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Edited Transcript of HINDUNILVR.NSE earnings conference call or presentation 23-Jul-19 12:30pm GMT

Q1 2020 Hindustan Unilever Ltd Earnings Call

Mumbai Jul 25, 2019 (Thomson StreetEvents) -- Edited Transcript of Hindustan Unilever Ltd earnings conference call or presentation Tuesday, July 23, 2019 at 12:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Sanjiv Mehta

Hindustan Unilever Limited - Chairman, CEO & MD

* Srinivas Phatak

Hindustan Unilever Limited - Executive Director of Finance & IT, CFO & Executive Director

* Suman Hegde

Hindustan Unilever Limited - Group Controller

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Conference Call Participants

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* Abneesh Roy

Edelweiss Securities Ltd., Research Division - SVP

* Aditya Joshi

Religare Capital Markets Limited, Research Division - Research Analyst

* Aditya Soman

Goldman Sachs Group Inc., Research Division - Equity Analyst

* Amit Sachdeva

HSBC, Research Division - Analyst, Consumer and Retail

* Amit Sinha

Macquarie Research - Analyst

* Harit Kapoor

Investec Bank plc, Research Division - Analyst

* Percy Panthaki

IIFL Research - VP

* Vishal Gupta

Phillip Capital Limited - Trader

* Vivek Maheshwari

CLSA Limited, Research Division - Research Analyst

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Presentation

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Operator [1]

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Good day, ladies and gentlemen, and a very warm welcome to the Hindustan Unilever Limited June Quarter 2019 Earnings Conference Call. (Operator Instructions) Please note that this conference is being recorded. I now hand the conference over to Ms. Suman Hegde, Group Controller and Head Investor Relations at Hindustan Unilever Limited. Thank you and over to you, ma'am.

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Suman Hegde, Hindustan Unilever Limited - Group Controller [2]

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Thanks, (inaudible). Good evening, and welcome to the conference call of Hindustan Unilever Limited. We will be covering this evening the results for the quarter ended 30th June 2019. On the call from HUL, we have Sanjiv Mehta, Chairman and Managing Director; and Srinivas Phatak, CFO, HUL. We will start the presentation with Sanjiv sharing aspects of our performance for the quarter, and then hand over to Srini to take you through some of the details of the quarter performance. Before we get started with the presentation, I would like to draw your attention to the safe harbor statement included in the presentation for good order's sake. With that, I hand over to you, Sanjiv.

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Sanjiv Mehta, Hindustan Unilever Limited - Chairman, CEO & MD [3]

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Thank you, Suman. Good evening, everyone, and thanks again for joining us. It's always a pleasure to have you guys on the call. We are talking about a clear and compelling strategy. At HUL, we are committed to building a purpose-led future-fit organization, delivering growth which is consistent, competitive, profitable and responsible. In line with our vision of reimagining HUL, we are choreographing changes across the value chain using data analytics and digital. Our focus is also to ensure speed and responsiveness in the organization, and this positions us well in the current scenario of moderation in the market growth.

Now talking about the market context. Let's take a look at how the markets have performed. Year 2019 so far has witnessed softening of growth rates from the highs of 2018. Rural growth rates are now nearly at par with open growth rates. Crude and currency continued to be volatile.

With Union Budget 2019-20 emphasizing on (inaudible) and Kissan, we do expect a positive impact on the lives of our rural brethren, which will spur the overall rural consumption. The subsidy to marginal farmers , [voltage wall], electricity delivery, [willing outdoor] upgrade of 125,000 kilometers of rural road and millions of houses to be constructed should give a boost to rural income. We also agree with government focus on MSME, with loans interest subvention of corporate tax reduction. In addition, the focus on investments and infrastructure, capital infusion and buying through reduction in policy rates by 75 bps over the last 6 months by the monetary policy committee and the movement of the stance from neutral to accommodative should provide an impetus to the overall economy and pick up of demand.

The important thing now is the start of the virtuous cycle in terms of the capital investments; savings; exports; creation of more employment opportunities; and finally, more income in the hands of consumers. We also do hope that the country receives adequate rains and the gods are kind to us. The right policy measures and its execution should also result in sentiments improving and consumer confidence going up. We believe that improvement in demand is more likely to happen in the second half of this [fiscal].

Now looking at the quarter's performance. We have delivered resilient domestic and rural growth of 7% on the back of 5% underlying volume growth and a strong EBITDA margin expansion of 150 bps on comparable basis. It continues to demonstrate our strength and agility in the given market context.

