, where we've seen they've been, at a category level, showing only a 2% to 3% growth for last year as well as continued. So I think there is a lag, and I hope Nycil shares will catch up with our internal growth because that's been sustained. So I would say it's a mixed bag. We do see, like many other companies, local players springing up, competition heating up. but our book growth are not fully reflected in some of the market shares.
Sure. And sir, considerable jump in our A&P spend for the quarter, any -- was this to support new launches? Or was it the existing competitive [indiscernible] in the existing portfolio very high?
So there are, again, 2 factors. One is that we've been been optimizing our advertising spend as the gross margins were under pressure over the last 2 financial years. Now as we've got the opportunity to -- with the gross margins improving, we [indiscernible] back that money because we believe it has to support the demand generation to build our business in the right direction.
Yes, we have some launches, but it's more to build more demand and also deal with competition challenges that come along [indiscernible]. But we think we'll reset this level and we not have to invest continuing at the same growth levels.
Sure. And sir, last is [indiscernible] on gross margin or raw material situation as it is today. How should we think about the EBITDA margin? Because we have given quite margins in the last 2, 3 years. So how should we think about that number from here on?
So going forward, we expect the inflation to be normal, which is a manageable 4%, 5% or 3%, whatever that we've seen over the last 8 to 10 years rather than the extreme inflation that we saw over the last 2 years. Within that, I think we hold our wish list to be much higher 17%, 18% EBITDA in the next 2 years. I think we'll continue on our journey. Our gross margins is a starting point. I think over the next -- over the next few quarters, I think this should build up into some operating leverage as well.
Next question is from the line of Ajay Thakur from Anand Rathi Securities.
So my question was, again, on the summer portfolio. So you did elaborate on summer sales kind of seeing -- witnessing good kind of a traction. But have we seen any weather-related kind of disruptions at any kind of regions? Or how is it versus the last year? If you can throw some light more so from the more like April, May perspective rather than the Q4 perspective.
At a overall level, I think we still see a good season. Of course, there are patches like some markets which will have those things. And no year is completely even across the country. So right now, at an overall level, we are seeing a good uptick, and we believe that's a good way to look forward.
Regarding last year, we saw, especially the biggest of the markets like North had a significant green fall, which depressed the temperature. So that we are out of hopefully, that should persist...
I understand. Secondly, I wanted to get more sense on the growth in Complan actually coming through. so can you just elaborate on the what kind of a growth we are seeing in the category itself? And also, how are we kind of looking at further kind of improving our shares in the category? So that would be helpful.
So at Complan level, the category has seen some revival. And like I mentioned at our MET level, we are seeing a about 6.5% kind of growth levels. We are also positive that as the category builds up, we will continue to build along with that. We have seen penetration levels grow in double digits. Of course, it's not fully translating into the same level of growth because of inflation and other factors. The consumption is not keeping pace with the increased penetration. So our view is, right now, we continue to, like we've said in the past, hold and build step by step.
Good part is, with the milk prices being stable, we will continue to improve our gross margins. We'll look at holding our market share or step-by-step building it and a reasonable level of growth. We have some interesting more initiatives over the next few quarters, which will help us to take it to the next level, and we'll share it as and when they are out in the market.
Understood. Sir, I also wanted to understand more on the sugar-free side of it. We have been witnessing some bit of competition, especially in the modern trade in the sugar-free category. What is your take on the same? A lot of competition coming from the equal and the branding. So are you also witnessing the same in the market? And if you can throw some light on the sugar-free category itself?
So there has not been any significant competition perspective. I think our focus -- single-minded focus on sugar-free and sweeteners overall is to build the category as a significant #2 focus is to recruit new consumers. We found over the period of time since a lot of negative things happened, sugar fee green, thanks to its natural equity, plays a very strong growth. That's seen a good double-digit growth consistently over now, 10 or 12 or maybe 13 quarters. So we continue to build driving that as a lead recruiter variant on the sugar free. And we've also now launched lime light. So at the overall sweetener level, we're hopeful that we should be, over the next couple of years, see a good enhancement of growth.
Understood. So lastly, on the tax front, if you can just guide us for the tax rate for next year and the year after, FY '25 and '26?
