Sundrop Brands Ltd — Q3 FY26

Sundrop Brands Ltd Q3 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=y2OrodP67TI Published: 3 months ago

0:00 Ladies and gentlemen, good day and welcome to the Sundra Brands Limited Q3 FI26 earnings conference call. As a 0:08 8 seconds reminder, all participant lines will be in the listenon only mode and there will be an opportunity for you to ask questions after the presentation 0:16 16 seconds concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchstone phone. Please 0:25 25 seconds note that this conference is being recorded. I now hand the conference over to Mr. Ajay Takur from Anendraati. Thank you and over to you sir. 0:34 34 seconds Hi everyone. Good afternoon. I welcome you all to the third quarter and 9 months earning conference call for Sunundrop brands. From the management 0:42 42 seconds team we have with us Mr. Nitish Paj group managing director Mr. Ashish Kumar Sharma CEO and executive director and Mr. KP and Shinwas CFO. 0:55 55 seconds Without wasting much of a time, I shall hand over the uh call to Mr. Nish Pajad for his opening comment which will be 1:02 1 minute, 2 seconds followed by Q&A session. Over to you sir. 1:06 1 minute, 6 seconds Thank you so much AJ. Uh good afternoon all the members of our community who are on the call. Uh I'm very happy to be 1:14 1 minute, 14 seconds with all of you and sharing our Q3 update. I will I assume you have all got the presentation which was loaded. I 1:22 1 minute, 22 seconds will keep referring to the slide numbers as I talk through the presentation. I'm starting with slide number three where 1:31 1 minute, 31 seconds I'm quickly recapping the vision and mission we had set for Sandra Brands as an organization. We continue to be in 1:38 1 minute, 38 seconds the path of delivering joyful food experiences to the evolving modern consumer. Of course, through launching 1:46 1 minute, 46 seconds innovative, delicious and convenient food solutions and you will see a lot of innovations which have come in the last 1:53 1 minute, 53 seconds few months as we have embarked on a new journey for Sunrop brands. 1:59 1 minute, 59 seconds Moving on to slide number four. Again a quick recap of why this platform is very attractive for all of us who are 2:07 2 minutes, 7 seconds associated with the business. First and foremost uh we have built it now as a scaled platform because we have two big organizations 2:15 2 minutes, 15 seconds embedded in this platform already which gives this business platform a strong opportunity to grow and grow profitably and efficiently. 2:25 2 minutes, 25 seconds What this platform has innately built in is our presence in very high growth and high margin categories and we are 2:33 2 minutes, 33 seconds actually expanding that growth and margin as we continue on the journey for profitability. 2:39 2 minutes, 39 seconds Second is we have built in a very strong renewed focus driven through advertising, communication, brand 2:46 2 minutes, 46 seconds building and innovation on the core portfolio. So we have taken very strategic calls on which portfolios we'll invest on and we continue to do 2:55 2 minutes, 55 seconds that with a great precision in our journey for profitable growth. Third which we'll also take you through and we 3:02 3 minutes, 2 seconds have talked that as a strategy we are increasing our growth in fast growing alternate channels and those are 3:11 3 minutes, 11 seconds reflecting very strongly in our business performance. 3:15 3 minutes, 15 seconds Fourth point which is our extremely high focus on very capital efficient way of building the business. So we are now 3:22 3 minutes, 22 seconds very strongly focused on taking strategic calls on putting our investments where we can drive high ROI 3:29 3 minutes, 29 seconds for the business and that results in improved performance on AITA and part margins in the longer term. And last of 3:38 3 minutes, 38 seconds course which is the thesis of this platform we will beyond organic growth keep looking externally for external opportunities to build this business inorganically as well. 3:50 3 minutes, 50 seconds This platform I'm moving on to slide number five is a combination of three big brands actu which is in the business 3:57 3 minutes, 57 seconds of popcorn and ready to eat and ready to cook snacks. We have sunrop which is dominantly a staples portfolio. led by 4:07 4 minutes, 7 seconds edible oils but we are looking to expand this portfolio into cereal snacks and and oats kind of promises which also 4:15 4 minutes, 15 seconds I'll take you through. Third is of course the Delmonte franchise which is a very large global brand inately trusted 4:24 4 minutes, 24 seconds by the consumers for highquality products which is into uh culinary which is into Italian which is into packaged 4:31 4 minutes, 31 seconds foods. So fairly wide and broad portfolio which gives us a foothold in the large package food industry. 4:40 4 minutes, 40 seconds Coming to Q3 results on slide number six. Uh we have continued our strong go growth momentum in quarter 3 as well. At 4:49 4 minutes, 49 seconds a consolidated level we are growing at 10% on revenue. Our B2B growth which is innately built into the Delmonte 4:58 4 minutes, 58 seconds business and B2B is about 40% of Del Monte revenue continues to be strong at 9% growth. I talked about alternated ch 5:07 5 minutes, 7 seconds alternate channels. Our e-commerce growth remains very strong at 31% growth in quarter 3 as well. We are continuing 5:15 5 minutes, 15 seconds to invest strongly for growth. So our advertising investments are reflecting ahead of curve growth of 22%. 5:22 5 minutes, 22 seconds What is very important for us to look at is how we have done on margins and how we have done on a beta and I'll explain these numbers as I come at the end but 5:31 5 minutes, 31 seconds at an overall level our focus on driving margin expansion continues and we are seeing sequential improvement in our 5:39 5 minutes, 39 seconds margin expansion at end of quarter 3 we have had about a 330 basis points improvement in our gross margins 5:47 5 minutes, 47 seconds dominantly driven by foods business within Sundrop and Del Monte We of course also has an edible oil business and an olive oil business in Del Monte. 5:57 5 minutes, 57 seconds That business because of the commodity cycle where we are seeing inflation especially in edible oil segment has 6:05 6 minutes, 5 seconds been more at a protect absolute margin strategy rather than a percentage margin. So our gross margin expansion is dominantly coming out of our foods 6:13 6 minutes, 13 seconds business. And as an outcome of that we have seen an 80% growth in our consolidated debita at end of quarter 3. 6:22 6 minutes, 22 seconds same numbers and I contrast on slide number seven to our YTD results growth 6:28 6 minutes, 28 seconds identical at about 10%. B2B growth a shade higher at about 12%. E-commerce growth again shade higher at about 39%. 6:37 6 minutes, 37 seconds Advertising investments again shade higher at about 37%. Gross margin I talked about is improving sequentially. 6:45 6 minutes, 45 seconds So while our Q3 improvement is about 330 basis points at a YTD level, our margin improvement was about 230 basis points. 6:54 6 minutes, 54 seconds Uh a beta again is improving sequentially. So YTD growth is about 40 while Q3 growth was in in specific at 7:02 7 minutes, 2 seconds about 80. So very strong numbers both at a Q3 and YD levels. Just uh uh moving on 7:09 7 minutes, 9 seconds to slide number eight. If I just break them down between Sunundrop and Delmon, Sundrop accounts for almost 57% of the 7:17 7 minutes, 17 seconds group turnover now growing at 10% on YTD basis, 11% on Q3 basis. Last year growth 7:26 7 minutes, 26 seconds was 5%. So it has accelerated the growth momentum and you will see that in numbers. Del Monte which is 43% of 7:34 7 minutes, 34 seconds business growing YTD and quarter 3 both at 8%. a shade lower than FI25 growth of 7:42 7 minutes, 42 seconds 13% but that is dominantly explained by olive oil business where commodity prices have actually gone down and we 7:49 7 minutes, 49 seconds have gone the pricing given the pricing benefit to consumers which is leading to a value decline but we have very strong 7:57 7 minutes, 57 seconds volume growth in the business which means that as a sustained business outcome even delonte growth should be longer term much better than what you 8:06 8 minutes, 6 seconds are seeing right Now moving on to slide number nine and this is more about portfolio calls uh which 8:13 8 minutes, 13 seconds we had taken. We had said our focus of investments will be on the packaged foods business dominantly and we are 8:21 8 minutes, 21 seconds staying true to that path. We are investing specifically on popcorn business under act two. We are investing on peanut butter business again under 8:30 8 minutes, 30 seconds Sundrop in Delonte. We are expand making investments on our culinary business which is spreads and ketchups and mayo 8:38 8 minutes, 38 seconds and also on the Italian range. So very sharp calls on which portfolio to invest and we are consequently as an outcome of 8:45 8 minutes, 45 seconds that investment seeing over a longerterm trajectory significant improvement in the saliency of our core categories 8:54 8 minutes, 54 seconds which today stand at about 61% of our business significantly up versus what we were about 3 years back. 9:03 9 minutes, 3 seconds Moving on to slide number 10 and this is very important uh reflection of how our business has shaped on the categories 9:10 9 minutes, 10 seconds where we invest. So first is overall if you look at most categories with the exception of spreads are growing on 9:19 9 minutes, 19 seconds volumes. Very hearty to see that even Sundrop oil where we had said we will do a volume protection as a root and 9:27 9 minutes, 27 seconds managing the business there has actually started to reflect volume growth in a quarter. Historically we are still at 9:35 9 minutes, 35 seconds about flat volume at a YD basis. But in quarter three we have seen business coming to a 5% volume growth. Outside of 9:43 9 minutes, 43 seconds oil if I look at popcorn strong double-digit growth of 12% on volume, 18% on value. Culinary which is a mix of 9:51 9 minutes, 51 seconds ketchup, mayo and spreads business. Both value and volume growing at about 10%. 