Concall — clean across the call.

Two questions. First, given the early monsoon, was there a positive impact on household insecticides in Q1? Second, Unilever recently launched Sunlight at INR70 a liter, undercutting even Fab. Do you see this as a challenge to Fab's growth and margins going forward?

On household insecticide, we have something called an infestation index for the quarter. The overall quarter was at about 100. That's because April was very low and May and June were good. April was very low because it was a particularly hot April. It became hot early this year and then it cooled down in May and June. So April normally where the season changes in the north, the season changed in March. So, overall, actually, we didn't have a particularly good seasonality index in, it was an average seasonality index on household insecticide and April is normally a much bigger month than May and June. So I don't think we got any particular benefit in terms of household insecticide, in terms of season this quarter. On Fab, Fab continues to do extremely well for us. It is sequentially gaining share. It is much loved by consumers and it is heading towards unprecedented levels of revenue in FY26. We do not see Fab as a price comparator. We think that there's an overall mix to Fab that is good. In fact, we have taken up prices by 5% on Fab in the last quarter and have seen no impact of it despite a lot of price competition in the market. We are very convinced that this is a good mix and a fundamentally good mix.

Most HI sub-segments seem to have grown double digits. Is the coil decline structural — and is it a good long-term issue to have since premium products can grow faster? And on Q2 — with high monsoon expectations, mosquito larvae get flooded away, which is not good for HI demand. Would you be cautious on Q2 demand given this monsoon premise?

On the coil decline — I think, the growth is declining. We don't usually give numbers at a sub-segment level. But I feel like last quarter was an average quarter in terms of season. And we have done this high single-digit volume growth, which other things being equal, I think, will persist in the future. If you have a good season, if you have a bad season, we may go to low single digit. So that kind of variance will be there. But we seem to be on that kind of trajectory. One obvious way is to see how we can upgrade faster from incense sticks. But at least this battle seems to be a little behind us. This is, in fact, third quarter in which Electrics has done well. So that we continue to be quite positive about. In terms of Q2, in terms of seasonality, it's hard to say. Actually, July was a little bit of a poor monsoon in South India. But again, the monsoon has come back in August. It's been a bit of a strange season where what happens in August is happening in July and everything is getting changed a little bit by 15 days, 20 days. But sitting here today, I don't think this is going to be a particularly good or bad season. Last year in Q3, it was a particularly poor season. So one can be hopeful that that will improve.

The new RNF formula has been a few quarters in now. How is competition responding? India is all about jugaad and reverse engineering. How has the competitive landscape changed from a new formula perspective? And what is the customer saying on the efficacy of this product?

Within Electrics, we have had unprecedented share gains over the last few months and genuinely unprecedented share gains. Nielsen market share gains. Again, I don't want to give exact numbers, but they're very high. In fact, for the first time in a decade, we have gained share of overall HI. In the past, we would gain and lose share, a little bit of share in Electrics, but then the market was reshaping so rapidly that we were losing overall share of HI, as were all branded players because illegal sticks were gaining shares. But this is the first quarter, except for one or two quarters in COVID, in a regular quarter in a decade that overall HI shares we've gained. The RNF molecule is a competitive moat for us. When we launched RNF, we have exclusivity for some time on this and the lead time for new molecules in India is long. So in the short- to medium-term, we don't expect any challenge in terms of product. We are convinced that this is the best molecule in India, it has shown results. It's not easy to copy this and mere proposition doesn't help. In the last decade, everyone's tried a lot of propositions, but mere propositions don't help in the absence of a solid product. On consumer efficacy — qualitatively has been very good. But quantitatively, if you're able to gain enough share in Electrics to compensate for the headwind loss of incense stick growth, that kind of share doesn't happen without a genuine product differentiation and consumers genuinely loving it. Plus, this advertising also seems to have clicked. We went in with a proposition of lasts for two hours after the electricity goes off. This seems to have been a good proposition that consumers are recalling as well.

Perfumes and deo mid-teens growth — how does this look on a two-year basis given summer categories didn't do well this quarter? And on Bloq antiperspirant at INR99 — the application format has been tried before. Would you need a lot of time for consumers to learn to use it before traction builds?

