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Edited Transcript of GSKCONS.NSE earnings conference call or presentation 5-Aug-19 8:30am GMT

Q1 2020 GlaxoSmithKline Consumer Healthcare Ltd Earnings Call

Aug 9, 2019 (Thomson StreetEvents) -- Edited Transcript of GlaxoSmithKline Consumer Healthcare Ltd earnings conference call or presentation Monday, August 5, 2019 at 8:30:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Navneet Saluja

GlaxoSmithKline Consumer Healthcare Limited - ISC Area GM, MD & Director

* Vivek Anand

GlaxoSmithKline Consumer Healthcare Limited - Director of Finance, CFO & Whole-Time Director

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Conference Call Participants

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* Abneesh Roy

Edelweiss Securities Ltd., Research Division - SVP

* Gaurav Jogani

Axis Capital Limited - Assistant VP

* Kaustubh Pawaskar

Sharekhan Limited, Research Division - Senior Research Analyst

* Latika Chopra

JP Morgan Chase & Co, Research Division - Senior Analyst

* Percy Panthaki

IIFL Research - VP

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Presentation

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Operator [1]

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Good day, ladies and gentlemen, and welcome to the Q1 FY '20 Earnings Conference Call of GlaxoSmithKline Consumer Healthcare Limited hosted by Axis Capital. (Operator Instructions) Please note that this conference is being recorded.

I now hand the conference over to Mr. Gaurav Jogani from Axis Capital. Thank you, and over to you, sir.

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Gaurav Jogani, Axis Capital Limited - Assistant VP [2]

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Thank you, Margarette. It's a pleasure on behalf of Axis Capital to welcome you all to the call. We have with us today from the management Mr. Navneet Saluja, Managing Director; Mr. Vivek Anand, Director of Finance; and Ms. Parul Agarwal, Finance Controller.

Thank you, and over to you.

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Vivek Anand, GlaxoSmithKline Consumer Healthcare Limited - Director of Finance, CFO & Whole-Time Director [3]

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Yes. Thank you. Vivek Anand here. Good afternoon, everyone, and thank you for joining the conference call today for quarter 1 '19/'20.

The quarter witnessed a strong financial performance, which was in line with past few quarters. The revenue from operation increased by 8% to INR 1,194 crores led by volume growth of 5.4% that is broad-based and cuts across portfolio and channels.

During the quarter, we have launched 2 new products, Active Horlicks and Boost Bites. Active Horlicks is based on the proposition of energy for adults; and Boost Bites, leveraging the core brand equity of this.

Gross margin during the quarter has improved 21 basis points driven by pricing and deflation. We are decreasing inflation in commodity prices from the current quarter. We are investing competitively behind our brands and increased focus on TV and digital media spending during the quarter at 14% of sales.

PBT for the quarter increased by 24% to INR 386 crores. The underlying PBT has increased by 18% adjusted for one-offs, largely explained by clearing of old balances in current quarters sitting in other income. PBT is driven by pricing, commodity deflation and cost-saving initiatives.

The company has adopted Ind AS 116 effective April 1, 2019. The EBITDA has improved by INR 6 crores, which is a 50 basis point improvement in the quarter. And PBT has a net adverse impact of rupees 20 lakhs during the quarter.

Yes, we have seen volume and value share in both Horlicks and Boost in the current quarter after Nielsen report. Horlicks grew 80 basis point volume share and 80 basis point value share. Boost gained 100 basis point volume share and 40 basis point value share. HFD volume market share at June '19 stood at 64.6% and value market share at 64.5%.

We continue to drive brand-building activities through stepped up investments in our brands, innovation and convenient connect activities that has helped us to sustain SOV market share. We have also achieved the highest-ever SOV distribution in the last 5 years, wherein our distribution stood at 2 million outlets in current year as against 1.78 million outlets in previous year, indicating a growth of 13%. Further, we continue to strengthen our business through selling-space innovation and brand-building initiatives.

Some of the most important initiatives I would like to call out. We have launched Active Horlicks, which is based on the proposition of energy and protein for adults more than 30 years. The key ingredient being fiber and other energy nutrition -- nutrients help our brand support its claim, be active for longer. Over time, key brands in SMP category has been talking to kids despite significant volume contribution, especially in vitamins from adults. Hence, we see a huge opportunity for our popular segment, other targeted brands and therefore, launched Active Horlicks. This is priced at parity with Standard Horlicks and has been launched in South and East markets in June.