In this quarter, we held a Tribunal Convened Meeting of Equity Shareholders and Unsecured Creditors on 29th of June for seeking approval of the scheme of amalgamation between HUL and GSK Consumer Health in India. I'm very pleased to say that the equity shareholders and unsecured creditors has approved the scheme of amalgamation with the requisite majority. We have now filed the requisite company scheme petition seeking sanction of NCLT and remain on track for necessary statutory approval for GSK merger. I'm also very happy to share that we are on track with our plastic commitments that -- and we have made good progress in this quarter. Across the value chain, we are working with several organization and NGOs, including UNDP for waste collection and disposal. We are working with global and regional players in the area of making our materials recyclable as well as in increasing the use of post-consumer recycled resins. All our food parcels are now 100% plastic-free. Our blister packaging for Lakmé iconic lip gloss and Lakmé lip care now uses 80% recycled content. We have launched TRESemmé shampoo black bottle [vegan] this quarter in markets with 25% recycled content. We've also developed our curriculum on waste segregation and benefits of plastic recycling to drive behavior change in schools and collaboration with our partners. Additionally, we continue to focus on waterless part of our sustainability agenda, especially because most of the categories that we operate in consume water. Delighted to tell you that over the last [8] years, we have created water potential of over 700 billion liters, working in over 4,000 villages. We continue this work through HUF, which is Hindustan Unilever Foundation. As enthusiastically as ever because it's even more important in the current scenario where water shortage is emerging as a key concern across several parts of the country, we remain committed to reducing environmental footprint and at the same time, creating a positive social impact to advance.

The resilient delivery is a testament to our relentless focus on 4 key drivers: strengthening our core portfolio by constantly innovating and renovating, putting focus at the heart of our brands, deepening our reach and acting on local trends.

Second, building a portfolio that straddles the pyramid, driving market development and premiumization by increasing consumer connects, launching access packs, expanding brands across subcategories and offering higher order benefits.

Our continued focus on innovation and experimentation to lead enables this model and channels our future. And last but not least, remaining sharply focused on flawless execution and fueling the virtuous cycle of growth by capturing savings across opportunities, across all P&L lines and investing behind our brands.

Looking ahead, we remain optimistic about the medium to long-term prospects. Despite being one of the fastest growing markets globally for FMCG products, the per capita consumption in India is still amongst the lowest in the world, giving us a huge run rate for growth. At HUL, we are reimagining ourselves from the lens of portfolio, organization capabilities and culture. We are going through a digital transformation program that will redefine the way we work in the future. And we believe we are well placed to capitalize the India FMCG growth opportunity, and I remain optimistic about what the future holds for our country and for Hindustan Unilever.

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Srinivas Phatak, Hindustan Unilever Limited - Executive Director of Finance & IT, CFO & Executive Director [4]

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So thanks, Sanjiv. Sanjiv has actually given a detailed picture of the macroeconomic environment and our strategy. And therefore, let me now go straight into the numbers. Our -- the quarter performance has -- really our growth has been resilient and profitable, and that's the key message that we want to land with all of you. Our domestic consumer business grew at 7%, with underlying volume growth of 5%. Our EBITDA at INR 2,647 crores was up 13%.

On a reported basis, our EBITDA margins were up [250]. After the (inaudible) for the accounting impact of Ind AS 116, our comparable margin for like-for-like EBITDA margin were up 150 basis points. Our profit after tax before exceptionals grew by 12%, and our net profit at INR 1,755 crores was up 15%. Our margin expansion was driven by mixed improvement, leverage in advertising and other expenses, and we will give you a better flavor of that (inaudible) in the coming charts.

If I were to talk from a length of our divisional performance, at the headline level, Home Care and Foods & Refreshment have delivered good growth in the quarter. Home Care grew at 10%, led by [robust] volume growth. Foods & Refreshment grew at 8%, with secular delivering across the portfolio. BPC grew at 4%, but again, this has been a story of two halves. Within BPC, personal products performed well, while Personal Wash was soft.

Activations innovations continue to be key to the way we deliver on our FMCG business and the quarter saw a cue or launch and relaunches and engaging activations across the portfolio. In Home Care, we launched Sunlight liquid (inaudible) and relaunched the brand Rin nationally.

This was also a particularly innovation-heavy quarter for Beauty & Personal Care. We launched natural variants in Sunsilk, Lux Botanicals, Pears. And we also launched Fair & Lovely soap.

From a knowledge point of view, Lever Ayush (inaudible) and a number of shares across Lakmé eye and lip portfolio were also launched during the quarter. In Foods & Refreshment, Lipton Matcha Green Tea was launched on e-commerce channel.

In summary, our focus on building a strong innovation funnel remains unhinged, despite market conditions.

Now let me talk to you for a little bit in terms of detail in the divisional performance. The Home Care business continues to deliver robust volume-led growth, both in Fabric Wash and in Household Care. In Fabric Wash, we continue to benefit from a large portfolio that straddles the economic pyramid with strong presence of brands across most popular and premium.

In this quarter, as I talked about, we launched Sunlight liquid detergent in select geographies, in line with our strategy of braving the portfolio of liquid detergents that [straggles development]. Household Care delivered another quarter of strong performance led by central and southern markets. We will continue to focus on innovation and renovation to continue to bring momentum in this category.

In purifiers, we remained focused on the premium portfolio as per the strategy agenda that we called out. We have actually undertaken the company to redesign of our go-to-market margins, and now that's been broadly completed.

When I look at Beauty & Personal Care, I gave you the headlines, and I think [we could put out a little bit about] Personal Wash. Our (inaudible) Personal Wash (inaudible) quarter, while the premium still continues to be stable.