The two-year number will be high only, because the growth number that we had in the previous year was on a low base from when we acquired the business. But the traction is good. We've done two, three things that seem to be working. Amazon Woods 4X, which is an innovation, seems to be working well because the market was disrupted by 2X and this is 4X. In Tamil Nadu, we did a pilot, which seems to be working very well, where we bought the MRP of the category down to INR99. This category, MRP was INR230 and the trade price was INR100. In Tamil Nadu, what we did is we brought down the MRP to INR99 and we bought down the trade price to INR90 and converted 150 ml to 125 ml so that the gross margins remain the same. That has had explosive growth in terms of volume shares, volume growth and even NSV growth. So we are now convinced that that is the right way for us to compete in this market, not give so much margin to the trade, give trade the margin that they earn in the rest of HPC and bring down price. Bloq, I agree with you is a long, hard battle because converting this country to antiperspirants is not going to be easy. But antiperspirants is selling at INR200 to INR220 and Bloq is a INR99 disruption. Among the top couple of players, we probably have the best distribution for this kind of thing. But is Bloq going to give us a lot of revenue in the next two years? I doubt it. But it is one of the key reasons why we did this acquisition, which is to build the antiperspirant category.

Legacy detergent powder players have caught on to liquid detergents and are now pricing below Fab. Modern trade has also caught on. Long term, legacy players tend to come back with higher advertising budgets and better economies of scale to cross-subsidize. How do you see Fab competing against Rin at lower pricing over the long term?

Firstly, laundry liquid is a category we built in India with Ezee and the category is quite analogous to soaps 20-25 years ago. It's a category that we've done well over a long period of time. So we are certainly one among a few players. I don't think that there is a question of right to win in this category, both because we were the pioneers in liquid and the detergent category has a lot of similarities to soap. We look at our mix from a consumer's lens. We feel that a combination of the product, the pricing, the packaging and the advertising is a sweet spot for consumers. We have, in fact, as I said, gone the other way around and taken up prices on Fab, because actually raw material costs have gone up, SLES, which is a big component, is linked to the palm complex. And we have not seen any impact of this. We have only seen our sequential revenues go high. We will play a branded game here. We are not going to play a pricing game on Fab. It came at a disruptive pricing because we felt that's the right price for consumers, not because you want to discount the category. Our job is to upgrade from powders to liquid.

Clarification on soaps — you mentioned 15% growth, was that soaps or ex-soaps? And with the import duty cut, does that benefit raw materials, and when do we see soap margins normalizing?

No. I said our business ex-soaps has grown 15%. Soaps have done badly this quarter, both because of grammage cuts, which are very sharp and also because of a poor season in May. So we overall grew 5% in India, but we grew ex-soaps in the mid-teens. On import duty: the import duty cut will benefit us. However, in the last few weeks, there has been a bit of a rally again in palm oil prices. So palm oil prices fell back up, not hugely up, but they've gone back up 10%. So from their peak, they fell 30%, they've gone back up 10%. But because of the inventory that we hold, I think, the benefits of soap margins will only come in towards the beginning of Q3.

We've seen this Indonesia competitive cycle repeat three or four times over the last 12 years — things going well, then competitive intensity, then realizing we should have responded more forcefully early on. What actions are being taken now? And when you face slow macro plus price competition, is your priority to protect margins or to protect market share? Any call-out on Indonesia margins for the next few quarters?

The primary cause in Indonesia seems to be macro. In Q4 itself, Indonesian FMCG had slowed down and a lot of our peers and competitors reported that in Q4 and beginning of Q1. There have been some price competition, which has I think been in response to the macro, because when the macro is poor for four months, five months, a lot of competition also wants to react. We have to defend market share unblinkingly. I'm going to Indonesia next month to assess for myself. But from what I've seen from the data, it does seem to be a little bit of a sudden slowdown. And it also seems to be doing a little better now. Our objective is always to defend our shares and to grow our shares. That is number one priority when the macros are poor. Whatever the consequence of defending shares, you have to bear it. On margins — I have a feeling that this is a bit of a temporary drop and it should come back in the next few months. This quarter we have kind of continued to invest on pricing, but I have a feeling that the pressure should lift by Q3. It doesn't look like a deep structural margin correction that we have to take.