We have recently launched Boost Bites chocolate-flavored biscuit in all 4 Southern states. Boost Bites has been launched with a consumer-validated formulation that delivers on sensory expectations that are key in this category. We believe the extension of Boost to this format with great chocolate taste and energy and formula releasing nutrients will help us leverage the core brand equity and will cover on kids better. In the coming months, we will work on building the right mix for the brand and continue to drive Boost relevance to monetize the occasions.

Capturing growth topicality of the biggest cricket tournament World Cup in June '19, Boost created a 360-degree marketing campaign called Exams are Coming to drive kids' love and strengthen its association with sports. Similar to how kids prepare for exams, we captured how cricket stars (inaudible) are doing to prepare for their cricket matches. The campaign, including a clean cone, 3 teasers and 5 contestants playing to capture the essence of a cricket teaser. It was launched with strong surround plan, including integration with captures, impactful in-store visibility drive and on-ground activation. Some food drinks are mostly consumed as hot beverage. Therefore, some months are a period when the category consumption declined. To address this consumer barrier, Horlicks launched an integrated campaign to drive cold consumption of Chocolate Horlicks. With a focus on driving space among kids, new communication was created along with a new digital platform to strengthen the disconnect. We are confident to strengthen our leadership in the SMP category with our focus on hindsight, innovation and sharp consumer insights.

The macroeconomic environment continues to be a key watchout with low GDP growth and rising inflation. Further, we can also mention that the FMCG sector is reaching the edge of slowdown, citing macroeconomic factors such as slow sales growth, a GDP growth, below-normal monsoon and higher base.

As you are aware, on December 3, 2018, the Board of Directors of GlaxoSmithKline Consumer Healthcare Limited approved a scheme of amalgamation between the company and Hindustan Unilever Limited, where expected shareholder and creditor is subject to obtaining requisite regulatory and other approvals. The scheme of amalgamation was filed with National Company Law Tribunals, seeking direction to both equity shareholders and unsecured creditor of GSK. Pursuant to the order dated April 12, 2019, passed by the NCLT, the segment convened using all the equity shareholders and unsecured creditors of the company on June 1, 2019. The equity shareholders and unsecured creditors of the company, in their respective meetings, approved the resolution as set out in the notice of Tribunal convened meeting, approved the scheme of amalgamation with requisite majority. The company has now filed the requisite company scheme position seeking function of the NCLT. The merger process is progressing as per expected timeline.

With this, we end our brief update on quarter 1 and open the call for a discussion Q&A. Thank you once again for joining the call.

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question is from the line of Abneesh Roy from Edelweiss.

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Abneesh Roy, Edelweiss Securities Ltd., Research Division - SVP [2]

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Congrats on good numbers. My first question is on market share. There seems to be a good improvement versus earlier quarters. So has the competitive intensity come down? Or is there some reclassification in terms of how you're -- how you or the agency is defining market share?

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Navneet Saluja, GlaxoSmithKline Consumer Healthcare Limited - ISC Area GM, MD & Director [3]

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Yes. No. The competitive intensity in any market will continue. Everybody wants to gain share. I think it's been a good quarter. And we've been working very hard to improve our share of voice in terms of media over the last 18 to 24 months. And I think some of that is also getting us through here. So I think it's hard work of the team, a good strategic intent, right, and also new launches like Protein+, which are helping us gain that small -- gains we've been acquiring and market share gain here. So overall, the picture is that we work on around market share perspective for ourselves.

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Abneesh Roy, Edelweiss Securities Ltd., Research Division - SVP [4]

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And so your ad spend as a percentage of sales is, in fact, down on a Y-o-Y basis. And you said the share of voice over the past few quarters has improved. So has your mix changed in terms of now using more of online just the way actual does? So are you taking some learnings from there? And so is that leading to better ROI in terms of, say, market share and lesser cost also?

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Navneet Saluja, GlaxoSmithKline Consumer Healthcare Limited - ISC Area GM, MD & Director [5]

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So yes. Your answer -- I'll let Vivek build on it, but I think there are 2 aspects to it. One is that it's not only 1 quarter year-on-year but a longer-term project if you really look at it. If you do a 2-, 3-year analysis, you'll get a very clear indication as to where the investments have been increasing here. And media, as you know, it's not about winning a consumer's mind on a daily or a quarterly basis. It's on a long-term sustained basis. So over a period of time, our investment strategy on media has increased over what we were doing last 2, 3 years. And I think that's paying dividends. The second thing, of course, I'll just request to Vivek to give you an update on that. Yes, there have been some gains on that also, yes.