Commodity costs have been benign in this category for some period of time. And therefore, we as well as the industry has been progressively passing some of these benefits to the consumers, but we have not seen a meaningful uptick in the volume for those activities. We have been working on various aspects, the whole 6 feet, including products, price, promotion for the last few quarters. Taking into account the benign commodity scenario, the recent changes to the budget, we have now started to take certain decisive actions.

In the quarter, we launched Lux Botanicals and Pears range to help us drive the naturals momentum. Another highlight in the quarter was really Fair & Lovely launch in a few geographies. Lifebuoy has also been partnering with -- strictly in 2 cities to communicate with customers at Moment of Truth to remind them to clean their hands before eating a meal.

Post the quarter, I believe you'll also speak of some of this in the marketplace. We have taken some clear actions. I talked about looking at the further outlook of commodity, but given the budget changes, we have taken certain decisive actions from a pricing point of view. You will see that in July, most from Lux and Lifebuoy. We have taken price reductions across-the-board in the range of about 4% to 6%, where in case of certain facts, you will also see a steep reduction in price. That's really passing on the right value equation given that the commodity is expected to remain benign for a certain period of time. And it's only rightful to pass on some of these benefits to the consumers for various (inaudible).

From a product point of view, Lifebuoy was relaunched earlier in the year with an enhanced product, and you'll also in the next few weeks start to see some actions addressing the propositions.

Similarly in Lux, there will be future actions coming through over the next few weeks, everything, both the products and the proposition, with a combination of this activity. We should be well set up to actually drive growth back in this category into the future.

In Skin Care, delivery was broad-based across both brands and segments. I talked about Fair & Loving soap. During the quarter, we continue Fair & Lovely Ayurvedic face wash and also entering into facial kits, our segment in Fair & Lovely. We also relaunched the Pond's men's range, and I think they're going to hold host of innovations which are helping to drive growth in Skin Care.

Hair had good growth across the portfolio. We've launched some variants in Sunsilk shampoo, which are paraben-free and contains natural ingredients like coconut oil, aloe vera, et cetera. This will help us build momentum on the naturals rave in Hair Care. Lever Ayush Bhringaraj hair oil was launched with a clinical claim to thicken the hair in just 4 weeks.

If I go on to Colour Cosmetics. Colour Cosmetics has sustained its double-digit growth trajectory. Lakmé got to market new shades in lipsticks and eyeliners, while Elle 18 Lasting Glow compact was launched nationally. The view of share expansion in line with emerging trends has helped Lakmé gain increased online and offline traffic.

Oral care delivered a good quarter, with momentum further strengthening in Close Up and Lever Ayush. In Deodorants, we continue to focus on market development, both from an antiperspirant point of view as well as from workings through Axe.

If I look at Foods & Refreshments, beverages delivered a reasonable quarter driven by a consistent strategy across brands and markets. I already talked about the launch of Lipton Matcha Green Tea. This was done in the e-commerce channel to capture the growing benefits of health and wellness. In the quarter, this summer is a particular quarter for us from an ice cream's point of view, and we are delighted to share with you that the ice cream has delivered very good growth in the quarter, driven by consumer-focused innovation such as (inaudible). We continue to leverage the capabilities of the innovations and the products R&D that we have gained from (inaudible) integration, and that's helping us actually rollout new products to meet consumer requirements.

In Foods, the core segments have performed well. Market development continues to be a key for this category.

Now I look at some of the segmental performance. There's been a good step up in profitability across our 3 divisions. And if I were to give you a flavor from a Home Care point of view, we have not seen a significant or a sizable increase in its gross margins. You will appreciate that a lot of the commodity in the crude-led inflation was faced by Home Care. So our gross margin expansion in this category has been muted. I will say that there was a step down or a bit of a lower strength in our BMI, primarily arising from 2 events: one is the overall competitive intensity in the sector given the macroeconomic conditions has been lowered. We continue to get more bang for our buck. We continue to maintain our reach and frequency. The other also has been that given our innovation intensity whether it's lower in the quarter in Home Care, some of the strengths in BMI was [surely] lower.

When I look at Beauty & Personal Care, this is a story of us getting a lot of benefits in gross margins, strong mix, strong savings, strong premium migration. And here, we have continued to invest behind our overall innovations. I think our primary gross margin expansion has enabled us in significantly step up our profitability in Beauty & Personal Care.

This is a summary of the results, which you have already seen. In summary, if we were to look at it, its domestic consumer growth grew at 7% and our comparable EBITDA margin grew at 13% and the EBIT margins was up by 150 basis points.

Looking ahead, we expect near-term demand to remain subdued given macroeconomic conditions. Commodities and currency will continue to be volatile, but I think that has been the case for the past few quarters, and we don't expect that to really change in the near-term. Our strategy is consistent. I think we are very well-positioned. Our strategy remains unchanged, and we continue to believe that all the investments that we have done in our capabilities, we are well-positioned to really deliver on our gross margin, which is all about consistent, competitive, profitable and responsible growth.

