Concall — clean across the call.

On pet food — you entered Tamil Nadu about 8 months ago with Ninja. How has progress been? Reliance Consumer is planning to be aggressive with 20-40% lower pricing. How do you see pricing dynamics in pet food medium to long-term?

We basically launched a test market in Tamil Nadu and as we speak, we have got a plant ready now in Nashik, which is ready to go. In Tamil Nadu, our results have been mixed. We've had some success in terms of consumer traction, distribution, etc. But I don't think we're still at a position where we can say we've got the mix 100% right. I think mixed results in a sense that we've got a market share which is a little lower than what I would have hoped for. We kind of launched with this promise of immunity. We've been pretty heavy on television. We've got a pretty good salience. Our Google share of search is now in double digits in Tamil Nadu. So good measures on mind measures. But still, I won't say that we've got that mix exactly right. When the moment we feel we've got that, we'll let you know. But we are persisting with this. We've built a kennel, we've built manufacturing capability, we're building a sales team, we're building a vet contact program. This is going to be a slow burn for a few years, and then I suspect it will take off.

On Muuchstac — what will be the FY27 target? And on Park Avenue/Raymond, how has progress been in the two sub-segments?

On Muuchstac, it's probably not proper for us to give a target. To reinforce the rationale — Muuchstac is very focused on a single SKU in face wash, having pretty rapid growth coming from just 1 or 2 channel partners and having a very high EBITDA margin. With Godrej's capability across other channels — e-commerce, modern trade and even general trade — this should give us a pretty disruptive growth number. The total size of the market in men's face wash is INR1,000-odd crores, growing at 20%. Whatever happens, this acquisition does look like a pretty good deal at a good price. We will consolidate and try and become the number two player in this. In the case of Park Avenue, reasonably well, a little slower than what it was last year. There's been a pretty sharp change in this market in terms of the market has upgraded from deodorants to EDPs. That is a segment where there is a clear market leader, but we are now competing for number two and getting explosive growth actually in EDPs. Our EDPs are now almost INR100 crores odd in gross sales value. So, there does seem to be a market change from deodorants to EDPs.

At the analyst meet, you said RNF would reduce HI index volatility from 95-105 range. Are we seeing that? And was HI growth positive this quarter despite the excessive winter?

Yes growth was positive. But see the last 3 quarters in India have been a cooler 9 months. In quarter 1, it positively benefited HI, but negatively impacted soaps. In quarters 2 and 3, it actually had a negative impact on both soaps and HI. So we've actually delivered these results in Q3 despite weather not being favorable — we have a mosquito infestation index and now for 6 or 7 months, it's been relatively poor. We are expecting, however, that this year, Holi is a bit early and we hope that earlier summer onset will be positive for our business. I think the RNF won't change the volatility of HI results because the volatility of HI results depends on the volatility of seasonality. It will change the mean from a business that was practically not growing. As our incense sticks business becomes bigger and bigger, and that business is now quite a profitable business, this business I think is in the mid-single-digit range and will kind of inch towards high single digit. There will be a volatility of plus/minus 5% in any quarter. Going from 95-105, it may go to 100 to 110. There are a couple of percent improvement in our revenue rates after RNF, that is quite clear to us.

The worry has been that incense sticks' lower margin profile could end up diluting overall HI margins as it grows. With GCPL now targeting incense sticks growth, is that lid off?

Yes, in incense sticks, we have taken a weighted average price increase of 30% since we launched, and we are seeing no slowdown in our volume growth. So now our margins are pretty good actually in incense sticks.

What are the drivers behind the India margin improvement from last quarter? Is it mostly soap normalization or are there other factors?

No, I think there are 2, 3 causes for the margin improvement. One has been, relatively minor, has been normalization in soap — that actually will start playing out from this quarter or next quarter onwards. I think the biggest one has really been cost savings. We've had an unusually high year in terms of cost savings. We've had very significant savings in media cost. While our ATL looks optically lower, the number of GRPs we are spending in the market is actually higher. We made a big decision to change to a very large new media house, and that has a significant media saving. We've also got significant cost savings from supply chain initiatives like the new factories that we launched. And also in both laundry and soaps, we've got some reasonable savings in terms of product changes — blend flex — because the relative price of vegetable oil to fossil fuel has increased. So both in soaps and in detergents, you can have reasonable blend flex. So, a combination of these three things: supply chain savings, blend flex in soaps and detergents, and media savings have been the big drivers of margins. These will be structural savings — they'll persist.