Africa has delivered very strong top-line growth but there's been a margin compression. What is the reason for that margin compression?

I think the primary reason is that one of our products, which is Aer Pocket, has been doing well across the world and we have been launched it in many countries in Africa and invested quite a lot in Aer Pocket in terms of media and on-ground activities and BTL. So I think that has been the main reason for a slight bit of dilution in Africa margins and also consequently the growth as we are also pivoting that business to an FMCG business and Aer has been such a big success in India that we see a big opportunity not just in Africa actually, but across the world on Aer Pocket.

If I exclude soaps and look at the standalone business ex-soaps margins on a year-on-year basis, how did that trend? And in the second half when you talk about margin recovery, is it soaps normalizing plus ex-soaps also improving, but not to the same extent?

Directionally, we also on ex-soaps have taken some price corrections in some part of our portfolio, including household insecticide, hair color, which also explains the high growths in the rest of the business. So even there, the margins have not been much, but they have come down. But we have had spectacular mid-teens growth there. We felt there were some parts of the portfolio, for example, the aerosol part of the portfolio, when compared to the rest of the world, prices were high. So we've dropped prices there. In some parts of our hair color portfolio, where margins are high, we've dropped some prices. All these businesses have exploded, but we have taken some kind of margin correction there. We will recover those margins as the year goes along through cost savings. We have very aggressive cost saving programs — from media negotiations, from supply chain, from our new factories. Our strategy on soaps is to recover to normative margins with pricing. Ex-soaps is to be a little bit aggressive on pricing and recover those margins back through cost. In the second half, we should go close to our normative kind of margins. That's what I think, assuming oil prices are roughly where they are today. Our calculations suggest that's achievable.

In Q1, what was your price level gap versus the aggressive challengers in Indonesia across household insecticides and air fresheners?

Compared to where we should be, I think we were about 7%, 8% higher than where we should have been, which we took corrective action in the quarter itself. So towards the end of Q4 and beginning of Q1, we saw some sharp price drops on household insecticide aerosol, which we waited for a month and then we've kind of gone and matched. But we were off by about 7%, 8% for a period of two months. So which means if the price aggression from the challengers don't get worse from here, our price levels are probably where they should be from a competitive standpoint.

On standalone pricing and gross margins — soaps has declined and within HI the premium categories have done well. Mix seems to have significantly improved. Yet we still see a sequential drop from Q4 to Q1. Is that largely inventory-price-led or the price drops in the non-soap portfolio you mentioned?

Largely, we've taken some price drops in the non-soap part of the portfolio, especially on aerosols on what we call CIK, which is crawling insect, flying insect, which is mosquito and cockroach. And also on hair color, we brought down the price of our large pack by about 5%. So on three big packs, we have taken down prices to aid volume growth.

On soaps — it looks like at least a double-digit volume decline. When do you see that easing — is it just a base effect that anniversarizes from Q3 and Q4, with the seasonal piece ideally playing out from Q2 itself?

It wasn't that high, it wasn't a mid-teen volume decline. Yes, it will ease. We'll definitely see better volume performance. A good part of the volume decline, UVG decline is just grammage. So about half our business or 40% of our business is price point packs. For example, on Godrej Number One, INR10. Last year, same quarter, I think we were 55 grams or 56 grams. This year, we're about 43 grams. That's the kind of grammage cut that we've had to take, which is almost 20% grammage cuts. So that on 40% of your portfolio, that accounts for most of the volume decline. And then there was a volume decline which was an unusually poor May that we had. So the unusually poor May will disappear in Q2. What will happen on grammage cuts is those will continue because as we go through the year, the base also has smaller and smaller grammages and units also tends to increase over a period of time. So while our UVG is 5%, my reckoning is that our unit growth would have been in double digits this quarter.

As you track competitive intensity, have you seen market shares stay largely intact in soaps?

We're still gaining in this quarter market share on soaps, despite all this, but it is less than we usually gain. So I have to say that we have for a long time been gaining significant share on soaps. That significant share has reduced to a marginal gain on soaps, but we're still gaining, we're not losing share on soaps.