That concludes the summary in terms of numbers. Now I hand it over to Suman for us to take on Q&A.

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Suman Hegde, Hindustan Unilever Limited - Group Controller [5]

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Thanks, Sanjiv. Thanks, Srini. With this, we now move on to the Q&A. In addition to the audio, as you all well know, you also have an option to post the question through the web option on your screen. Before we get started with the session, I would like to remind you that the call and the Q&A session are only for institutional investors and analysts. And therefore, if there's anyone else on the call who's not an investor analyst but would still like to ask a question or engage with us, please feel free to reach out to the Investor Relations team out here. [Ali], with that, can you open up the line for questions, please.

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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 a decent set of growth numbers. So my first question is in Oral Care. If you could elaborate more? Now this is 1 more quarter wherein you're elaborating and pointing out towards a good momentum in Close Up and Lever Ayush. So if you could give more granular data? Still, Lever Ayush, is it only South India where you're thinking a good performance? If plans are there for rest of India, if you could share that? And on Pepsodent, what is required? If you can make 2 brands work in Oral Care, why not in Pepsodent?

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Sanjiv Mehta, Hindustan Unilever Limited - Chairman, CEO & MD [3]

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Yes. First is -- good that you remain an open [investment]. You're talking about Oral Care. What we said last year has sustained. Last quarter, what we said has sustained. Close Up and Lever Ayush continues to do well. And of course, at an appropriate time, we would look at how do we expand Lever Ayush, not just the Oral Care but the entire portfolio beyond South India. But we are very happy with the way that Close Up has recovered as well as the way Lever Ayush has been performing. On Pepsodent, it's a work in progress. We are on the drawing board. We are looking at several options. Some are underway, some more have to be done. But it is still to reach a stage where we can say with clarity that Pepsodent also is on the same path as Close Up is today.

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

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[And since] -- that was helpful. My second question is now this new brand in detergent, essentially the Love Home and Planet. So what's the thought process here? You're launching this very quickly to some of your big global markets, so that again shows the importance of India. But my question is this is quite premium pricing, and do you really need one more brand? Or you see this is -- this has a very long-term strategy. This is not going to be much in the medium-term.

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Sanjiv Mehta, Hindustan Unilever Limited - Chairman, CEO & MD [5]

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First, Abneesh, we are not launching Love Home and Planet. There's another brand which is coming in. And watch the space. It would be a bit premature for me to talk about until you have seen the mix. And once you have seen the mix, then we would be very happy to engage with you.

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Operator [6]

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The next question is from the line of from Vishal Gupta from Phillip Capital.

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Vishal Gupta, Phillip Capital Limited - Trader [7]

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Congrats for the -- congrats on a good set of numbers. So I have a question on the detergent segment. Recently, we have seen a good amount of (inaudible) coming in for the entire lot of private labels that have entered in. But your competitors are launching new products. My second question is in the liquid portfolio. Liquid, we recently have seen a rough few launches happening on the liquid side. What are you trying to do [outside] to drive the liquid portfolio (inaudible)? What are the challenges in driving the option of liquid?

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Sanjiv Mehta, Hindustan Unilever Limited - Chairman, CEO & MD [8]

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So look, the category continues to be attractive. And it's only natural that (inaudible) attract a lot of others coming in. But if you really look at it from our point of view, I think whether it's from brands or from price and benefits segments, I think we are very, very well established in detergents. And therefore, I think we're fairly confident in terms of our ability to continue to drive this business in a holistic manner, top line and bottom line. So to that extent, while there are many other competitors who keep coming into it, we're fairly confident in terms of our own product portfolio. Also you said there's a key market development opportunity. Today, it's a very small segment, but if you were to look at any advanced market, any developed market, if you were to look at, let's say, the organization and premiumization and if you even look at some of the washing habits, liquids continue to be important, whether it is a hand-wash liquid or it's a machine-wash liquid. And therefore, as a market leader, it's imperative that we continue to build that segment, and we are doing so.

The good part is, it is a great consumer experience. It is a better mix and a better -- accretive to us from a margin point of view. And as we continue to build this segment, it is also going to be growth accretive. The challenges are very similar to challenges of the new market development activity where you need to give the consumer the right proposition, the right reason to buy. And I think that is the journey that we are all on. Once I think consumers get it and -- typically as it happens, they will first try. Then they will adopt. Then you'll get consumption and you get upgrade. But this is a cycle of market development, and that's where we are currently [arranged to].

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Vishal Gupta, Phillip Capital Limited - Trader [9]

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Okay. (inaudible), question on the tea sale. How do you assess the opportunity out over there? Because on the competitors, the financial position significantly weakened (inaudible). Or are they more of a plantation kind of player without reaching the opportunity in the tea side?