With soap margins now getting better, can India margins exceed the 24-26% guidance range in Q4 or FY27?

I doubt it because we also have, all said and done, incense sticks and laundry growing the way they are growing — we also have a negative mix that is coming in. So, I would be surprised if we exceed this 24% to 26% range. This is also an annual range — on a quarter it may go up and down. The annual range of 24% to 26% is roughly where we will be. Our objective continues to remain to get to 10% volume growth. We feel we're in the 6% to 7% volume growth in India. We had two big objectives — to take India up to first high single digits and then double-digit volumes, and to structurally improve our Africa margins. On both these, we've made pretty substantial progress. Our intention is to get volume growth and to keep margins range bound.

India delivered 9% UVG this quarter with base support. As the quarters progress, the base gets higher. What sustains the volume trajectory given base normalization and soap benefits already starting to come in?

See, firstly, the soap volumes in this quarter were a little lower than my expectations. It took us October and actually half of November for all the old price stock to get cleared. We had a good December. So, it's not like this quarter has been driven by soap volumes. It's actually been driven by aer care, laundry, hair care and incense sticks and actually non-mosquito HI is also growing very fast. I feel like what will benefit GCPL is that some of these growth engines now have critical mass. And if they continue growing, there's a compounding effect. I'm hoping that this compounding effect kind of takes our volume trajectory up by, let's say, 100 bps a year. In FY24, our India volume growth was 7% driven by high soaps. In FY25, we actually did 5% volume. FY26, I expect somewhere between 6% and 7%. FY27, soaps should hopefully be a little better. So if you look at our non-soap volume growth, that has been steadily going up. Soaps will normalize at kind of 101-102 volumes. That's how I expect to see the future.

Gross margins are improving sequentially for two consecutive quarters but are still below the 4-5 year Q3 averages. Is that explained by higher cost table or by mix shift? And on other expenses down 6% — cost savings or phasing?

We had one exceptional gross margin year in FY24 in quarter 3, where we had very, very high EBITDA. If you remove those numbers, those gross margins are where they are. I think there will be a little bit of pressure on gross margins, which I hope will get alleviated with scale and leverage. So we will have to try and make those up through cost savings. But I'm not overly worried about gross margin numbers changing dramatically. [Aasif on other expenses] If you were to explain the reduction in other expenses this quarter, I would say 50% of it would be attributable to savings. There have been savings in other cost lines and part of it has to do with phasing. In a quarter, there is some phasing which happens quarter-to-quarter on cost, but we have managed to kind of save on some of the other expenses as part of the total cost-out plan, and some of it is just phasing between quarters.

Given that most GST-related adjustments are behind us, can we expect Personal Care revenue growth to accelerate in Q4? And is there any change in the pace of soap market share gains?

Certainly, the volume growth will accelerate even revenue growth should on soaps because the GST has not been a real price drop. I was hoping, frankly, that October, November would be slightly better in soaps — it's taken a little bit longer. But yes, I would hope that happens. It depends a little bit on the weather and it's been a very cold winter as well. So yes, I hope it accelerates a little bit. On soap market share pace — the pace of the market share gains is a little lower than what it was in the past, but we are still gaining market share. It's too small to have any — it's not a material difference. If I'm growing 30-40 bps a year and a year you grow 10 bps, it's really hard to attribute it. If now for 2, 3 years in a row you grow 10 bps, then we can say there's a change. But it's hard to attribute in a 1-year period.

On Indonesia — when do you expect revenue growth to revert to positive? And given your 5% volume growth and margin improvement, is the peak of competitive intensity behind us?

See, I think the revenue growth is already positive in reality. It's a bit optically negative because we did a change. [Aasif: We changed the arrangement with GT dealers — some expenses which were historically getting booked as cost now get taken off the margin. As a result, price growth is kind of negatively impacted.] But I do expect the revenue growth to turn positive quite soon, among other things because there's a currency base also coming. I would say that Indonesia at kind of the worst is probably behind us. The underlying 4%, 5% volume seems to be back, and it will follow in price soon. The peak of competitive intensity is indeed behind us. It continues to be competitive like every other part, but there was a period of 6 months of very highly competitive activity on pricing which does seem to be a little bit behind us.

On media savings — I recall at the analyst meet that you had in-sourced media. So what am I missing? Second, is soap volume growth positive? Third, on HI market shares — if you exclude incense sticks, what has the share trajectory looked like on 1-year and 3-5 year basis?