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Vivek Anand, GlaxoSmithKline Consumer Healthcare Limited - Director of Finance, CFO & Whole-Time Director [6]

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Thanks, Navneet. So clearly, we do holding on to our investment -- marketing investment quarter-on-quarter. And this quarter also, our spends are 13% of sales in terms of absolute. We are holding on in terms of what we spent last year in the same quarter. So we are almost flat in terms of our absolute spend. So firstly, yes, we made some choices in terms of where to -- where we put money and where it really matters. But more than that, we've very been significantly driving cost-saving program, which has really helped us negotiate better with our agencies. And that money also has been redeployed in our media spending during the quarter.

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Abneesh Roy, Edelweiss Securities Ltd., Research Division - SVP [7]

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But till now, the HUL synergy benefits obviously are not there, right, because the accruals are still awaiting?

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Vivek Anand, GlaxoSmithKline Consumer Healthcare Limited - Director of Finance, CFO & Whole-Time Director [8]

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Yes. So therefore, we continue to operate as...

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Navneet Saluja, GlaxoSmithKline Consumer Healthcare Limited - ISC Area GM, MD & Director [9]

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To independent O&I.

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Vivek Anand, GlaxoSmithKline Consumer Healthcare Limited - Director of Finance, CFO & Whole-Time Director [10]

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As we move to independent organization, business as usual.

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Abneesh Roy, Edelweiss Securities Ltd., Research Division - SVP [11]

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And sir, you mentioned 14-plus is also helping you in terms of market share. So you have a 50 crore target for this year. So how has been Q1? Can any further gains for that 5% to 6% share which you already had?

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Vivek Anand, GlaxoSmithKline Consumer Healthcare Limited - Director of Finance, CFO & Whole-Time Director [12]

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No. We've -- I think we are on plan. You're absolutely right that the plan is to really hit a 50 crore plus number, so we are progressing to plan. And we are close to 5.5%, 6% share.

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Abneesh Roy, Edelweiss Securities Ltd., Research Division - SVP [13]

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And sir finally, again, you mentioned on the Boost-related biscuit, et cetera, and the focus on non-HFD. So could you talk a bit more about this because now there will be a transition. And why going into -- you have done biscuits earlier with pretty mixed results. So in that context and the fact that now there will be a change in terms of ownership, why would you want to scale this up at the current juncture?

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Navneet Saluja, GlaxoSmithKline Consumer Healthcare Limited - ISC Area GM, MD & Director [14]

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Right now, like Vivek said, it's business as usual, right? Till the time the regulators don't get clearance to the merger, it's business as usual for us. So we are pursuing what we believe is the right strategy for us, our shareholders and our stakeholders. And we believe that the different categories for Boost and Horlicks are interesting categories to participate in. And Boost Bites is a very, very interesting product because there is a market for the energy and stamina biscuits. In the younger generation, yes, Boost clearly plays a big part here. We founded a national set for on-the-go consumption opportunity for our consumers, who on the go may not be able to have a -- take up a Boost here.

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Operator [15]

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(Operator Instructions) The next question is from the line of Sameer Gupta from India Infoline.

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Percy Panthaki, IIFL Research - VP [16]

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Sir, this is Percy Panthaki here. Sir, my first question is on the distribution expansion that you've seen, 13%. I'm assuming that it's total distribution, not direct. I just wanted to know what basically drove this. Is it mainly the sachet packs, which is sort of responsible for this distribution expansion? Or you have seen even the other packs increase in distribution?

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Navneet Saluja, GlaxoSmithKline Consumer Healthcare Limited - ISC Area GM, MD & Director [17]

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Well, absolutely. First of all, you are right. This is not direct coverage. This is the entire -- as far as major branding tool, right? And the way we see it right now, yes, sachet has been a prime driver of the distribution efforts. But all our packs, right, a significant proportion of our pack has seen a gain in their seller/dealer stocking here. So we've seen the gain across, but largely, you're right. The focus has been to drive distribution to sachet growth.