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Srinivas Phatak, Hindustan Unilever Limited - Executive Director of Finance & IT, CFO & Executive Director [10]

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Look, tea is business where it has been well -- performing well for us from a considerable period of time, and I think Sanjiv has spoken in the past that we continue to be market leaders. Again, we got a strong portfolio of brands across the full price (inaudible). We have picked up some news in terms of some stress from a financial position of some plantations. That's true. There is also some news about potentially how the crops will come through. So these are the vagaries or these are the nuances of what happens to any agri-based commodity business. I think we just need to see the impact that it will have in terms of price and availability and quality, and we will deal with that. But if we step back and see, from an opportunity point of view, while there is a premiumization opportunity with tea bags and higher benefits through natural care, there is also a sizable opportunity of converting people from the [loose] to (inaudible). And that is where I think brands such as (inaudible) are doing a fabulous job for us. Overall, we continue to believe it is a very attractive market with a lot of potential for growth. And I think we have got enough in our market development activity and focus on cost to drive that.

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Operator [11]

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Our next question is from the line of Amit Sinha from Macquarie.

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Amit Sinha, Macquarie Research - Analyst [12]

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My first question is on your -- on HUL's growth compared to the overall market's growth and the majority part of the last 2 years, you had outperformed the market. Now just wanted to understand how has been the trend in the last 2 quarters?

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Srinivas Phatak, Hindustan Unilever Limited - Executive Director of Finance & IT, CFO & Executive Director [13]

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At an aggregate, our growth continue to be comfortable. So whether it (inaudible) now. At an aggregate, we continue to be competitive, meaning ahead of the market.

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Amit Sinha, Macquarie Research - Analyst [14]

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Okay. Okay. And secondly, you indicated further recovery in 2H. Now basically, I wanted to understand what gives you confidence on the time line of recovery?

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Srinivas Phatak, Hindustan Unilever Limited - Executive Director of Finance & IT, CFO & Executive Director [15]

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So that's a good question. Can we all say it with confidence? Of course not. But step back and see all the interventions which have been made. I think Sanjiv spoke elaborately about what has come through from a budget. Some of the structural interventions, which are going into the rural in terms of infrastructure, health, insurance, direct benefit transfer. And as a whole, most are activities which have been undertaken by the government.

Similarly, if you were to see, even from a liquidity and a monetary easing point of view, we have seen some actions, and it's only reasonable to expect that government will do more because issues are well known and well understood across. Monsoon is another thing. As things stand today, we are I think behind some 15% to 20%. But if you were to actually look at revenue strength delivered for the end of June, there has been a significant step up in the monsoon spread. So all of these elements will start to have a bit of a pass-through into the market. That's clear. The quantum and how much of that will come through is something which we all need to wait and watch. I think, therefore, enough to say that look -- I think you can say with reasonable comfort in saying that some of the interventions will start to have an impact. Quantum we need to see, and that's the reason if you've seen the parts of the market in the near-term demand, we expect it to be subdued. And it's only fair to expect that to start to see somewhat of a pickup in quarter 2 -- sorry, half 2.

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Amit Sinha, Macquarie Research - Analyst [16]

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Sure, sure. And just very quickly on this A&P spend. And when you say there is a leverage in the advertisement spend, did you mean basically the lower spending in the Home Care business? Or was there any other kind of explanation to...

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Srinivas Phatak, Hindustan Unilever Limited - Executive Director of Finance & IT, CFO & Executive Director [17]

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Well, there is about three things. There's one where it's a piece about how are we getting value to our buying initiatives, how are we getting value to our digital initiatives. And we continue to unlock a lot of savings there, whether it's channel mix, digital versus traditional views and the various other outdoor. So there is that set of value accretion which we continue to drive. And that again has continued a strong delivery into the quarter.

Second piece, which I also called out, and if you see, the overall competitive intensity has started to actually come down. We started seeing a little bit of that in March quarter, but clearly from a June quarter point of view, the intensity has come down, which means that you can still meet your reach and you can meet your reach objectives by spending less.

The third element I also called out is from a home care point of view. Given the phasing of our activities and innovations, we didn't have to spend the amounts that we have done earlier. A combination of the 3 is really the explanation for advertising. I think we simplified it by summarizing and saying that we got leverage across A&P and other expenses.

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Amit Sinha, Macquarie Research - Analyst [18]

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Sorry, but just to follow up. This competitive intensity you meant is less only in Home Care or across the space?

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Srinivas Phatak, Hindustan Unilever Limited - Executive Director of Finance & IT, CFO & Executive Director [19]

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Across. So let me give you a picture. And good to clarify this. From an A&P standpoint, when you see overall the intensity or the pressure which was there and then in the market have come down. And so therefore, that's what we see from an A&P and (inaudible) totality of the market. Having said that, competitive intensity is slightly difficult in 1 channel for us, which is [modern trade]. That's got nothing to do with advertising. A lot of that goes into the trade expense. Then we have seen that there has been a little bit of a step up in some categories. I think given the nature of what is happening to the market with some moderation, people have started to step up a little bit of an expenditure there. So it's a different volume that's getting cleared up. Overall, A&P, competitive intensity has come down. Profits for modern trade and certain competition in modern trade have taken up strengths in modern trade.

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Amit Sinha, Macquarie Research - Analyst [20]

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Sure. And just -- actually, sorry to harp again on this because I believe this is very important, but this -- the competitive intensity coming down, is it a function of a slowdown in the market or some of the peers facing financial distress?