So for this financial year, [ INR 125 million ], we won't be paying any tax. And the offers that will be a deferred tax would be there won't be any cash outflow on tax. In the year '26, '27, there will be patient outflow because we will have a benefit of seeking facility as well in [indiscernible]. So for '27, financial year '27, we'll have some tax outflow. But this year, certainly, there won't be any cash outflow.
So 26%, if you can throw some light specifically...
'25, '26.
So we are not looking at any tax rate in terms of...
No, no, we have. I said because of the we are 256 because of the hiking facility, we will have [indiscernible] outflow.
So what kind of actor can we build in for modeling purpose?
Yes. So you can talk to me separately, I'll take the [indiscernible].
[Operator Instructions] Next question is from the line as from Kaustubh Pawaskar by BNP Pariba.
For good set of numbers. Sir, my question is again on the sugar fee. So -- last quarter, we have seen because of some bit of negativism. And even the super light got impacted...
Kaustubh, can you please speak to the handset?
Is it better now?
Yes. Thank you.
Yes. So I have a question again on sugar free. So last quarter, we have seen sugar free sales seeing a degrowth on a year-on-year basis. And there were reasons to it, a lot of negativism was built up around the brand. This quarter, we have seen growth coming back again. So I just want to understand the reason for the growth is sugar free green only the key driver for the growth? And can we expect this growth to be consistent and with the new addition to the portfolio, it should improve further maybe in quarters ahead?
So we've seen consistent -- after the WHO and other impact that we had and the impact of sugar light. The sweetener portfolio did come under pressure. We've seen that progressively improve and clearly a reasonable revival of growth on this in the last quarter. We expect, going forward, we'll further build on it and see consistent growth as we emphasize for sweeteners as a portfolio. With both [indiscernible] green and lime light being the key leaders or drivers of growth back.
So sir, overall food portfolio, so we are seeing Personal Care consistently, there has been a good growth. This quarter also, we have a double-digit kind of a growth. Foods, this quarter, it was mid-single digit kind of a growth. With overall recovery in the -- in some of the key categories, should we expect FY '25 to be a double-digit kind of a revenue growth? Considering the fact that even in Q1 FY '24, there was an impact of -- seasonal impact on your summer portfolio. So that was -- that impacted the overall performance of Q1. So considering all these factors, should we expect double-digit kind of growth for FY '25?
Yes. Yes, I agree. We should see a double digit growth.
Okay. Okay. And Personal Care should be something which should continue to grow in double digit with a fair bit of recovery in the food and nutrition. Is it the right understanding?
Yes. Yes, please.
Okay. And sir, on the distribution front, what is the current touch point for us? And '25, '26, where do you expect this distribution touch point?
So I think there are 2 or 3 things that factors we should look at when we look at distribution. Factor is that the organized channel continues to lead demand because there are consumers who are shifting and and these platforms are getting deeper and wider. So maybe whether it's quick commerce or whether -- whatever be the kind of initiatives they may be doing and expansion of stores by some of the offline organized retail. The share of organized trade will continue to go up. It's about at 20%. We expect it to continue to 21%, 22% over next 1 year or 2 years.
From a traditional trade point of view, our products are available close to about 3 million outlets. Journey or our plan would be to how do I build it to be available at 3.5 million outlets. That's one. So what does it take to get there? So a whole set of initiatives we are putting in place. The second more important call that we are doing at least in the next few months our priority will be to expand our range within the direct outlet reach that we have about 6.5 lakh outlets that we have directly covered how to expand our portfolio within that? So we have more lines or more SKUs sold within those stores. That would be priority one.
Of course, then we can follow it through if we need to expand our direct distribution as well. But these are set of input parameters, but the whole value will be when I can take my 3 million outlets availability across the portfolio to a 3.5 million over the next 2 years. That would be my maybe, a little ambitious, but target given that how we envisage to build our business.
Can we have the next call. Hello, can you hear us?
[Technical Difficulty]
Next question is from the line of Chaim Modi from MK Investment Managers.
Am I audible?
Yes.
Okay. Sir, my question is around on plan. So good controversy about or reclassification of the category has seen an end consumer demand getting impacted?
Not really. I think is just about nomenclatures, which I think has nothing -- no impact on consumers. This is largely more regulator led issue. So the demand stays consistent, like I mentioned, at MET level, the category has seen a revival with growth, we are hopeful that it will stay on course and win further.