Whenever there's been a very large volume decline in soaps — 8%, 10%, high single-digit in a year — long term there is still low single-digit growth in the category. Do you expect volume growth to come back to a good number to make up for this decline, or does usage actually drop and not recover when you take grammage cuts?

I think you will get to the long-term line of the industry from my past experience, because people don't reduce the number of baths. It's an inelastic category. Similarly, you see, we're also lapping bases where the other way around happened, where you suddenly give grammage increases and then it looks like you have high UVG. But I do expect that the long term volume growth on soaps to be in the low single digit, which is 2% odd, 2 to 3% is what I expect the long term volume growth on soaps to be.

This quarter seems to be the first in a long time where HUL grew slightly better than GCPL on soap volumes. Anything you read from that — in terms of on-ground understanding after the formulation change or pricing actions? Or is it just a quarterly blip?

I think it's one quarter, we still gain share. We have a large business in North India and North India had a particularly poor summer. We had a really poor May in North India and 70% of our business comes from North India. So there's a little bit of geographic stuff here. I would say that we have been a little aggressive on soap pricing over the last few years and generated quite a lot of margins. But I would not read too much into one quarter, if this continues for a few quarters. I mean, the market share gain that we've got in this quarter is less than what we want, to be honest. I would still kind of leave a quarter aside because it's also been an unusual quarter in terms of various kinds of pressures. The weather does affect soap sales. So I'd probably not react too quickly to this, wait for a quarter or so and then probably kind of think about it.

Most companies are reporting a slight broad-based pickup in mass consumption. Your categories are quite season-driven, but are you seeing broader consumption trends slightly improving — and is there some chance you do get uplift from broader consumption recovery in H2, beyond just soaps recovering?

I think so. I think that one can say that this quarter growth has been slightly easier than the previous quarter and the previous quarter was much better than the previous one. So it's too hard to say there's like some big boom in consumption and all, but certainly it looks in the right direction because soap numbers that are affected by a lot of things. So ex-soap is a good way to kind of look at the overall consumption basket. Those numbers have been quite unprecedented for us this quarter.

Post RNF launch — via Nielsen or any other medium, is there feedback on repeat rates? There will be a novelty factor associated with the advertising campaign, but any sense on repeat factor for the new molecule? And beyond the current Electrics share, where can GCPL take its Electrics share long-term?

On repeats — we've now launched a new molecule in September last year. This kind of market share gains cannot happen without repeats. So, I mean, you can get after advertising the first three, four months, your trials can go up and then the repeats can come down, etcetera. So that alone tells us that the repeats are high, because the scale of market share gain is very high. On where we can go — in FIK, our share is 85%, in cockroaches, it's 90 plus. So, I mean, when you have a differentiated product and you have a moat, I suppose the sky's the limit.

During the Analyst Meet, you mentioned revamping the channel margin architecture for the deodorant portfolio. Initial feedback — given it was the first time any company was trying to implement this?

We're very happy. We launched it in Tamil Nadu. Tamil Nadu is the easiest case, by the way, because the lowest wholesale component, the most retail component and wholesale doesn't like this. But the lesson that we've learned is doubling of volumes and doubling of volume shares and actually doubling of revenue also, because you're not really drop price — NSV per ml, we've kept the same. This shows us that this is a powerful idea, which is if you bring this category to INR99. Now, it's a hard transition to do. So we'll have to do this slowly and not like one shot because you do it in one shot, you can really lose a lot. But certainly, the right thing to do is to get this category to INR100 and then this category has to explode. We're also unique, because among the top couple of players, we probably have the best distribution for this kind of thing, because you need a wide distribution to compensate for initial loss of wholesale traction.

After the Africa cleanup, the growth seems quite strong. Is this growth sustainable and what is a reasonable growth rate for Africa in FY26? And on Indonesia, have the higher promotions and margin pressure from competitive matching already been fully factored into Q1 margins, or could there be more pressure in coming quarters?