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Srinivas Phatak, Hindustan Unilever Limited - Executive Director of Finance & IT, CFO & Executive Director [21]

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Amit, as much as I would like to give you that answer, it's not -- I really don't know. All that I see is that, look, the competitive intensity has come down. I would like to believe that it's a bit of what is happening to the market, overall economic (inaudible) demand. To say that liquidity has started to impact some of the organized players, I don't believe so. Is it possible that some of the unorganized are feeling a level of pinch? Possible. But they're not necessarily the big media spenders, yes? That kind of an intensity, you will see more in terms of lower pricing promotions in markets. That's not so much of a media phenomena.

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Operator [22]

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The next question is from the line of Sameer Gupta from IIFL.

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Percy Panthaki, IIFL Research - VP [23]

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This is Percy here. So my first question is just to get a little bit more on the demand trends. So recently, Nielsen has called out that the June quarter has been slower than March. And even within the June quarter, as the months progressed, the slowdown has sort of intensified. So do you see, within June quarter, the same kind of trend in your sales as well?

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Sanjiv Mehta, Hindustan Unilever Limited - Chairman, CEO & MD [24]

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So Percy, I think overall in products, we haven't seen any kind of a software deceleration in June month, if that's your question. Has been an overall moderation versus prior quarters? Yes. We have not seen anything specific only from a June month.

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Percy Panthaki, IIFL Research - VP [25]

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Okay. So -- I mean in your best estimate, do you think that the underlying demand, as you have seen in the June quarter, is what it stabilizes at? Or do you think there could be a further slowdown going ahead?

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Srinivas Phatak, Hindustan Unilever Limited - Executive Director of Finance & IT, CFO & Executive Director [26]

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[Just past one], Percy. Because there has been a moderation in June quarter versus March. We have not seen any trend emerging to, say, June monthly sharper and lower, but that's something we'll have to wait and watch. Yes. Let's really take it from there. I just said I don't see any reason to get too worried about where the market is headed. But equally, we also have to wait and watch because there are no near-term triggers for an immediate turnaround.

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Percy Panthaki, IIFL Research - VP [27]

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Okay. Secondly, on pricing. This quarter, the difference between your volume and price was about 2 percentage points, and you mentioned that after that, there has been some price cuts in soaps. So at a portfolio level, is there something that will offset this price cut in soaps? Or do we see the aggregate company level pricing further sort of come down versus what we have seen this quarter?

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Srinivas Phatak, Hindustan Unilever Limited - Executive Director of Finance & IT, CFO & Executive Director [28]

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So look, part of the price that is also linked to commodity outlook. At the extent of that is value. It's only right and the best way to actually be competitive and pass it on to the consumers. It's a way for us to look at it and say, look, when you do this, are you creating the right value for consumers? And therefore, is it going to start giving new volumes. Because after a point in time, there's no point really chasing just the price. You need to chase the aggregate turnover. Having said that, in categories such as Home Care and in some of our other segments of BPC, there are pricing opportunities, and there is a need. We are looking at all those levers. You know that very well. We don't give any guidance to it. But I think again, a very nice descriptor of how we are looking at managing the business.

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Percy Panthaki, IIFL Research - VP [29]

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Sure. Understood. And in soaps, I was just a little confused as to the reason for the price cut because you also mentioned that in conjunction with the budget, and I recall in budget actually, the customs duty and palm oil actually went up. So a little bit confused on that point.

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Sanjiv Mehta, Hindustan Unilever Limited - Chairman, CEO & MD [30]

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So good catch, Percy. I think that's a valid point. When you look at overall commodity, look at, let's say we compare it to compare [balm] about half a year ago and a year ago to where it is now, you have seen balm almost come off about 15% to 20% depending on where the starting point of competition is. There are multiple ways to deploy what has happened. Some of the money went into pricing. Some of the money went into step up in terms of advertising expenses. There was a certain way we deployed that. There's a certain way in which the rest of the markets -- [are they in competition] has deployed that. And where we are very certain is that we are making certain decisive interventions, whether it is on products, whether it's on proposition, whether it's on price. So when we have looked at all of those levers, we have taken a view of what is the outlook for the commodity. We have taken the potential on cost, which is coming from what has happened to the budget. Factoring all of those into account, we are still in a position to actually take down the pricing, give the right value equation to the consumer and drive growth in to this. That's exactly what we are doing from July numbers. You have seen -- just to amplify, we have made some product interventions on Lifebuoy at the beginning of the year. There will be some more changes that you will see from Lux and Lifebuoy in the next few weeks and months, and we will be in a position to talk about it once they come into the market.

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Percy Panthaki, IIFL Research - VP [31]

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Understood. And in the popular soaps where basically you are saying that you have not performed well. I just wanted to understand is it that the overall popular soap segments has been slow? Or is it that within that popular soap segments, you have lost market share?