9:56 9 minutes, 56 seconds Italian business which is about 70 80% of the business is olive oil. uh olive oil and about uh sorry 70% is olive oil 10:05 10 minutes, 5 seconds and 30% is pasta. Volume growth very strong at 16%. 10:11 10 minutes, 11 seconds Uh with olive oil actually growing on volume by close to 34%. And pasta growing at about 7 odd%. Uh but on value 10:20 10 minutes, 20 seconds growth this business is uh declining purely because olive oil has seen a sharp correction in consumer prices as a 10:29 10 minutes, 29 seconds category led by of course the decline in the prices of olive oil uh at the commodity side. So the price benefit has 10:37 10 minutes, 37 seconds been passed on to consumer which is resulting in a value decline in the shorter term. spread business does 10:44 10 minutes, 44 seconds remain a level of concern for us but if I contrast it with ITD performance which I'll show in next slide we are starting 10:51 10 minutes, 51 seconds to see improvement but this is still a journey and we still need to do lot more on this side and we stay committed via 10:58 10 minutes, 58 seconds investments to get this business also on a growth path in the period ahead same performance at the level popcorn 11:06 11 minutes, 6 seconds business growing at 17% on volume culinary value uh culinary business growing at 11% % in value staples I 11:15 11 minutes, 15 seconds talked about oil business was growing sharper on value uh because price was high uh was let's say price increases 11:23 11 minutes, 23 seconds happened last year September when the duty was introduced so quarter 3 value benefit did come down but we have seen a 11:31 11 minutes, 31 seconds growth and recovery in volume in quarter 3 at overall level we are about minus 1% on volume on staples Italian business 11:39 11 minutes, 39 seconds again very similar performance at a IT level and spreads as I talked about sequentially improving do still a lot of work needs to be done in that area. 11:49 11 minutes, 49 seconds Getting into some greater details on each of these businesses. Popcorn business is a combination of ready to 11:56 11 minutes, 56 seconds cook at home which is hot and fresh popcorn. 12:00 12 minutes uh that is growing at about 8% and that business is a business through which we entered into the popcorn category many 12:07 12 minutes, 7 seconds years back and is still continuing to grow and has been our flagship part of the business. Ready to eat which we started scaling up more in last four to 12:16 12 minutes, 16 seconds five years is continuing to grow very very strongly and that is driving the out ofome consumption of this category 12:25 12 minutes, 25 seconds in an accessible price point formats and that market is very very large because then it directly competes with snacks 12:32 12 minutes, 32 seconds business and that business continues to grow at 36% and that is driving our long-term growth potential of this 12:40 12 minutes, 40 seconds category because it's making the category more accessible. 12:43 12 minutes, 43 seconds at at points where historically we were not there. In addition to these business this growth, we are also doing well on 12:51 12 minutes, 51 seconds Nacho's business which is sitting embedded in our uh act 2 franchise. We are also seeing expansion of this 12:58 12 minutes, 58 seconds business in alternate channels which is modern trade and e-commerce which are actually help both sides. one gaining 13:06 13 minutes, 6 seconds new pen is a penetration which comes a lot through GT and alternate channels which actually help us gain share from competition where we did have some 13:15 13 minutes, 15 seconds challenges but we are now doing very strongly very happy to say that we are number one player in both RTE and RT C formats both ready to cook and ready to 13:23 13 minutes, 23 seconds eat format we are by far the dominant player in this market we also have increased our innovation quotient and we 13:31 13 minutes, 31 seconds launched about six products in this year each of them have been well established lished uh into now channels and will be the growth driver for us in future. 13:42 13 minutes, 42 seconds Premium staples as a business I'm on slide number 13 that business uh is growing in value strongly because 13:49 13 minutes, 49 seconds commodity prices had seen inflation. It has also come back to volume growth in quarter 3. Our thrust here is purely on 13:58 13 minutes, 58 seconds one we want to increase accessibility of our brand. So we are working on a price pointless strategy. When I'm saying 14:06 14 minutes, 6 seconds price pointless strategy, we are not saying we are diluting margins. We are actually looking at some attractive 14:13 14 minutes, 13 seconds price points at which we can sell packs to consumers. So our strategy is slightly shifting. We were historically 14:21 14 minutes, 21 seconds playing on uh in line with commodity by increasing the prices. We have now started to play between gramage and 14:29 14 minutes, 29 seconds price to make sure that our price point remain more stable and more attractive for consumer and that strategy we have 14:36 14 minutes, 36 seconds largely started in Q3 is starting to show immediate outcomes and that's why our volumes is reflecting in addition to 14:44 14 minutes, 44 seconds that we are also starting to get into expanding our other staple franchise. So we are specifically working on building 14:51 14 minutes, 51 seconds our oats business. That business sits identical on the Sundrop franchisee of 14:58 14 minutes, 58 seconds Sundrop hard franchisee of good hard health and that business we are specifically building in e-commerce and modern trade channel and is now 15:06 15 minutes, 6 seconds reflecting growth of 200% plus in the in these channels. 15:12 15 minutes, 12 seconds Moving on to slide number 14 which is on our spreads and dips business peanut butter. I did talk about that this 15:19 15 minutes, 19 seconds business is under pressure. Primarily we have seen erosion in share in modern trade and e-commerce. Two factors we 15:27 15 minutes, 27 seconds have faced specifically here. One is our innovation pace was weaker. We were lagging in versus competition on pace of 15:36 15 minutes, 36 seconds innovation. Market started shifting towards high protein based offering while Sundrop as a brand was positioned 15:43 15 minutes, 43 seconds more on strength and immunity for the family. So we did lose out because we did not have relevant innovation for 15:50 15 minutes, 50 seconds high protein lead consumption in this category. Over last 9 months we have worked really hard to get innovation 15:59 15 minutes, 59 seconds where we could bridge our gap versus competition. So in the last 3 to four month we have launched about seven SKUs 16:07 16 minutes, 7 seconds in this portfolio. Four of which are in the high protein area. So we have launched specific product where we can 16:14 16 minutes, 14 seconds take on to competitive pressure in the modern trade and e-commerce channel. In addition to that we are also seeing in 16:21 16 minutes, 21 seconds standalone modern trade a lot of shift happening on attractive price points to compete with those segments also we 16:30 16 minutes, 30 seconds have brought in select variants where we are offering uh competitive price points to consumer and that also is going to 16:39 16 minutes, 39 seconds help us regain our share. One more thing which we did is we enhanced our beyond of course building continuing to build 16:46 16 minutes, 46 seconds our investments on mass media influencer marketing digital marketing. We also enhanced our investments on performance 16:54 16 minutes, 54 seconds marketing in e-commerce channel and e-commerce channel which now contributes sizably close to 25% of the business 17:01 17 minutes, 1 second here is starting to deliver strong growth of 34% on a YTD basis. So we are seeing greenshoots of investment already 17:10 17 minutes, 10 seconds in one channel. While of course as our innovations get listed and distributed widely across the modern trade and 17:18 17 minutes, 18 seconds alternate channels we will see further growth expansion coming through those networks uh in the period ahead. 