And sir, second was around the industry level demand. So now that the input inflation is much stable than what we've seen in past years. And a lot of initiatives taken during the leader for the category penetration, do we expect this category to grow in double digit going forward?
It's hard to say, but our own view is that we will build our strategy around double-digit growth around the nutritional space that we operate with Complan leading it. The category may or may not see a double-digit growth because there are factors which play both ways, and therefore, that's how we operate.
Got it. Sir, can you give us a rough indication as to how much would Complan be as part of our food's portfolio? Just a rough number, not the. I mean if it is INR 20 crore, INR 35 crores?
We don't share. Sorry, we do not share this.
Okay. And sir, lastly was around the channel. So we've seen our share on e-commerce going up. Now -- are the margins on this channel in line with our traditional trade? Or is it margin dilutive for us, any rough indication?
At a gross margin level, we are able to balance across sales because we have to -- we have a great focus on it.
[Operator Instructions] Next question is from the line of Mayur, Wealth Manager.
Am i audible?
Sir, your voice is coming a little [indiscernible] can you speak for the handset, please.
Is it okay?
Yes.
Actually, just a very high-level top-down question. Over the last couple of years, we have seen many of our things falling in place after this quarter results when we see after there was a an portfolio, which had to be integrated, then COVID came in place. Those issues were behind us now behind the debt levels are we have become a debt-free company, the raw material pressure has been now behind us, and we are looking back on the growth path. With this background in place, do we -- will we look at increasing our expectation? And should we look at increasing an expectation and look at middle double-digit kind of growth over the next 2, 3 years? Or will we -- still management continue to believe that will be somewhere the current growth rates to continue in that segment of maybe around 10-ish kind of level? Or do you think there is a scope for us to now start looking at higher growth rates and look at our target of INR 3,500 crores as the revenue target?
So we do believe that we have the right capability inputs as a company to build on a double-digit growth path. We had part of the macro environment we operate, and that's why there were some challenges in the past, but we think with a stable environment, we are on the path to deliver our consistent [indiscernible] over the next few years.
Sir, I understand, but do you think INR, 3,500 crores is 3 years ago? Or do you think is it more than that? There's a simple understanding so that we have a better understanding on what do you mean by the kind of growth rate we are looking for?
I do not have a specific number to share as we don't work on specific guidance. But yes, we are committed to a double digit like I mentioned.
Okay. And sir, on the margins front, also, you did mention that we'll look at 17%, 18% kind of EBITDA over the next 2 years, right? So did I get that right?
Yes, that's what we want to do. We know it's a little ambitious given what we have done this year, but we'll work towards it, and we do believe we have a [indiscernible].
So in fact, in fact, I had a different way to look at this. Just by the sheer reversion to mean in terms of the last year low margin scenario, which we had, and which is now slowly coming back in terms of gross margin improving, if we just do the simple mean reversion and see the previous year, won't you -- wouldn't it be fair for -- not to say that we would already be reaching around 16% in this year itself with the margins move the way they are a simple base effect coming back to normalization? So do you think [ 17, 18 ] will be -- is a -- it will be a tough task for it is that the simple main revision itself will take us?
So I think, well, the math is simple, but there is 2 things you need to keep in mind. There is costs continue to build up on your fixed cost as well as we have managed last couple of years, which was extreme inflation by optimizing some costs and investments that we need to build on the business. So we need a tighter walk on balancing our EBITDA wish list as well as investing on the brand to build it for the future. So therefore, I would not hurry on either of the side and balance that, and therefore, [ 17, 18 ] is a reasonably optimistic or a tough challenging task we've taken. And I think because we want to build it sustainably.
Okay. Sir, last financial question I had. We have -- I saw in the cash flow are of INR 50 crore inflow on debt side borrowing. What would be that?
That was temporary working capital inflow that has been repaid now.
Okay. Okay. So it was only for the March quarter or something like that?
Yes. Yes.
Sir, what would be the cash levels now after this?
So we have mentioned that we are now debt free. And at a net cash level like net debt is around INR 80 lakh.
Sorry?
INR 8 lakh.
INR 8 lakh?
and it's practically 0, INR 8 lakh .
Next question is from the line of Shirish Pardeshi from Centrum Broking.