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Srinivas Phatak, Hindustan Unilever Limited - Executive Director of Finance & IT, CFO & Executive Director [32]

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So overall popular segment has been slow. You would have seen that other tech people who published results even in the previous quarter and you also heard us talk about it. But definitely from a segment point of view, there is slowdown. But having said that, we have also talked for a couple of quarters in terms of making some structural changes and decisive actions on our part of the portfolio, which is what we have talked about. So it's a combination of both. I think there's an overall demand moderation slowdown there. And there are certain things that we have to address, which we are addressing.

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Percy Panthaki, IIFL Research - VP [33]

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All right. So last question is on the margins this quarter. We have seen a very handsome 150 bps kind of EBITDA margin expansion, which is higher than what we have seen in the last couple of quarters. So I just want to understand how you look at it. Is the margin expansion higher this quarter because that was necessary to deliver a certain level of profit growth that you thought was decent? And in the absence of sales growth, that kind of margin expansion was necessary. I mean how do I look at the margin expansion? Do you target an absolute profit? (inaudible) are you targeting a margin expansion in your plans?

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Srinivas Phatak, Hindustan Unilever Limited - Executive Director of Finance & IT, CFO & Executive Director [34]

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First I think, Percy, you'll have to see which is 7% top line growth with a 5% UVG. I would only go on to describe that as healthy top line growth. So first, I -- and not absence of growth. So that's point number one. Point number two is -- actually, I think when I was talking about the margin drivers from a Home Care point of view and our margin drivers from Beauty & Personal Care, I'll give you an explanation in terms of how those margins have come through. And we have also talked to you a lot about how do we look at the savings plan, how that's coming. We also explained many a time that, look, we've continued to run the business for a medium-term, which means that we do not manage this for a quarter. Look, for example, I told you in Home Care because of my phasing of activities, apart from everything else, I think we have to spend the amount. That doesn't mean that in September quarter, it requires we will increase it, we will double it, and we will do the right thing for the business. I think all of you have all known each other for a fairly long period of time to know that we don't offer it with certain numbers to deliver those numbers. We do what is fundamentally right for our business.

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Operator [35]

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The next question is from the line of Vivek Maheshwari from CLSA.

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Vivek Maheshwari, CLSA Limited, Research Division - Research Analyst [36]

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My first question is -- you have given Ind AS 116 at an overall P&L level, but is it possible to get either like-for-like margins for like-for-like EBIT growth for the top 3 segments?

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Srinivas Phatak, Hindustan Unilever Limited - Executive Director of Finance & IT, CFO & Executive Director [37]

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So I think we have not split that up. And to be honest, it's not going to be materially different between Home Care and BPC. It will be similar. That would be a good summary. And if there is something...

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Suman Hegde, Hindustan Unilever Limited - Group Controller [38]

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So I think -- so Vivek, I think at an EBIT level, as we explained, the major movement has happened in the (inaudible) lines for the EBITDA, but in EBIT level, it's very marginal. It will require the numbers that we have shown, and that amount was from 10 to 15 bps movement at an EBIT level. So we are not making (inaudible) from a category, segment-wise, the number breakout.

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Srinivas Phatak, Hindustan Unilever Limited - Executive Director of Finance & IT, CFO & Executive Director [39]

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If you want to count it out, yes, you will see a bit of a bigger impact in BPC and Home Care and very less in Food & Refreshments.

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Vivek Maheshwari, CLSA Limited, Research Division - Research Analyst [40]

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Okay. Got it. And the second thing is, again, this question has been asked on the demand bit, but my specific question is about the liquidity issues. So let's say that for you, are you seeing, let's say, your wholesale -- I mean, the wholesale of who buy from your distributors, are you seeing demands under stress? Because this liquidity issues is something we are hearing recently, so what has triggered this? Is it the NBFC crisis? Or is that -- is it something more -- something which can, let's say, continue for a slightly longer period of time?

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Srinivas Phatak, Hindustan Unilever Limited - Executive Director of Finance & IT, CFO & Executive Director [41]

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So Vivek, this has been -- so yes we have (inaudible) therefore some of the distributors seeing liquidity. Yes, they are. And we also started to see some more of the unorganized players struggle because of similar issues. And yes, they are. It's a combination. And today, it's not something which has happened overnight. If you see progressively what has happened to the whole monetary system and the NBFC crisis. Overall liquidity has been [impacted]. At one point in time, NBFCs were compensating. Then we have series of events, which has also meant that the quantum of liquidity available has started to dry up and everybody is a bit weary about credit risk today. And actually, recovery of their money rather than the interest of (inaudible). Obviously, some of the measures, which are now -- the government has started to take should start to ease. But we will have to see how fast and how quickly will the transmission come through. But in an aggregate, is there pressure in the distribution chain from liquidity? I think the answer will be yes.

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Vivek Maheshwari, CLSA Limited, Research Division - Research Analyst [42]

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Okay. And one last bit on the margin expansion. So at the time of analyst meeting, there was a -- whether you have had specifically mentioned that the margin expansion probably will be more moderate from here. And I know this question was just asked, but let's say 150 basis points this quarter. I mean, that's definitely not moderate. So FY '20, when we look at -- what is moderate in your -- as per you? And what will be the definition of moderate for you?