17:26 17 minutes, 26 seconds Moving on to slide number 15. culinary which is a mix of ketchup and mayo as a business doing very well on the back of 17:35 17 minutes, 35 seconds growth in both B2B and also in organized retail. So we are seeing very strong growth both in spreads and in ketchup 17:43 17 minutes, 43 seconds and also in mayo and spreads in B2B side as well as organized modern trade side and that is driving very strong growth 17:51 17 minutes, 51 seconds for this business. uh that is a strategy we will continue to do on. We will continue to make sure that we invest on 18:00 18 minutes discoverability and visibility of our offering in modern trade in food services and e-commerce channels to 18:08 18 minutes, 8 seconds expand the growth Italian business. I'm moving on to slide number 16. Uh I did talk about softening 18:16 18 minutes, 16 seconds of olive oil commodity prices. We did pass on the benefit over quarter 1 to quarter 3 sequentially 18:24 18 minutes, 24 seconds and because of which we are seeing a value decline in this business but the price correction has also stimulated 18:31 18 minutes, 31 seconds very strong volume growth. We are growing at 34% on YTD basis and that's a very good sign for a longerterm trajectory of this business. We do 18:40 18 minutes, 40 seconds expect the commodity prices to remain stable in this and hence we also expect our growth momentum on this business to 18:48 18 minutes, 48 seconds continue and turn value positive in the period ahead. Pasta which is again I talked about on ITD basis is growing at 18:56 18 minutes, 56 seconds about 10%, this growth is also driven both on organized modern trade and e-commerce on the back of increased marketing investments. 19:05 19 minutes, 5 seconds Moving on to slide number 17. On e-commerce business, uh if you look at YTD basis, 19:13 19 minutes, 13 seconds we are growing at about 39%, this growth is fueled by quick commerce which is growing close to 50%. So there is a 19:21 19 minutes, 21 seconds sequentially much better performance on quickcommerce as a channel and that is helping us uh expand business in a big 19:29 19 minutes, 29 seconds way. What we are also starting to do is we are starting to leverage this channel to build our future categories. So a lot 19:37 19 minutes, 37 seconds of investment is also going on innovation, new launches and expanding our footprint in emerging categories of 19:44 19 minutes, 44 seconds oats and breakfast which could potentially create some future heroes for us for larger distribution expansion 19:52 19 minutes, 52 seconds because we do have a network which is ready to take this into general trade. 19:59 19 minutes, 59 seconds overall brand spends and we have stayed we have been talking that we will as a as a business increase our marketing 20:06 20 minutes, 6 seconds investments we will drive growth and you would see that our investment momentum is continuing we started that journey 20:13 20 minutes, 13 seconds largely from uh November last year if you would recall we had started expanding our investments from quarter 3 20:20 20 minutes, 20 seconds of last year so while on a YTD basis our overall investment growth is close to 37% even in quarter 3 we are growing at about 22% on our marketing investment. 20:31 20 minutes, 31 seconds So media and also performance marketing investments driving e-commerce business they remain strong and they are helping 20:39 20 minutes, 39 seconds us drive acceleration within the channel of e-commerce as also our acceleration of growth momentum in other channels which is in the traditional trade space. 20:51 20 minutes, 51 seconds One big journey which we which we talked about in last quarter which is around Salesforce automation that is very critical for us to improve our 20:59 20 minutes, 59 seconds productivity and improve our distribution metrics and also help us build very strong ecosystem for 21:07 21 minutes, 7 seconds innovation expansion is to get our Salesforce system automated. This journey we started in quarter 1 and as 21:15 21 minutes, 15 seconds as we can see we have already got almost about 58% of our network which we cover 21:22 21 minutes, 22 seconds through a dedicated field force on a mobile interface. So we do get today for these about 250 odd thousand 220 odd, thousand outlets. 21:32 21 minutes, 32 seconds We get full KPI visibility of what is the product we are distributing, what kind of frequencies people are buying and that would become a very important 21:41 21 minutes, 41 seconds and critical data for also to look at synergies of business with Delmonte where we already have an SFA in place. 21:49 21 minutes, 49 seconds So that's work going on in good speed. 21:52 21 minutes, 52 seconds We expect to close this entire coverage of 375,000 outlets on our mobile app by end of this financial year. 22:03 22 minutes, 3 seconds Margin improvement and this is very critical because largely our growth is fully funded through expansion of 22:10 22 minutes, 10 seconds margins in the bay way. We are investing more on brand building but we are also creating constantly a pool for being able to invest higher in the business. 22:20 22 minutes, 20 seconds uh work has been going on both internally through our own team and also using external partners. We did talk 22:28 22 minutes, 28 seconds about that in the last meeting that has helped us expand both on the material margin side as also on the other 22:36 22 minutes, 36 seconds expenses which are primarily in the area of manufacturing and logistic costs and we have seen sequential improvement. So while at a YTD level we are seeing 22:45 22 minutes, 45 seconds overall overall improvement of let's say close to 230 basis points at a quarter3 level that number is close to 330 basis 22:53 22 minutes, 53 seconds points and a fairly healthy mix between material cost which is adding about 230 basis point improvement and 23:01 23 minutes, 1 second manufacturing and other logistics costs which is also giving another 100 basis points improvement. 23:08 23 minutes, 8 seconds Moving on to slide number 21 and this is around making sure that we continue to bring innovative delicious offerings uh 23:16 23 minutes, 16 seconds for our consumers. We have expanded our innovation phase. We have launched 70 plus new products across the franchise 23:24 23 minutes, 24 seconds of actu, sunundrop and del monte and within uh if I and our metric is anything which is launched in last 24 23:32 23 minutes, 32 seconds months we are seeing our innovations are today contributing close to about 55 cr of our sales which is close to 5% of our 23:41 23 minutes, 41 seconds sales. So we are now starting to see innovation also playing a very strong lever in our growth trajectory and this 23:48 23 minutes, 48 seconds momentum and journey will continue going forward. 23:52 23 minutes, 52 seconds Moving on to slide number 22. Uh I'll not spend too much of time because these are uh consolidated results but they are 24:00 24 minutes not comparable because quarter 3 last year does not include Delmonte in this. 24:07 24 minutes, 7 seconds Uh similarly on slide 23 again their numbers on YTD basis. I'll again not spend time here because they do not 24:15 24 minutes, 15 seconds include the Del Monte numbers of last year. I will move straight to slide number 24 and these are comparable 24:24 24 minutes, 24 seconds numbers and delmon last year's uh number are included for like comparison. So 24:31 24 minutes, 31 seconds some of the key things which I would want to highlight we have talked about that at a EIA level we have improved about 80%. So we have seen strong 24:40 24 minutes, 40 seconds improvement in our EITA margins. Some of the callouts I would want to make which are important for us to understand. 