I have just 2 basic questions. When I look back last 2 years, we had a bigger challenge, consumer traffic, consumer offtake is smart with the discretionary spends, which -- so just reference Slide #8, what you have mentioned in FY '24, our food and nutrition portfolios just remain flat, while personnel has grown 17%. So this is 1 observation. And second, you mentioned that our coverage -- direct coverage is [indiscernible] to get from INR 6 lakh to INR 7 lakh. so I'm just trying to build a scenario that though we know what are the problems which discretionary spends are looking. But internally, maybe what are the top 2, 3 things other than the ad spend or supporting the brand, which we to change in FY '25 for food and nutrition portfolio?
So Shirish, thanks for this question. I think I've kind of tried to explain this earlier. I think food and nutrition portfolio, though, if we look at last financial year, 1 of the biggest drivers of our flattish numbers was the fact that we had a hard summer where the temperatures were much lower than they should be in our key markets. And that clearly pulled out, and it's 1 of the largest plants we have that impacted us.
Secondly, we had a double trouble in our Sweeteners portfolio where WHO decided to create a warning with some ways of putting it. And our sugar light came under trademark litigation. With those 2, 3 largest of the things, and if I can add maybe Nutralite, when the oil prices dropped, our value growth reduced volume was better. So overall, therefore, our value growth looked much lower than what it could have been or should have been in a normal situation.
Having said this, I think as we come back to normalcy and any medium period of time, 2 to 3 years, we should see a double-digit growth. We should see Glucon-D coming back on growth path, and we have no reason to believe anything less than that. All our actions are in place. Similarly, for Sweeteners, we are already seeing a revival with sugar fee green leading it, but other portfolio not losing so much. And similarly, we have launched [indiscernible] light, which will take care of our blended sugar opportunity. These put together, Complan is seeing good single digits right now. So we should see at least that category seeing a good single-digit growth. We should see a decent double-digit opportunity on food and nutrition.
Personal Care anyway has been on a double digit despite the market, and our belief is that we are gaining from competition in some of these spaces. So we are well equipped to build our business.
Your question on traditional trade distribution. I think like I mentioned to some earlier participant, my priority will be to take our 30 lakh outlets or 3 million outlet availability to 3.5 million outlet availability, [ 6 to 7 ] because we have [ 6.3, 6.2 ] kind of lag, which varies depending upon the category and season that we do want to take it up, but the eventual goal is have more products going through the same outlets, so widening my portfolio within what I cover. And overall, my distribution or availability going up to 3.5 million. So those are a few things that we are driving.
We anyway know organized trade, which is a mix of off-line modern trade as well as e-commerce are building up, and we are participating reasonably well while gaining share in those markets. So we are well rounded on this whole growth journey.
Well, that's really helpful. I'm just trying to build in mind, that when you move from 6 lakh to 7 lakh direct coverage and you have 3 million to become 3.5 million. So which category will have given the current scenario -- if it continues another 1 or 2 quarters, which category will have the positive numbers? I'm just trying to derive, not trying to build the numbers.
So across the portfolio, I'm seeing clearly, Personal Care categories. Nielsen has not caught up with the numbers, both [indiscernible] and Everyuth distribution. Given the smaller price packs, have expanded substantially in these categories for us. They should have captured much more. So we do expect those are clear drivers. Similarly, in the food and nutrition portfolio, we've been able to expand our presence, so there're also most of the brands, including Complan or Glucon-D could also expand on that.
So this distribution expansion is largely within the cities where we are present, or this is the newer markets we're opening?
Substantially within the markets we are already available. Of course, in some of the lower POPs data, we'll go deeper as well. It's a mix.
Okay. My second question is that when you look at INR 23-odd crores of year number, what is the international contribution and what are the plans which we are trying to build this business over 2 to 3 years?
So at the international business level for the full year, we are about 3.5% to 4% range. This has been range bound because if I were to break it down into 3 geographies or 3 focus markets, namely, we have talked about it, Africa led by Nigeria, India subcontinent, which is Bangladesh, Nepal, and there is GCC in the Middle East. We've seen good double-digit growth in both GCC as well as India subcontinent, and we believe these will be significant growth drivers for us over the next 3 to 4 years. Nigeria, which is 1 of our largest markets, has been under pressure in the last 1 year because of the macroeconomic and currency issues, demonetization and whole lot of those things.