On Africa — I think one is we've kind of taken in a lot of interventions over the last year. Some bit of the growth is obviously kind of coming in because of corrections or base corrections, which we've done in the past because we had taken down dealer inventory. I would kind of attribute around 10%, 12% of the growth to that. So should we be able to kind of grow by double digit over the next few quarters? I think we should, with macros being where they are. [Sudhir on Indonesia margins] Look, it's hard to predict this. My guess is that margins may have bottomed out in Indonesia because of pricing pressure. Because my guess is that the market will grow faster. If the market grows faster, the kind of need for competitors to drop prices kind of slightly reduces. So that's my guess. I think a good model is to think that this is not a deep structural correction, but maybe we can have a conversation in a quarter or two on this for us to assess whether my guess sitting here today is correct.

The best HI sales quarters are ahead — should one revisit the HI guidance upward? When does the soap price hike fully annualize? And do you expect sharp volume improvement in India once pricing annualizes?

On HI guidance — I think we have achieved a certain kind of momentum on HI which we're convinced of, which is kind of moving from a zero to low single digit volume growth to a high single digit volume growth in HI. And I think we should probably kind of stick to that guidance for some time. There will by the way be another event where this should change, because there has to be a limit to incense sticks growth. And when incense sticks growth taper off and then start declining, then it'll suddenly upgrade and we will have a lot of high market share in the premium segment. So there will be a second wind of growth. But for the time being, high single digit in HI on a norm and this will vary between low single digit and double digit depending on season, by the way, but on average, kind of this is what we should probably think of for some time. Probably not [upping the guidance] because the relative growth of incense sticks continues unabated. On soap annualization — second quarter it annualizes. So by next quarter, Q3, it would have fully annualized. On India volume — I would be disappointed if India doesn't move from mid single digits to high single digits in the next few quarters. Soaps was impacted by a composite of bad season and grammage cuts. As I was telling Arnab, ultimately consumption doesn't fall.

Any initial update on the pet food Ninja — launched in Tamil Nadu? And on pricing, you mentioned price cuts in hair color large pack and HI aerosols. What was the driver for each?

On pet food — it's early days. We've launched it in TN. I was in Chennai yesterday both to look at Bloq and to look at our pet business and the first question I ask more than anything else is, is the product acceptance good and among consumers whose pets have used Ninja, the product acceptance is good. So I think at this early stage, that's the only relevant question. This is a long gestation, like Bloq, it's a long gestation thing where there'll be lots of ups and downs. We'll probably really get into numbers in a few years. On pricing — in the case of household insecticide, we saw that our price per ml was very different from the rest of the world. One of the barriers for aerosol penetration is pricing. India was an overpriced market when compared to even our own markets of Indonesia. Our bet here is that it is better to benchmark the prices versus the world, get to that price and get to volume growths. There we've thrown the kitchen sink, we've put the new formulation and dropped the price. In the case of hair color, the driver of price drop is we had launched a INR15 pack, which has done explosively well for us. But we did feel that the gap versus the large pack was too high. So we reduced the large pack from INR42 to INR37. So that the per ml price is still much better for the small pack, but we narrowed that gap.

On soaps after grammage cuts — similar to biscuits, doesn't consumption eventually mirror actual volume growth? And how long might this take to recover? And separately, the number one player has reduced palm oil requirement in Lifebuoy and Lux by 20% versus before. Do you need a formulation response at some stage?

I think it will, Avneesh. I think there's no reason for it not to. It could take because you're also sitting on bases where there was extra grammage, then you're going to less grammage. There's a lot of inventory lying at various parts, including the consumer's pantry. There might be an initial kind of titration, but my own experience, this is a necessity. Consumers use two grams of soap per bath. They need that cover. I mean, it's not the kind of thing that is such a large component of household expenditure that people titrate and it's not doing it. So it has to come back. The grammage cuts have been really sharp. From 56 grams, you've gone to 44 grams in like 12 months. Every quarter you're cutting and cutting and cutting. But look, if you do the maths over a two, three-year period, the volume growth of soaps has to mirror the volume growth of the population. On formulation — I have to answer this in slightly general terms, which is we have to do what we at one point think is right for the consumers. And right now we think our formulation is right for the consumers. We are not happy with our market shares in soap, but we're not unhappy with it either. We just have to wait and watch a little bit more. I still feel that our path is probably the right one and we should probably stick to it. But look, we are also ready to learn at any point in time on anything.