24:48 24 minutes, 48 seconds Employee expenses here do not include the ESOP charges. ESOP uh is a non-cash 24:55 24 minutes, 55 seconds expense. We have rolled it out as a five five-year grant. The grant the way the structure is is frontloaded in 25:03 25 minutes, 3 seconds provisioning and allocation but also as an outcome. It is a very strongly outcomebased grant and a very high 25:11 25 minutes, 11 seconds percentage of this grant is linked to performance and performance milestones are year three and year five. So while 25:18 25 minutes, 18 seconds we continue to see uh allocation to the P&L linked to the grant which is being made up front the real uh the real 25:28 25 minutes, 28 seconds encashment of this grant or vesting of this grant will happen linked to strong performance milestones at end of year 25:34 25 minutes, 34 seconds three and year five a larger part of it and that's why it's important to look at our employee expenses net of uh this 25:43 25 minutes, 43 seconds ESOP grant that expense is growing at about 12% And uh of course we are creating some structures which are important for us to 25:52 25 minutes, 52 seconds grow uh business and that's leading to a marginally higher employee expense growth uh in shorter term. But if you 26:00 26 minutes look at other expenses which is where our manufacturing logistics SGNA expenses beyond the just the employee 26:08 26 minutes, 8 seconds expenses those we have been able to control very well and we are only seeing an increase of 2%. And as an outcome of 26:15 26 minutes, 15 seconds that we are seeing improvement in both uh uh gross margins uh which is a mix of material cost and other expenses going into manufacturing as also overall EITA. 26:28 26 minutes, 28 seconds One more call out is we have taken some of the one-time costs which have gone towards uh projects which are advisory 26:36 26 minutes, 36 seconds service kind of project for improving margins and that expense was higher in quarter two. we had shared with you. 26:43 26 minutes, 43 seconds I'll again recap the YTD number in quarter 3. Most of these projects have been concluded and hence it's not a 26:50 26 minutes, 50 seconds large expense going forward and it is already reduced to 2.7 cr in quarter 3 and that is also taken out from uh this 27:00 27 minutes calculation even if I were to include uh that expense we are still growing our EITA in a very strong and healthy way uh 27:08 27 minutes, 8 seconds at an overall level. uh so that's in nutshell as an outcome of this our profit if I look at before esop and 27:16 27 minutes, 16 seconds one-time expenses post depreciation etc is still continuing to grow very strongly at 190%. 27:24 27 minutes, 24 seconds Moving on to YD figures. Again the call out is ESOP expenses are removed from the employee expenses. Project expenses 27:34 27 minutes, 34 seconds which were loaded more in quarter 2 came down significantly in quarter 3 and will be negligible in quarter 4. They have 27:41 27 minutes, 41 seconds been excluded uh as one-time expense in other expenses. 27:47 27 minutes, 47 seconds Again a very similar trajectory you would see at a YTD level. strong growth in the beta margin which is of close to 40% after excluding the one-offs at an 27:56 27 minutes, 56 seconds EIA level and at a PBT level again the growth of close to 239%. Important point is quarterfree margins are higher both 28:04 28 minutes, 4 seconds at an AIA level and also at a uh as also at a PBT level. So we are sequentially 28:12 28 minutes, 12 seconds continuing to improve performance of the business. Moving on to last slide slide number 26. 28:19 28 minutes, 19 seconds This is just to sum up uh the thesis of this platform. We do have very strong uh brands which cater to our which help us 28:28 28 minutes, 28 seconds deliver our vision of catering to the choices of a modern evolving consumer base. We do have very strong consumer 28:36 28 minutes, 36 seconds trends which are supporting the growth and consumption of packaged food. The industry which we operate in our brands 28:43 28 minutes, 43 seconds innately sit in high growth and high margin categories. We do have leadership position in some. We do also have a 28:50 28 minutes, 50 seconds challenger position in some where we are seeing in both of these uh focus categories we are seeing a significant 28:58 28 minutes, 58 seconds headroom for growth either through penetration expansion or through share gain or a combination of both. 29:06 29 minutes, 6 seconds And to deliver that we continue to invest heavily and that is driving us help and accelerate our business growth while retaining the innate core of 29:14 29 minutes, 14 seconds making sure that we make capital efficient investments going forward. And there is complimentarity uh of businesses between Sundrop and Delonte. 29:24 29 minutes, 24 seconds We have talked about it as a quick uh update. we are now increasingly start to leverage some of the complimentarities 29:33 29 minutes, 33 seconds and results of that should start coming in in period ahead. uh one or two call outs we can talk about. Uh we have 29:40 29 minutes, 40 seconds looked at CFA consolidation. We did one XP uh one set of that in uh quarter 29:47 29 minutes, 47 seconds three uh and quarter 4 in two of our CFAs and we will go forward do and uh consolidate more of our backends 29:55 29 minutes, 55 seconds wherever we can to bring complementarity. We are also starting to leverage strength of B2B for Sunrop and 30:03 30 minutes, 3 seconds the strength of B2C for Del Monte. uh using alternate strengths of the two companies and overall you are aware this 30:12 30 minutes, 12 seconds business is backed with a very strong management which have proven credentials to drive growth, profitability and value creation. 30:21 30 minutes, 21 seconds Very happy to conclude my address uh and look forward to your questions. Thank you so much. AJ back to you. 30:29 30 minutes, 29 seconds Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch to 30:38 30 minutes, 38 seconds telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use answers while asking questions. 30:48 30 minutes, 48 seconds Ladies and gentlemen, we read for a moment while the question queue assembles. 30:58 30 minutes, 58 seconds The first question is from the line of Bimmel and investor. Please proceed. Yeah, good afternoon. 31:06 31 minutes, 6 seconds Good afternoon, women. 31:07 31 minutes, 7 seconds Yeah, good. Happy to see that you are on the path of progress. Now, one cause for 31:15 31 minutes, 15 seconds worry is that 4,700 BC is now taken over by Maro which is the popcorn segment which is our biggest and most promising. 31:28 31 minutes, 28 seconds So I mean how are we planning to I mean face this channel expansion is actually 31:37 31 minutes, 37 seconds institutional we are not there even large management I had highlighted that we should look at institutional in big 31:45 31 minutes, 45 seconds way because that is a totally untapped market and they will come into in if we 31:51 31 minutes, 51 seconds don't enter they will definitely enter so I mean how are we looking to 31:59 31 minutes, 59 seconds uh safeguard our uh market share from 4,700 BC. Sure. 32:06 32 minutes, 6 seconds That is the first uh concern. I mean I am a shareholder for 8 to 10 years and uh it was quite a disappointing journey. 32:17 32 minutes, 17 seconds I hope new management will take it forward and the good points of this uh 32:25 32 minutes, 25 seconds company the products are will help us to grow and create shareholder value. 32:33 32 minutes, 33 seconds Sure. Sure. Thank you. Wiml should I answer it or no no only on this. So think uh thank 32:41 32 minutes, 41 seconds you Vimmel for staying uh invested with us on the business. Uh overall uh you're right that yes we have a new competition 32:50 32 minutes, 50 seconds and competition in a category which is yet to let's say has a huge penetration opportunity growth is already 32:57 32 minutes, 57 seconds and they have more coverage also I mean retail coverage is much higher. 33:02 33 minutes, 2 seconds Sure. Sure. Yeah. So see the way we look at competition see competition also spurs growth of categories. So many a 33:10 33 minutes, 10 seconds times competition is also a good sign because it one gets more out of you and second it also gets more out of 33:18 33 minutes, 18 seconds consumers. So I would also see competition also to help us drive penetration on this category inherently. 33:25 33 minutes, 25 seconds What is strength for us? If you look at some of the things which are very strong for our business, we do have a very 33:32 33 minutes, 32 seconds strong standalone reach but we also through the wholesale channel go much deeper and wider in the popcorn 33:39 33 minutes, 39 seconds category. We hold a very strong price point of 10 rupees and we have a very strong efficient back end which supports 33:47 33 minutes, 47 seconds the price point of 10 rupees. Uh and that is one of the modes in this business very difficult for all the 33:54 33 minutes, 54 seconds players to break. uh coming to spec you're right Marico per se has distribution strength but they will also have to build their strengths a lot in 34:03 34 minutes, 3 seconds the back end if they have to compete with us in a business second point you made was on the institutional side on 34:11 34 minutes, 11 seconds the institutional side 4700 BC is dominantly present in PVR through the 34:18 34 minutes, 18 seconds carts what you consume on the counter is not 4700 BC that is actually PVR's own 34:25 34 minutes, 25 seconds branded business uh I don't think that business is being accessed by Marico that business remains a PVR's own 34:33 34 minutes, 33 seconds business in my understanding but that aside institution is an opportunity we are alive to this we are now starting to 34:40 34 minutes, 40 seconds work with RB2 no sorry to interrupt just by institution I meant and education and you know all these 34:49 34 minutes, 49 seconds call centers and GCS is coming up you can be present in air. 34:56 34 minutes, 56 seconds Yes, I was coming to that. I was coming to that only uh through inst through our Hora network which is embedded with the 35:04 35 minutes, 4 seconds Del Monte we are starting to work at looking at some of the institutional opportunities in this area. So you will 35:13 35 minutes, 13 seconds see in the period ahead work coming on in the area of institution le leveraging the network of Del Monte. So that is in 35:21 35 minutes, 21 seconds our plan. So we will work to expand in this area. Overall on the competitive intensity we have already said for us it is a very very important growth driver. 