Once that is sorted, we believe 1 of the strongest equity for our brands is there. So all of these markets can really help us double our business every 3 years maybe if I were to look it maybe faster. We'll have to see those numbers whatever it plays out, but they can definitely increase our share of overall business to [ 7, 8 ] that we want to do sooner than later.
Okay. My last question on the margin. When I look at this quarter, our expenses [indiscernible], obviously, we had the gross margin lever. So what kind of ad spend we should build for FY '25 I don't want the number if it is remaining at similar level will go up from here. And if barring about the commodity prices, which is there, which we can track, but what are the internal levers in terms of cost synergies or cost management, which you think especially we can go to 17%, 18% EBITDA margin?
So I'll just answer in summary because if you need more detailed questions, we can pick it up separately. But quickly speaking, I think we've upped our investments largely to come back to levels that we wanted to operate, closer to 13%, 14% of expense. But going forward, I don't think we see a substantial increase. They may happen one-off led by some initiatives, but rather we'll try and maintain a similar level. Margin expansion is led by the fact that our growth will come back to double digit. We will continue to improve our gross margins and have operating leverage. I can get into more detail, but then it needs a separate discussion, which you can pick it up with [indiscernible] and then we can have this.
[Operator Instructions] Next question is from the line if Varun Singh.
So my first question is what is your reading on rural recovery?
So our read is that there is an improvement in rule recovery. Some of our brands showing it. Some of the data from the industry has also shown that there is improvement. So we are hopeful that it will only get better in nenxt coming quarters.
So in our portfolio compared to last quarter, if you would like to call out some numbers with regards to how much the improvement appears to be for you?
So at an overall level, it's quite balanced across the whole -- across all categories and channels. So we've been fair across.
Okay. Understood. And sir, my second question is on Glucon-D. Maybe if you would like to call out your observation, analysis, et cetera, like before COVID and after COVID how the category has grown, and maybe anything structural observation into this category, if you can share some insight, that would be helpful?
So I think, Glucon-D has seen consistent penetration. It's only during the COVID that it had dropped substantially, but otherwise, we've seen a consistent penetration increase with the consumers.
[Operator Instructions] Next follow-up question is from the line of Mayur from Wealth Manager.
Give that Glucon-D is a summer -- largely summer product for us, and last year the -- we -- as we said, that in key markets and key geographies were impacted due to summer being impacted by rain, would you -- and when we see the commentary here, the food and nutrition is much lower [indiscernible], would you say that the growth has been much lower than your expectations and should have been much better given the good summer this year and given the low base effect last year?
There is no base effect in Jan, Feb, March. I think our growth has been quite on the expected lines given the macroeconomic factors. So I think it's quite balanced. This is also a quarter when a lot of trade loading has happened. So we have to see the Glucon-D over our Jan, June period to really establish all the season healthcare.
Right. So you believe a large part of the recovery in growth and demand will actually be more witnessed in -- as we go ahead in the fourfold quarter rather than... Sorry, your voice was breaking.
Yes.
Okay. Okay. Sir, second is a clarificatory question and not intended with respect to the company's strategy as such. But the sugar-free, the new brand, which substitute [indiscernible] light also has on the face of it as lower calorie as 1 of the key aspect. And as per WHO that has been something that the sugar substitutes can't do. So is there something which we believe that it will -- these situations won't come to India -- won't be implemented in India? Or is something different our understanding with respect to regulatory aspect? Because on the face of it, not that I'm [indiscernible], I am just asking your view on your understanding.
Timelight is a blended sugar. It's not a sugar substitute. It has [indiscernible] blended with sugar. So I think it is not in the [indiscernible].
it won't come under the purview of sugar substitute [indiscernible].
[indiscernible].
Finally, the third question on every Sir, do we have any B2B business on the -- on this segment of the -- in this category? Or is it all week you see in a B2C?
B2C.
And do we have any intent to tie up or go for B2C and B2B segments over here or will remain a B2C?
We are focused on B2C, but we always look at all opportunities that come away.
As there are no further questions, I will now hand the conference over to the management for closing comments.
hank you, everyone. Thank you for your patience and diligent questions. We'll see you next quarter.
Thank you very much. On behalf of ICICI Securities that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.