On media — I think we made a presentation on insourcing the creative function. The media buying, we have bolstered our team in-house and there's a lot of use of technology. One reason for the reduction in media cost is the agency. Another reason is far better internal planning. But our media function is not an in-house function — we continue to work with GroupM. Our advertising function is an internal function. On soaps — it's positive. On HI market shares excluding incense sticks — in each of these four segments — incense sticks, electrics, aerosols and coils — we've gained significant share. Each of these segments we've introduced a new molecule and each of the segments we have gained share. Overall, in HI, we have not gained share, simply because our share of incense sticks, which is such a fast-growing market, is much lower than in other segments. In a few years' time, we'll start gaining share overall too. If you remove incense sticks, we have gained very significant shares in HI — both in the short run and the long run. In terms of our share as a percentage of organized players in the medium and long term, it has been increasing. Excluding incense sticks, the market itself is very marginally positive. Including incense sticks, the market is growing at mid-single digits in value but is actually a very fast-growing market in volume. HI was in fact one of the top-3 categories in India in terms of penetration growth.

Africa has done very well over the last few quarters with high-teens EBITDA growth. On this higher base, can you keep up this kind of performance or should we moderate expectations to low double-digit EBITDA growth?

I still think that the sharp margin increases we saw in Africa may not happen. But I do think that there is still scope for us to have some kind of cadence of margin improvement in Africa going forward. And I hope that bottom line grows faster than top line in Africa for the next few years. For top line double-digit growth — I don't know about that. It may or may not, depends a lot on currency and things like that. But we certainly will aim for that. Africa is a little bit volatile and some of those things are hard to predict. I would be quite happy if we can do high single-digit volumes in Africa and whatever happens to currency happens.

On margins — do you see margins stabilizing here or should investors expect volatility based on how things go? And second, how is Godrej Spic doing in Tamil Nadu and is there a strategy to expand to the broader South?

On margins — our business margins are quite dependent on oil price fluctuations. If oil prices don't fluctuate, our margins won't fluctuate. In the past, when oil prices went up, we would sharply cut advertising — we don't do these days. If there is a very sharp increase in oil prices, greater than 15-odd percent, then we will take another quarter or two to recover the margins. We won't react in the short term by cutting media just to cover up some margins optically. This has happened in the last 5 years twice. When oil prices go down, we end up passing the benefits to consumers quite fast, whereas when they go up, we pass it down a little bit more slowly. So that is the only condition in which we may have a margin hit. Otherwise, I expect it to be in this kind of range, maybe a little lower in the summer months, a little higher in winter months. On Spic — we launched it in Tamil Nadu two months ago. Usually, the results are quite positive. We usually don't decide anything before 6 to 8 months. So we will wait for 6 months before deciding what to do next. We are quite encouraged with Spic, it's a good product, and we're quite happy with consumer response. But before we take a call on national rollout or even South rollout, we must wait for 6 months to pass.

How should we think about India volume growth going ahead — for FY27 and in the near term? You have weak bases in soap but a high base in HI. Can you sustain the high-single-digit to low-double-digit trajectory? And is there a broader consumption pickup you're observing?

No, I don't think we'll grow at 9% volume at all going forward. But the 6% to 7% volume gradually inching up is what I think for the India business. Our portfolio has changed quite dramatically in the last 3, 4 years. The fast-growing part of our portfolio continues to grow fast, even though it's becoming bigger — there is a compounding effect that is happening. I do expect kind of sequential gains in volume growth. But right now, I think we're at a rough level of 6%. I hope we can take it to 7%, 8% and so on over the next maybe 18 to 24 months. We had a relatively low Q2 of 4% volume, this quarter 9%, so averaged two it's 6.5%. On a base last year, this Q3 was a lower volume, but Q2 was high volume. So all in all, we're in the 6% to 7% range give or take. On broader consumption — I can't say that with full confidence yet. This quarter, of course, everyone's results will be better than last quarter thanks to GST. In our particular case, soaps was actually slightly disappointing this quarter, but it picked up quite well towards the end of the quarter. A very cold winter and GST transitions meant we really got bank for the buck only by December. So I would still kind of wait. But our volume growth trajectory is intended to be pretty independent — we want to move towards aspirational double digit regardless of what the market is growing at.

Africa constant-currency growth has moved to single digits after three strong quarters. Which segments are you eyeing for better growth in Africa and which segments have seen disappointment? And what's the growth trajectory expectation for the next 2-3 quarters? Also, on the Strength of Nature litigation charges of INR23 crores — one-time or recurring?