35:33 35 minutes, 33 seconds We have enhanced our marketing investment. We have a strong headroom for growing penetration in this category as also distribution in this category. 35:42 35 minutes, 42 seconds We are continuing to invest solidly and I would say almost like 40% of our marketing investments go directly on 35:49 35 minutes, 49 seconds popcorn business in Sundrop side that will continue and we are expanding our investment. So we are very well 35:57 35 minutes, 57 seconds committed and focused to make sure that we accelerate the growth of this business and continue to drive the penetration of popcorn in our country 36:05 36 minutes, 5 seconds and hence deliver a much larger shareholder value. 36:10 36 minutes, 10 seconds Yeah. So sir don't take it as a negative this thing but see what has happened our spreads business also we were the 36:17 36 minutes, 17 seconds pioneers and uh then now competition is uh so same way it should not happen with 36:25 36 minutes, 25 seconds popcorn which is our you can say crown jewel you know so that's why that's the concern I mean I'm still very positive 36:34 36 minutes, 34 seconds on the company but as a shareholder it's our duty to just bring certain concerns your attention. 36:43 36 minutes, 43 seconds Yeah, thank you. We are uh we are alive to this uh new challenge and you are already seeing our investment. We will 36:51 36 minutes, 51 seconds of course ensure that our innovation pipeline, our way of addressing and reaching customers and making sure that 36:58 36 minutes, 58 seconds they stay invested with us on the brand and this brand continues to be the most loved brand for popcorn will be our key 37:07 37 minutes, 7 seconds ethos going forward. We will not let any stone unturned to make sure that this business does not get compromised. Our 37:14 37 minutes, 14 seconds endeavor is to actually grow this business much faster in the period ahead. So we will stay committed to that. 37:22 37 minutes, 22 seconds Thank you. Thank you. 37:26 37 minutes, 26 seconds Thank you. Before we take the next question, we would like to remind participants that you may press star and one to ask a question. 37:34 37 minutes, 34 seconds The next question is from the line of Kiran Gandhi from Jagro Cap. Please proceed. 37:41 37 minutes, 41 seconds Hello sir. Thanks for taking my question. I hope my Kiran you could be a little louder. 37:50 37 minutes, 50 seconds Hello. 38:09 38 minutes, 9 seconds We shall move on to the next participant. Before we take the next question, we would like to remind participants that you may press star and one to ask a question. 38:18 38 minutes, 18 seconds The next question is from the line of Deep Gandhi from I thought PMS. Please proceed. Yeah. Hi. Am I audible? 38:27 38 minutes, 27 seconds Yes. 38:28 38 minutes, 28 seconds Yeah. So, first question is on the ready to eat side. Um so I mean if you can help us understand uh the break up between the smaller pack and large pack 38:37 38 minutes, 37 seconds in terms of revenue and also if you can explain us I mean uh what is the lowest pack size we have within the smaller 38:43 38 minutes, 43 seconds pack and what would be the uh largest pack size we have within our readyto portfolio. 38:49 38 minutes, 49 seconds Yes. So I'll request Ashish to answer this. 38:52 38 minutes, 52 seconds Yeah. So um our on the RT side we largely have uh big and small pack as 38:59 38 minutes, 59 seconds you said and the split at the top line would be closer to about uh 7030 we have about small pack 10 rupee business which 39:07 39 minutes, 7 seconds will be about 70% of the business and 30% would be on the large pack business. 39:12 39 minutes, 12 seconds So that's the first um part of your u question second. So 39:20 39 minutes, 20 seconds you also sorry if you could address the second question again. 39:23 39 minutes, 23 seconds Yeah and what what would be the starting pack size in the large packet and what would be the largest pack within the large pack size. 39:29 39 minutes, 29 seconds So the large pack so we have we count the 5 rupee and 10 is the small pack. Anything which is above that which is in the price points 39:37 39 minutes, 37 seconds of 25 30 40 and up to 60 rupees are our large packs. So the biggest pack that we 39:44 39 minutes, 44 seconds have is a 60 rupee price point right but large part of our business in that straddles between 25 and 35 rupee price points. 39:55 39 minutes, 55 seconds So, so the net uh 70% is in the small pack which is dominantly rupee 10 dominantly rupees 10 rupee 5 is possibly 40:04 40 minutes, 4 seconds only about uh 5% of our overall business or lesser and big packs is about uh 30% of our business which have price points ranging from 20 rupees to 60 rupees. 40:18 40 minutes, 18 seconds Sure. uh I mean how say next 2 to 3 years down the line do you see this mix changing significantly or do you think 40:26 40 minutes, 26 seconds uh this will broadly remain stable uh to understand that yeah the um so there are two parts to it 40:33 40 minutes, 33 seconds one uh is the mix uh likely to change yes the mix will change in the favor of big packs going forward because as the 40:41 40 minutes, 41 seconds e-commerce and other channels develop they are primarily more bigger pack consumers buying efficiently and 40:49 40 minutes, 49 seconds quickly, right? So that contribution will change. However, to increase penetration, we will continue to drive 40:56 40 minutes, 56 seconds our 10 rupees by virtually getting the numeric distribution and a reach for actto franchise in more towns and more outlets. 41:05 41 minutes, 5 seconds Right? Uh the answer to the question that will the mix change yes. But will it change significantly? Uh not in the nearer term. Nearer term there'll be an 41:13 41 minutes, 13 seconds improvement of few percentage points every year. Right? That's how it'll progress as we go forward on this. 41:21 41 minutes, 21 seconds Sure. Sure. And so coming on to the distribution sites, I mean if I see the number last two three years, our distribution outlet reach has remained 41:29 41 minutes, 29 seconds broad broadly flat at five lakh outlets, right? So uh going ahead I mean how do we think of scaling our distribution and 41:36 41 minutes, 36 seconds why this number I mean has not been changing much significantly and what we are doing to increase our out outlet reach significantly in the future. Okay. 41:46 41 minutes, 46 seconds So again that uh we'll say see the outlet reach is also a function where you need to build demand at the front end as you expand distribution. Right? 41:57 41 minutes, 57 seconds So if you look at the act two it was primarily led by the act 2 instant inhome consumption hot and fresh 10 rupee over the years this year 42:06 42 minutes, 6 seconds specifically if you must have heard that we have invested significantly in the salesforce automation in terms of mapping our stores and coverage. 42:15 42 minutes, 15 seconds Once that task is complete, we are going to look at productivity enhancement to improve our coverage further versus 42:22 42 minutes, 22 seconds directly adding feet on street to increase it further. That's one. Second, uh we had talked about in between that 42:30 42 minutes, 30 seconds with the increased media investments, we are looking at indirect coverage through wholesalers. 