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Percy Panthaki, IIFL Research - VP [18]

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So sir, what is the sachet contribution to the overall HFD category now? And what is the growth in the sachet packs?

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Vivek Anand, GlaxoSmithKline Consumer Healthcare Limited - Director of Finance, CFO & Whole-Time Director [19]

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So it's around 10.5%. And the volume growth in the quarter was around 14%.

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Percy Panthaki, IIFL Research - VP [20]

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Okay, sir. Sir, secondly, on margins. Your margins have also expanded. Just wanted to understand what is the scenario there on the input costs? Are you not facing any inflation in SMP, milk prices, et cetera?

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Navneet Saluja, GlaxoSmithKline Consumer Healthcare Limited - ISC Area GM, MD & Director [21]

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So we are witnessing inflation in commodity prices from the current quarter. I think the last quarter, we were able to manage our commodity inflation because of what I talked about in the earlier call. It's about the cost-saving program, what we've been driving and also in terms of the forward covers we've taken. So that has largely protected us. But starting this quarter, June quarter, we've started to see inflation clearly building

(technical difficulty)

We've seen a steep inflation in dairy prices, where we've seen an increase of almost 40% in -- as we speak, and that's largely to do with significant reduction in milk supply due to poor rains in West and South. And we've also seen Badhne prices also going up 30% year-on-year. So yes, as we really look at in the widened year-to-go period, yes, clearly, the inflation is for the key agri commodities this year high-single-digit inflation, which is going to be release a (inaudible) in the remaining part of the year.

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Percy Panthaki, IIFL Research - VP [22]

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Right. Sir, and lastly, if you could just comment on the variants' performance apart from the basic Horlicks, the women, mother, others, et cetera? How -- what is -- if I combine all these variants, what is the growth in that portfolio? And what percentage contribution to the overall?

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Navneet Saluja, GlaxoSmithKline Consumer Healthcare Limited - ISC Area GM, MD & Director [23]

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So the growth is broad-based as we talked about. We are seeing good growth in brand Horlicks and in Boost. And we are seeing growth across regions, right? So -- and in terms of our high science portfolio, which is 14-plus, we already talked about -- we put our ambition of 50 crores for the year, and we are clocking it back because their growth is not too relevant because we've just started the product last year.

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Percy Panthaki, IIFL Research - VP [24]

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Right. And the other variants, like mothers, women, et cetera, I'm not looking at specific variants. If you just club everything apart from the basic Horlicks that you have and just look at all the other variants together, are they growing faster than the overall sort of brand?

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Navneet Saluja, GlaxoSmithKline Consumer Healthcare Limited - ISC Area GM, MD & Director [25]

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I think I -- looking at the numbers, it's broadly pretty much online, meaning everything is growing, right? Sometimes, something is growing a little bit higher on volume because of sachet contribution, something is growing faster on value.

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Operator [26]

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(Operator Instructions) The next question is from the line of Gaurav Jogani from Axis Capital.

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Gaurav Jogani, Axis Capital Limited - Assistant VP [27]

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First, the employee cost during the quarter has risen very sharply. So any particular reason for this thing? And like, how is this expected to end going ahead?

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Vivek Anand, GlaxoSmithKline Consumer Healthcare Limited - Director of Finance, CFO & Whole-Time Director [28]

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See, employee cost during the quarter, you're right, has grown by 9.7%, right? And that's largely to do with the -- we are doing a long-term bid settlement in our Nabha factory as we speak. So there is some provision we considered for that. And also, there is some retention costs which we consider, right, as we are going through this merger process. So I think these are the 2 broad reasons why you see a close to a 9.7% growth in employee benefit expenses.

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Gaurav Jogani, Axis Capital Limited - Assistant VP [29]

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So sir, is it likely to -- the provision, is it one-off? And like, how can we build in for the coming quarters, I mean, going ahead?

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Vivek Anand, GlaxoSmithKline Consumer Healthcare Limited - Director of Finance, CFO & Whole-Time Director [30]

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So going ahead, I think this settlement cost for our factories, that will continue because whatever we negotiate and agree, that will have impact moving forward. But the retention cost is a one-off for this year. So that will not continue next year.

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Gaurav Jogani, Axis Capital Limited - Assistant VP [31]

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Okay, okay. And sir, as regards to the inflation that you called out for, particularly, so are you also contemplating any price hikes or anything on those lines to counter this inflation because we have always maintained that the pricing would always be in tandem to the inflation that we witness?