[On Africa] I think in this quarter also, we had a strong underlying volume growth. Currencies keep fluctuating — you have some currency appreciation, depreciation. There is also some play of pricing when you get better deals on input materials, you do kind of pass on some pricing benefit. So structurally, the underlying volume growth has been strong in this quarter. We will work through to ensure we deliver high single-digit underlying volume growth going forward. There is a plus-minus which will keep happening on price, local currency and in INR terms. In terms of new categories, there are multiple categories where we have a global right to win, and we will sequentially build our presence across the entire continent. We've spoken about the hair category, which we launched this year — there is still a lot of runway in terms of taking that to scale. There are also a few more categories we are targeting over the next 2 to 3 years. [On litigation] Some of the costs are getting incurred in terms of legal expenses. We will have to see how the suit progresses. But yes, it's likely to kind of continue for a few quarters.

On personal wash — is the volume recovery being driven by LUPs or is it broad-based? And on Godrej Spic — what's the differentiated proposition and how does the toilet cleaner market look?

On personal wash — the unit growth is pretty robust in the quarter because we're still lapping, despite GST and grammage increases on the small packs, our small pack grammage is still significantly lower than what it was in Q3 last year. So actually, our unit growths are significantly higher than our volume growth, which is why all this will anniversarize and we'll go back to reasonable volume growth. The turnaround has been everywhere, if you compare it with the previous quarter. I don't think there's any specific portfolio story on soaps. The GST price drops have helped and it will only help further in subsequent quarters. On Godrej Spic — one of the things in our launches is we don't just launch products with a price disruption. We are very cautious on launching products which are perceivably better than what consumers are using. Our promise here is not just cleans but also prevents stains from forming. It's a differentiated product. We are selling at a price index of about 70 to the market leader. So that's the kind of cherry on the cake. It's early days. We are reasonably encouraged with it. But we are pretty patient — we wait for 6 months, study it carefully, then ask the question is it worth doing nationally.

For 10% volume growth, soaps can only contribute 2-3%, so the rest of the portfolio needs to grow at low-to-mid teens on a sustained basis. How do you articulate the medium-term strategy? And will you keep adding categories every 2-3 years to sustain this?

Your math is correct. The rest of the categories have to grow at teens, which they're growing at, by the way. And as they become bigger, the impact of them will become more — the compounding effect. The three big categories that have been growing very fast have been air care, laundry liquid, and incense sticks. These are the three that are now becoming all of them material size and rapid growth. All of them have very large TAMs. And there's a fourth one that seems to be emerging — perfumes, EDP. These 4 are very, very fast-growing segments, all with very large TAMs. Aer per capita in India is a fraction of what it is in Southeast Asia — long runway. Laundry liquids are still only 6% or 7% of the total laundry market, growing at 30% volumes — we continue to expect multi-decade growth. Incense sticks, we're a 10% share of the market. And EDP is a small player in a small but rapidly growing market. You have 4 categories that cumulatively should grow at 30-odd percent, and 2 categories — hair colour and non-mosquito HI — growing at double digits, to compensate for soaps. Yes, we will keep adding categories. We've had strong success on innovations in the last few years. But we are a bit slow and methodical — we must have products that are materially better than what is available to consumers. That does limit the number of innovations we can do. But we will certainly continue doing it systematically — our aspiration is 7%, then 8%, then 9%, 10% volume over the next 18 to 24 months, independent of GDP growth.

What kind of value growth can we see in soaps over the next 2 years? And on personal wash — how serious are you about scaling hand wash, face wash, and body wash?

I expect soap value to grow at between 4% and 6% in the long-term basis, low single-digit volume growth and low single-digit pricing as well. That's what I expect in soaps. I expect personal wash to grow faster, first just a little faster, but then much faster because of the compounding effect. The three categories that soaps upgrade into are body wash, hand wash, and face wash. In all three, we've made differentiated players. In handwash, we've actually got a very differentiated player which is gaining share — Magic Handwash. In body wash, we've got a very differentiated share on Cinthol Bodywash, which is doing very well in modern trade, quick commerce, and channels of the future. And we've just entered face wash with Muuchstac. All these put together today, maybe less than 10% contribution to this business. But if they continue to grow at 30% to 40%, they will start giving 2% to 3%, 4% to 5% over a soap. In this period of 3 to 4 years, they may not materially make a difference. So if soap grows at 4%, personal wash may grow at 6% to 7%, but in 3-4 years, as these become bigger and as we consolidate market share, there will be a compounding effect on these in the future as well.