42:37 42 minutes, 37 seconds And the third which is happening is that there are moving on which largely distribute the RTE on the back of that 42:44 42 minutes, 44 seconds also with them we are riding on increasing the indirect distribution. So while there will be improvement in 42:52 42 minutes, 52 seconds direct coverage right that will be at a slower pace but overall reach of act 2 will continue to grow at a good pace coming in the coming years also. 43:04 43 minutes, 4 seconds Sure. So any I mean number you have in mind next two to three years five lakh outlet what is the vision which the company has set to take this number to 43:13 43 minutes, 13 seconds so so let me step in here deep uh as as Ashish mentioned right now we are focused on productivity of our field 43:20 43 minutes, 20 seconds force we do have a salesforce automation tool being developed which is bringing entire network into productivity through 43:29 43 minutes, 29 seconds that we are also going to get a handle of how many wholesalers we directly deal with and what kind of indirect distribution we can reach out through 43:37 43 minutes, 37 seconds this exercise we expect to complete by as I talked about by end of this financial year but let's say get a deep 43:44 43 minutes, 44 seconds down understanding of the productivity ROI of our coverage we will have an answer by September of 26 that is a 43:52 43 minutes, 52 seconds point when we will pivot to say what number we really want to chase because we are very focused on making sure that 44:00 44 minutes we do an ROI embedded in the principle of coverage expansion. It is always more efficient to do it through a wholesale 44:09 44 minutes, 9 seconds or indirect channel at a particular turnover of an outlet. But if let's say we do find that our lowest denominator 44:17 44 minutes, 17 seconds of the outlets are also giving us a,000 odd rupee business right I can directly expand my coverage. So allow us a time 44:25 44 minutes, 25 seconds of about 6 to 9 months where we get a full clarity of throughput from our smallest of outlets based on which we 44:33 44 minutes, 33 seconds will pivot to a strategy of how much numerically we want to expand directly versus how much we want to continue via 44:41 44 minutes, 41 seconds indirect uh channel. At this point of time management hasn't put a number yet because we don't have a very strong 44:48 44 minutes, 48 seconds handle of our per outlet productivity at the lowest denominator level. lowest denominator level. 44:56 44 minutes, 56 seconds Sure. So just one last question if I can ask before I join the queue. Um so so I mean we've broadly set a target to 45:03 45 minutes, 3 seconds double our top line in next 3 to four years. I think in the last few calls we've been talking about that aspiration but this year if I see I mean our growth 45:11 45 minutes, 11 seconds I think year to date versus the growth in the foods portfolio is around 8 to 10%. I mean if we want to reach to that target in next 3 years the ask rate is 45:20 45 minutes, 20 seconds much higher than what we are growing currently. So I mean if you can help us understand how are we thinking about it and specifically I mean uh if you have 45:27 45 minutes, 27 seconds modeled it to this extent that how much of this 3,000 crores number we will reach through say volume expansion in our core categories and how much will be 45:35 45 minutes, 35 seconds through distribution expansion which we are trying to do in Del Monte through getting an entry in general trade. So that will be thank you. 45:43 45 minutes, 43 seconds Sure. So so you're right uh we are a little softer versus our growth ambition of doubling the business. Doubling the 45:51 45 minutes, 51 seconds business will require a kagger of close to 15%. We are currently sitting at about 10% growth but you also uh need to 46:00 46 minutes see that we started our investment journey largely from quarter 3 of last year and sequentially we have been moving our momentum up. It is a journey 46:09 46 minutes, 9 seconds for us to build the scale and size for sure and we are committed to say that we'll expand our growth rate going 46:16 46 minutes, 16 seconds forward. uh referring to a question on how much volume and value broadly I would say the split of volume needs to 46:24 46 minutes, 24 seconds be because if you look at the country as uh a whole we are seeing in most categories where we operate in volume 46:32 46 minutes, 32 seconds expansion of close to 6 to 8%. So in our context if we want to gain share and 46:39 46 minutes, 39 seconds stay ahead of category each on uh on volume side we need to outperform at least by 3 to 4% versus uh the 46:48 46 minutes, 48 seconds categories. So if categories are operating at 6 to 8 we we will need to come to more like 9 to 10% on volume growth and balance to come from value. 46:58 46 minutes, 58 seconds That's the way I will so I will say 2/3 to come from volume and one/ird to come from value expansion in the mix. uh as 47:05 47 minutes, 5 seconds we see more premiumization happening and if let's say there is a slowdown in the volume side this may become 1 is to1 as 47:14 47 minutes, 14 seconds well which is 50/50 which is 7 and 1/2 on volume to 7 and 1/2 in value so short-term shorterterm trajectory will 47:21 47 minutes, 21 seconds pivot more around volume growth but as we get into forward years beyond year three I would say it will trigger uh uh 47:29 47 minutes, 29 seconds uh traverse towards more and equal value and volume growth Sure that was helpful. I'll join back to you. 47:37 47 minutes, 37 seconds Thank you. 47:39 47 minutes, 39 seconds Thank you. Before we take the next question, we would like to remind participants that you may press star and one to ask a question. 47:47 47 minutes, 47 seconds The next question is from the line of Kavin Gandhi from Cabro Capital. Please proceed. 47:54 47 minutes, 54 seconds Hello. Um hello. 47:56 47 minutes, 56 seconds Thank you for taking my question. I actually dropped out from the queue earlier. Sir my question was more on the gross margin because last year you actually reiterated that to reach 9 to 48:05 48 minutes, 5 seconds 10% we will have to have a gross margin of almost 40 to 45%. And even though we have actually seen a growth of 220 is 48:12 48 minutes, 12 seconds still around 37%. So how do you see that? So basically how do you see the road map of gross margin expanded? Uh yeah that was my first question and 48:21 48 minutes, 21 seconds second question sir as a KPI to track the company you focus more on the value growth on the volume growth because there are three four categories. So how do you see uh that as a KPI to that? 48:35 48 minutes, 35 seconds Sure. So let me first answer your question on the margin side. Uh we define two particular margins in our own 48:42 48 minutes, 42 seconds way of numbers. So I'll explain through that. One is what we call as a material margin which is purely our realization net of raw material and packaging 48:51 48 minutes, 51 seconds material costs and that number needs to be close to 40% for us and then we define what we call as a gross margin 48:59 48 minutes, 59 seconds which is material cost less manufacturing cost less freight uh through which we reach the product to 49:06 49 minutes, 6 seconds our end consumer or distributor. That number today will be close to 24% for us. So our material margins will be 49:14 49 minutes, 14 seconds close to 40. Our uh gross margins as which is material minus uh minus manufacturing and freight will be close 49:23 49 minutes, 23 seconds to 24. To get to a double-digit ambition, we will need to expand this by at least 3 to 4 percentage points. 49:31 49 minutes, 31 seconds That's the way we will look at it. And we are in this year. Let's say we have already expanded our gross margins by 49:38 49 minutes, 38 seconds close to 230 basis points which we shared with you. We need to do another journey of close to another 3 to 4% on 49:46 49 minutes, 46 seconds this over the trajectory of next 3 to four years to get to a uh over the trajectory of next 3 years sorry to get 49:53 49 minutes, 53 seconds to a double-digit kind of margins in the business. In addition to this gross margin expansion, we also want to stay 50:02 50 minutes, 2 seconds committed to invest and hence we also want to invest on brand building going forward. Which means from a ratios point 50:11 50 minutes, 11 seconds of view while we will improve margin you will also see ratios of marketing investment either staying stable or 50:18 50 minutes, 18 seconds marginally increasing. We do not expect our marketing or media investment as a percentage to business to go down. What 50:26 50 minutes, 26 seconds you will also see going down is our fixed costs which is our people cost and other SGNA cost which today stand close to 14%. 50:36 50 minutes, 36 seconds those two also come down by another three odd percentage points in next 3 years. So broadly I would say look at 50:43 50 minutes, 43 seconds the journey as expanding margin by 3% and explan reducing costs especially on 50:50 50 minutes, 50 seconds the SGNA side by another 3% but see marketing expansion of 1 to 2% as our journey going forward. 51:00 51 minutes That was first question. Second question you had asked me on the are is the KPI around value growth or volume growth. At 51:08 51 minutes, 8 seconds immediate term I did explain our focus is more on driving volume growth. We do have fairly large well distributed 51:16 51 minutes, 16 seconds business in Sundrop where intrinsically there is a strong headroom for category expansion and we are focused there on 51:25 51 minutes, 25 seconds value growth uh on volume growth. We also have some pivots in our business of Del Monte where there is an opportunity 51:33 51 minutes, 33 seconds for value growth as well and that's why in the short-term term trajectory we are looking at a volume growth close to 2/3 51:40 51 minutes, 40 seconds and value growth close to 1/3 of our total growth trajectory. Longer term we would say it may become 1 is to1 on 51:48 51 minutes, 48 seconds value and volume which is what I had explained uh in my earlier comment. I hope this answers your uh question. 