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Vivek Anand, GlaxoSmithKline Consumer Healthcare Limited - Director of Finance, CFO & Whole-Time Director [32]

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Yes. So as I've been saying that our strategy is very clear: that we will certainly grow with our pricing in line with the CPI. So the CPI is, at this point in time, forecasted at around 4%. And we normally take our price increases, as we've done in the last couple of years, some time in January. So we will certainly be really working towards that in terms of hitting our price increase slightly below the CPI level.

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Gaurav Jogani, Axis Capital Limited - Assistant VP [33]

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Sure. And sir, in your opening remarks, you did call out for some one-off items in the other income, and I missed that. But if you can, sir, just reiterate that again?

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Vivek Anand, GlaxoSmithKline Consumer Healthcare Limited - Director of Finance, CFO & Whole-Time Director [34]

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Yes. So other income has grown by 41%, right? So there is a one-off, which is this clearance of old vendor balances. That's -- so if you take that off, the underlying growth in other income is 15%.

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Operator [35]

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(Operator Instructions) The next question is from the line of Kaustubh Pawaskar from Sharekhan.

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Kaustubh Pawaskar, Sharekhan Limited, Research Division - Senior Research Analyst [36]

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Yes. Sir, just wanted to know how was the performance of the business of the dairy portfolio? And also can you throw some light on how the demand environment in the rural market was? As you mentioned that the low-priced packs or small SKUs, the contribution is increasing. So whether you have witnessed any kind of slowdown in the rural market?

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Vivek Anand, GlaxoSmithKline Consumer Healthcare Limited - Director of Finance, CFO & Whole-Time Director [37]

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Okay. So our business actually growth for the quarter, stands at 15.5%, right? So that's one. And in terms of rural growth, right, we are -- we've been -- possibly, we are seeing the same trend. We are neither seeing a downward or an upside. We've basically been consistent in terms of what we see in our rural growth numbers.

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Kaustubh Pawaskar, Sharekhan Limited, Research Division - Senior Research Analyst [38]

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Okay. But is it higher than what we have been achieving in the other markets' with the revenue?

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Navneet Saluja, GlaxoSmithKline Consumer Healthcare Limited - ISC Area GM, MD & Director [39]

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It's pretty much in line, but from an overall consumption basis, it's difficult to measure it from our own internal sales data because there is a portion of wholesale, which means, too, rural also. So from a result, there are revenue rupees, but as for the income, the growth is broad-based there.

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Kaustubh Pawaskar, Sharekhan Limited, Research Division - Senior Research Analyst [40]

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Okay. And one last one on the other income. You said that the comparable growth is 15% for this quarter. Is it right?

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Vivek Anand, GlaxoSmithKline Consumer Healthcare Limited - Director of Finance, CFO & Whole-Time Director [41]

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Yes, that's right.

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Operator [42]

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(Operator Instructions) The next question is from the line of Latika Chopra from JPMorgan.

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Latika Chopra, JP Morgan Chase & Co, Research Division - Senior Analyst [43]

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Yes. My first question was on the volume growth. If you could let us know what is the domestic volume growth, and how it's panned out across Horlicks and Boost brand?

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Vivek Anand, GlaxoSmithKline Consumer Healthcare Limited - Director of Finance, CFO & Whole-Time Director [44]

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Yes. So the domestic growth, volume growth is 4%, yes?

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Latika Chopra, JP Morgan Chase & Co, Research Division - Senior Analyst [45]

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Okay.

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Vivek Anand, GlaxoSmithKline Consumer Healthcare Limited - Director of Finance, CFO & Whole-Time Director [46]

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And it's, Latika, it's broadly -- between Horlicks and Boost, it's broadly the same.

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Latika Chopra, JP Morgan Chase & Co, Research Division - Senior Analyst [47]

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Okay. And your comments on raw material inflation, it seems it's going to start hitting you more from the September quarter. From your comments on pricing, does it imply that you're open to take a price hike to compensate for this margin pressure? And is there still room at your end to moderate your costs, so that the EBITDA margins still look fine?