51:56 51 minutes, 56 seconds Okay sir. uh one last question which I just wanted to s recently promoted has increased by 52:04 52 minutes, 4 seconds 4.99%. So basically since it was an offmarket just wanted to know the seller of the transaction and also why why the 52:11 52 minutes, 11 seconds promoter needed to lean the entire holdings of 33% because that has actually impacted the price of like 30% declines since last two months. So just 52:20 52 minutes, 20 seconds wanted an explanation and your view on the Okay. Uh so so I I'll tell you the first 52:28 52 minutes, 28 seconds answer to the first question. Uh Del Monte Pacific uh was the shareholder 52:34 52 minutes, 34 seconds which has uh exited or let's say reduced their shareholding from 15 to 10 and 52:41 52 minutes, 41 seconds that shareholding has been increased by promoters. So, Kag which is uh uh Cact 52:49 52 minutes, 49 seconds increased their shareholding by taking the shareholding part shareholding close to 5% of Del Monte Pacific. Uh and Del 52:58 52 minutes, 58 seconds Monte Pacific had also in their announcement talked about bringing it down further by another 5% which also will be taken by CAD tech in in let's 53:08 53 minutes, 8 seconds say post this financial year in the next at the next financial year. So that's one and second I think on the second 53:15 53 minutes, 15 seconds question on why they have to lean I would say it's more a internal call at the investor side on how they want to fund their proceeds. 53:23 53 minutes, 23 seconds So it's not uh something which I directly influence or have a control on. 53:31 53 minutes, 31 seconds Okay. Thank you. Kevin just one more addition to what Nitish has said about volume and value growth especially on 53:38 53 minutes, 38 seconds the active side which we mentioned that almost 55 to 60% of business is in 10 rupee price point you will always be 53:46 53 minutes, 46 seconds looking at value growth because there we don't tinker with price point but grammages so tonnage can be at times uh 53:53 53 minutes, 53 seconds little deceptive value growth is a better reflection of the health of our business okay forgot 54:01 54 minutes, 1 second because The unit growth syncs with the value growth there. Yeah. 54:05 54 minutes, 5 seconds So we are committed to acquiring new consumers and growing our business with them. But that's just a price point game that we play, right? Especially in the GTE market. 54:14 54 minutes, 14 seconds Yeah, I think you're right. So Ashish, thank you for correcting. In some places in instead of value, we use the term 54:22 54 minutes, 22 seconds value or volume we use the term unit growth. Especially in our 10 rupee price point which is a large part of our business. 54:30 54 minutes, 30 seconds Unit growth is the key metrics we go for. Yeah. Okay. That was helpful. 54:41 54 minutes, 41 seconds Thank you. 54:43 54 minutes, 43 seconds The next question is from the line of Nikk from OM portfolio. Please proceed. 54:49 54 minutes, 49 seconds Hey uh thank you for the opportunity. Uh sir in the spread business two things. 54:53 54 minutes, 53 seconds One is uh what is the availability of the proteinbased uh peanut butter that 55:00 55 minutes we've launched and how are we priced uh there a visa competition I mean have we 55:07 55 minutes, 7 seconds priced ourselves a tad lower to the competition or what is the strategy there as far as the protein uh PB is 55:15 55 minutes, 15 seconds concerned yeah uh Nikki so you're right so when we looked at the peanut butter portfolio we 55:22 55 minutes, 22 seconds said we need to do a premiumization work and that had to be created on basis of two important consumer needs and 55:29 55 minutes, 29 seconds differentiation. One uh we have to give a better protein content in per serve basis and second also continuously make 55:38 55 minutes, 38 seconds peanut butter more delicious. So if you look at the product that we talked about is a dark chocolate high protein peanut butter right which we are seeing a very 55:47 55 minutes, 47 seconds good so it's good on it's improved taste with dark chocolate and it has also got high protein now as far as the pricing 55:55 55 minutes, 55 seconds to end consumer is concerned it is little a tad lower than competition because we are a late entrant but from 56:02 56 minutes, 2 seconds our portfolio perspective the average selling price is higher which will also add a growth in top line as as well as do a margin expansion for our portfolio. 56:12 56 minutes, 12 seconds But since we are a um later entrant challenger in the initial phase to improve our trials, we have kept it uh a little tad lower than the competition. 56:27 56 minutes, 27 seconds Okay. And here would you uh hear the competition for you uh are all these new age players? Because whenever I open a 56:34 56 minutes, 34 seconds blanket or a Zar or Swiggy, all I see is uh very new names. They are not maki legacy names. 56:42 56 minutes, 42 seconds Yeah. So actually in the chocolate um if you look at the dark chocolate high protein peanut butter segment, right? 56:49 56 minutes, 49 seconds The real competitor for us is um My fitness My fitness and Pandora. And they are 56:56 56 minutes, 56 seconds both new age players. And as you see if you know in the question earlier we were very strong in GT in peanut butter and 57:05 57 minutes, 5 seconds in uh modern trade. What was happening was it was a table spread. The new age players did better than us in e-commerce 57:13 57 minutes, 13 seconds and commerce. Having said that in the last one year we have significantly focused on e-commerce and quickcommerce 57:21 57 minutes, 21 seconds and also now launching products which are good for the channel and you will see that's the reason our growth rates 57:29 57 minutes, 29 seconds are now coming back on peanut butter in this channel both improving in terms of unit margin and average selling price. 57:39 57 minutes, 39 seconds So how are we also aggressively pushing this products in the traditional challenges channels of MT and GT as well 57:46 57 minutes, 46 seconds or we are still focused on the QC or rather the e-commerce category for the I yeah and I think one of the decisions 57:54 57 minutes, 54 seconds that we have taken right which is that there will be some innovations which we will first scale up in e-commerce and 58:01 58 minutes, 1 second quick commerce because our ability to invest and generate demand locally on a platform is much higher. 58:09 58 minutes, 9 seconds Right. So what happens is once it builds traction and the metric that we monitor for ourselves is listing daily run rate 58:17 58 minutes, 17 seconds of pieces and the number of dark stores that we are covering. Right? Once we start getting repeat from there and have 58:24 58 minutes, 24 seconds created consumer awareness locally because that's easy to scale and test. 58:29 58 minutes, 29 seconds Having a good formula on it we move to modern trade and then we move to general trade. General trade requires a mass 58:35 58 minutes, 35 seconds media support beyond a point. Right? So that is how our innovation journey from now on will continue. You will see 58:44 58 minutes, 44 seconds innovation much larger in e-commerce scaling up to this and then to GT. 58:52 58 minutes, 52 seconds All right. And coming back to just to complete this on high protein right now the focus will be e-commerce in a big way and select modern trade. 59:03 59 minutes, 3 seconds Sure. 59:04 59 minutes, 4 seconds Thanks. One last quick question on the staples. What's our longerterm strategy there? Do we intend to be in this 59:11 59 minutes, 11 seconds segment uh for let's say over a 3 to 5 year period if not lesser than that? 59:17 59 minutes, 17 seconds Yes. So staples is a is a contributor to our margins and it also gives us a scale 59:24 59 minutes, 24 seconds and size in the business and hence we intend to continue. That's first. 59:30 59 minutes, 30 seconds Second, we have said for immediate term, we want to ensure that whatever volume decline and margin erosion we were 59:38 59 minutes, 38 seconds seeing in uh staples, we take care of that through our optimal investments on business. Very strong, clear, sharply 59:47 59 minutes, 47 seconds defined strategy to protect our core and we stop this leaky bucket. This we have been able to achieve fairly strongly I would say in the last few months. 59:58 59 minutes, 58 seconds We are also going to experiment and we have talked about that also on some brand building models and that is 1:00:06 1 hour, 6 seconds another area which you will see coming live in the next 3 to 6 months in an isolated regional media geography on 1:00:14 1 hour, 14 seconds seeing can we build some platforms for growth based on those successes is when we will take a future call on whether we want to 1:00:21 1 hour, 21 seconds invest for growth or we want to be more in a protect volume and protect margin phase. Sure. 1:00:30 1 hour, 30 seconds Thank you so much sir. Thank you. 1:00:38 1 hour, 38 seconds We take this as the last question. The next question is from the line of Shish from Motilos. 1:00:46 1 hour, 46 seconds Hi Nish. Thank you for the opportunity. 1:00:49 1 hour, 49 seconds uh if I look back last three to four quarters uh we are there and uh we have we have revised the entire product price 1:00:58 1 hour, 58 seconds architecture so in your reference of 10% volume growth uh like if we need to have a right in the category price product 1:01:08 1 hour, 1 minute, 8 seconds structure and distribution scale because we are not spreading too thin which are the categories you are betting next two 1:01:15 1 hour, 1 minute, 15 seconds to three years in terms of product development and in terms of right to win. 1:01:21 1 hour, 1 minute, 21 seconds Yes. So our biggest bet and I'll I'll try to give you also an order of this of priority. Our biggest bet is popcorn business and the entire actu franchise. 1:01:32 1 hour, 1 minute, 32 seconds Our second biggest bet would be Italian franchise which is sitting under uh Delonte portfolio because that's where 1:01:40 1 hour, 1 minute, 40 seconds the premiumness and the entire uh value of that uh Del Monte brand sit in a big 1:01:47 1 hour, 1 minute, 47 seconds way. Third will be our ketchups and mayo and spread business again under Delmon monte and fourth will be peanut butter. 1:01:56 1 hour, 1 minute, 56 seconds These are four key categories where we will stay invested in a big way to drive our growth and and this will be a mix of 1:02:05 1 hour, 2 minutes, 5 seconds innovation, media, distribution, expansion. All of these levers playing concurrently on each of these 1:02:12 1 hour, 2 minutes, 12 seconds categories. Beyond these four categories, we also have an intent to identify and build some future heroes 1:02:20 1 hour, 2 minutes, 20 seconds because we are eventually building a large sustainable scalable high growth oriented business. So while we drive 1:02:28 1 hour, 2 minutes, 28 seconds growth in these business in the next 3 to 5 years, we also want to create one or two levers for future 1:02:35 1 hour, 2 minutes, 35 seconds those categories between something in oil. If our experiment succeeds a category like breakfast cereal, a 1:02:44 1 hour, 2 minutes, 44 seconds category like oats and drop franchise is and also categories like uh food drinks or packaged foods within the Del Monte 1:02:52 1 hour, 2 minutes, 52 seconds franchise. But for the immediate term of next three odd years, you will see our big investments focused on the top four categories. 1:03:04 1 hour, 3 minutes, 4 seconds Okay. uh and when when we say that uh this 10% volume growth which specific I mean uh you you did Alwood saying that 1:03:12 1 hour, 3 minutes, 12 seconds popcorn has a right to grow to more than 10% because you're a category leader. Uh but then what are the new formats or what are the new things which we will launch. 1:03:23 1 hour, 3 minutes, 23 seconds So pop one even today if you look at our volume growth is close to about 16 18% kind of volume value volume growth. 1:03:30 1 hour, 3 minutes, 30 seconds volume growth is about 12%. Value growth volume put together is about 18%. 1:03:34 1 hour, 3 minutes, 34 seconds Between RTE and RTC uh microwave is something which we will see expansion going forward and that's 1:03:41 1 hour, 3 minutes, 41 seconds an area which let's say was little lagging for us. We are trying to bring that uh stronger uh expansion of popcorn 1:03:49 1 hour, 3 minutes, 49 seconds ready to eat will come a lot more in the form of flavors and pack sizes. The way the quick commerce platform is 1:03:57 1 hour, 3 minutes, 57 seconds expanding, we are seeing big sizes and new flavors as a very key driver of growth. Historically, actu franchise was 1:04:07 1 hour, 4 minutes, 7 seconds let's say more uh mass strategy and more uh Indian palette which means we had 1:04:13 1 hour, 4 minutes, 13 seconds flavors like uh hot and spicy, spicy podina, butter uh cheese kind of flavors 1:04:21 1 hour, 4 minutes, 21 seconds but we are also seeing with the emergence of uh younger consumption audience who is very open to trying new westernized tastes. We will see in 1:04:30 1 hour, 4 minutes, 30 seconds Propcon franchise lot more flavor expansions and pack sizes driving the growth in addition to of course the 1:04:38 1 hour, 4 minutes, 38 seconds distributionled growth in GT where price point of 10 rupee will play a big role and that also today is dominantly butter 1:04:45 1 hour, 4 minutes, 45 seconds but we'll expand that into other flavors in the GT space. Uh if you look at mayo, 1:04:53 1 hour, 4 minutes, 53 seconds ketchup kind of categories, there is a lot of headroom there for us to grow on again newer flavors, especially in the 1:05:02 1 hour, 5 minutes, 2 seconds spread area. Spread market is lot more expanded into newer flavors. Our strength today is more in the area of 1:05:10 1 hour, 5 minutes, 10 seconds core ketchup and core mayo. When I say core mayo, which is the eggless mayo, which is let's say standard variant. We 1:05:18 1 hour, 5 minutes, 18 seconds do need to expand a lot more in value added spreads in the culinary portfolio which is where the expansion will 1:05:25 1 hour, 5 minutes, 25 seconds happen. Italian if I look at as a franchise again pasta is one area where anyway the category is expanding. We 1:05:35 1 hour, 5 minutes, 35 seconds were missing out presence in some of the places like macaroni segment which is very large in the country. We will look 1:05:41 1 hour, 5 minutes, 41 seconds to expand that. In olive oils again we are very strong in pomise but we wanted to also build a franchise in extra 1:05:49 1 hour, 5 minutes, 49 seconds virgin and extra light oils. So those we'll see expansion going forward. 1:05:54 1 hour, 5 minutes, 54 seconds Peanut butter we have already talked about a very clear path of our growth is via expanding the franchise to high 1:06:02 1 hour, 6 minutes, 2 seconds protein offerings and also some new innovations which we will share when we are ready with those. But we are doing a 1:06:09 1 hour, 6 minutes, 9 seconds very healthy mix of great tasting and better for you uh high protein variants. 1:06:16 1 hour, 6 minutes, 16 seconds So our innovation pipeline is looking at taste and better for you concurrently and we already have some of unique 1:06:24 1 hour, 6 minutes, 24 seconds products like peanut butter jelly which gives the protein and also gives a great taste and easy spreadability. So you will see innovations on that side on that business as well. 1:06:37 1 hour, 6 minutes, 37 seconds Yeah, that's really helpful. One last uh question. Assume that we achieve 10% plus volume growth. What kind of margin 1:06:45 1 hour, 6 minutes, 45 seconds because we will see the operating leverage also five kicking in. So what kind of margin expansion in terms of gross margin expansion and margin we can expect in 27 28. 1:06:57 1 hour, 6 minutes, 57 seconds So I have talked about over next 3 to four years we would want to expand margin by 3 to 4%. And also bring cost 1:07:06 1 hour, 7 minutes, 6 seconds down by three odd percent. So that's the way you should look at uh our trajectory of saying equal work on margin and cost 1:07:16 1 hour, 7 minutes, 16 seconds and I'm saying cost as a I'm saying cost which sit below the margin which is typically SGNA. Uh we are not going to 1:07:23 1 hour, 7 minutes, 23 seconds cut marketing. marketing will remain at possibly at a 6% odd level for our P&L. 1:07:30 1 hour, 7 minutes, 30 seconds That's the way we are looking at marketing to be. So you should see you should see scaled expansion of our 1:07:38 1 hour, 7 minutes, 38 seconds margin getting to double digit within next two to three years I would say. 1:07:45 1 hour, 7 minutes, 45 seconds Okay. All right. Thank you and all the best. Thank you. 1:07:51 1 hour, 7 minutes, 51 seconds Thank you. Due to time constraints, that was the last question. I would now like to hand the conference over to the management for the closing comments. 1:07:59 1 hour, 7 minutes, 59 seconds Over to you, sir. 1:08:01 1 hour, 8 minutes, 1 second Sure. Uh thank you so much and thank you for all the participants for being there. Uh once again to reiterate, we are committed to grow our business uh 1:08:10 1 hour, 8 minutes, 10 seconds profitably, efficiently and making sure our roles uh on investments we make uh stay capital efficient and we continue 1:08:19 1 hour, 8 minutes, 19 seconds to deliver to the expectations of our uh stakeholders both and also of course continue to delight our consumers with 1:08:26 1 hour, 8 minutes, 26 seconds new and innovative offerings going ahead. Thank you so much and wishing all the best to all of you being here. 1:08:35 1 hour, 8 minutes, 35 seconds Thank you on behalf of Anendraati. That concludes this conference.