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Vivek Anand, GlaxoSmithKline Consumer Healthcare Limited - Director of Finance, CFO & Whole-Time Director [48]

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Yes. So one, I would say that we have taken a second

(technical difficulty)

in July, and we've taken it. There is very selected SKU. So that's really going to help us. Secondly, we continue to aggressively drive our cost-saving program. So that's going to cover some part of our inflation in the year-to-go period. And in terms of the next round of pricing, right, at this point in time, I think we will stick to our annual calendar of January next year.

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Latika Chopra, JP Morgan Chase & Co, Research Division - Senior Analyst [49]

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And what were the weighted average highs that you took in July?

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Vivek Anand, GlaxoSmithKline Consumer Healthcare Limited - Director of Finance, CFO & Whole-Time Director [50]

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July was a less than 1% price increase. That was not across. That was in mean selected fees, where we had an opportunity to take price increases.

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Latika Chopra, JP Morgan Chase & Co, Research Division - Senior Analyst [51]

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Sure. And lastly, any comments on the Boost RTD launch? Any update there?

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Navneet Saluja, GlaxoSmithKline Consumer Healthcare Limited - ISC Area GM, MD & Director [52]

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Yes. I mean, we continue to do well on RTD. And we continue to be excited in the current market. We will keep it to southern market only because Boost is largely a South-based brand. And I really believe it's a very strong long-term opportunity. And like I said in the last call, we will be expanding it, but we'll be careful, relatively aggressive on that portfolio. But we are very, very happy with the performance it is having right now in the marketplace here.

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Operator [53]

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(Operator Instructions) The next question is from the line of [Jim Weygandri] from Bharti AXA Life Insurance.

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Unidentified Analyst, [54]

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Yes. Sir, can you throw some more light in terms of your raw material consumption, especially in terms of value, like how much it could be constituting the overall cost or SMP? How will that carry in terms of the -- in that proportion? And do we (inaudible) SMP or like do we source milk? And can you just shed some light on this?

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Vivek Anand, GlaxoSmithKline Consumer Healthcare Limited - Director of Finance, CFO & Whole-Time Director [55]

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What I can tell you is that raw material actually is almost 1/3 of our total cost base, right? And we are seeing inflationary trend in that portfolio, right? So we expect a high-single-digit kind of inflation in the next 6 to 12 months. And as I already talked about, with the limited price increase we've taken in July and with the kind of aggressive cost-saving program we have, we'll be able to cover a large part of it, right, during the licensing period. And in case you want more specific details about -- ingredient-wise details, we can certainly take it off-line.

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Unidentified Analyst, [56]

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Okay. So you are saying that 1/3 of the total raw material cost is having kind of a single high -- high-single-digit inflation?

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Vivek Anand, GlaxoSmithKline Consumer Healthcare Limited - Director of Finance, CFO & Whole-Time Director [57]

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Yes, that's right.

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Operator [58]

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(Operator Instructions) The next question is from the line of Gaurav Jogani from Axis Capital.

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Gaurav Jogani, Axis Capital Limited - Assistant VP [59]

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Sir, just on the exports bid. Like in the previous quarter, we have called out for the higher exports to GSK Malaysia. So does that continue? How has the trend in the exports? If you can throw some light on that?

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Vivek Anand, GlaxoSmithKline Consumer Healthcare Limited - Director of Finance, CFO & Whole-Time Director [60]

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Well, you're right. So we had a good quarter. And exports sales were almost -- they grew by 15% plus during the quarter. And a large part of the growth was actually contributed by Malaysia because Malaysia is still not sitting in the base. But starting next quarter, Malaysia will get into the base.

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Gaurav Jogani, Axis Capital Limited - Assistant VP [61]

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Sure, sir. So hence, the overall volume, which is 5.8% majorly because of the higher volume from the exports, right?

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Vivek Anand, GlaxoSmithKline Consumer Healthcare Limited - Director of Finance, CFO & Whole-Time Director [62]

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Yes. That's right. That's right.

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Operator [63]

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(Operator Instructions) As there are no further questions from the participants, I now hand the conference over to the management for closing comments.

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Vivek Anand, GlaxoSmithKline Consumer Healthcare Limited - Director of Finance, CFO & Whole-Time Director [64]

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Yes. Thank you very much for your participation. It is always a pleasure to interact and get an external perspective for the category and business. And it always gives us an opportunity to understand what you, as analysts, expect from us. With this, I would like to thank you once again and close the call. Thank you.

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Operator [65]

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Thank you. On behalf of Axis Capital, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.