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Srinivas Phatak, Hindustan Unilever Limited - Executive Director of Finance & IT, CFO & Executive Director [43]

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So yes. 150 definitely is not moderate. That I can say. That's (inaudible) rate. But I haven't really started defining what is moderate, but 150 definitely is not moderate, yes? So to be fair, look, the focus has always been in how do you continue to drive competitive growth, yes? But having said that, you're also not going to start wasting money in this market trying to pursue growth. And that, I think, one should never do. For example, we have seen that some people have stepped up competitive intensity through promotions (inaudible). To us again, fundamentally that is not a value-enhancing proposition because all that it does is that it varies your demand cycle, but it doesn't do much to your consumer [uptake]. So in some of this, we will continue to invest. For example, Sanjiv has said watch for some action, which is going to come into the future, not getting into what that actually is because Sanjiv hasn't shared and neither will I. When we do something like that, we will continue to invest behind this price. If we have opportunities, we will not shy away from investing for that. If it's market development, we will continue to do. So we will have to take it as it comes along. But definitely, to be very clear, 150 is not a moderate -- modest expansion.

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Vivek Maheshwari, CLSA Limited, Research Division - Research Analyst [44]

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All right. And last question if I may, which is on the popular Personal Wash, which you have elaborated already. But that comment, opening comment actually that you have had, that gives some bit of a sense that perhaps there was a miss on your part in this category. Although you have said again the market shares have not more than the category itself has slowed down. But when you say product intervention or what you have already done in Lifebuoy, it's just about to hit the market. Lux, we will see. The impression is that something perhaps was amiss on your part. Is my reading correct or there is something more to it?

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Srinivas Phatak, Hindustan Unilever Limited - Executive Director of Finance & IT, CFO & Executive Director [45]

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So there is nothing new that we have been talking about. So if you go back to our previous quarters, if you go back to a quarter earlier to that, we have been talking quite a bit about personnel wash not delivering, and let's be specific, not Personal Wash, Lux and Lifebuoy within that, not delivering to our expectations. So to that extent, clearly there are a series of activities and actions we had to take, which we have taken. In fact, however, if you also look at the market concept and what is happening, they are also in a sharp slowdown in the category growth. So where we are really calling out is both. There is a category slowdown, which is real. There are series of actions which we have been wanting to take for some time. We have not taken them, yes? That's the best way to explain what's really happening.

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Vivek Maheshwari, CLSA Limited, Research Division - Research Analyst [46]

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Sure. And a follow-up to that. Lifebuoy, Lux, no market share loss?

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Srinivas Phatak, Hindustan Unilever Limited - Executive Director of Finance & IT, CFO & Executive Director [47]

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You know I don't specifically comment on market share. You're well aware of it. Nice try, but I'm not commenting on that.

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Operator [48]

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The next question is from the line of Aditya Soman from Goldman Sachs.

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Aditya Soman, Goldman Sachs Group Inc., Research Division - Equity Analyst [49]

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My first question, you mentioned that modern trade is seeing increased competitive activity. And you mentioned in passing that this was largely promotions, so is this largely from private label players that are other FMCG players and any categories that you'll want to highlight where you're seeing this competition?

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Sanjiv Mehta, Hindustan Unilever Limited - Chairman, CEO & MD [50]

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So look, mostly it's a combination of both. Clearly, you have seen some of the established guys do that. You also see some of the private labels, and part [advertising that we do have been] understandable, so there has been some moderation to grow. Modern trade is also a channel which is urban, which is a bit more affluent. And actually, it's not unreasonable to expect people to try and capture that. So it's a bit of combination of both which is actually happening.

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Aditya Soman, Goldman Sachs Group Inc., Research Division - Equity Analyst [51]

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Fair enough. And this modern day channel is still growing significantly faster than, I'm assuming, than a gentle take for you.

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Sanjiv Mehta, Hindustan Unilever Limited - Chairman, CEO & MD [52]

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So yes. Overall, there's been a moderation. I think it's important to understand that. Overall, there's been a moderation in urban and there's been a moderation in rural. But in the context of where we are, modern trade continues to grow faster than on the [other side].

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Aditya Soman, Goldman Sachs Group Inc., Research Division - Equity Analyst [53]

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And what would be the share here now as a contribution from modern trade?

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Srinivas Phatak, Hindustan Unilever Limited - Executive Director of Finance & IT, CFO & Executive Director [54]

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I think we have indicated something around the 15% to 17% range. Quarter-on-quarter, it will vary a little bit here, but that's where it will be.

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Aditya Soman, Goldman Sachs Group Inc., Research Division - Equity Analyst [55]

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I understand. And my second question's on the timing of the GSK deal. Any update on that?

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Srinivas Phatak, Hindustan Unilever Limited - Executive Director of Finance & IT, CFO & Executive Director [56]

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So we had our shareholders and creditors meeting last month. We've got their approval, so I'm being thankful to our (inaudible) shareholders for the approvals that they have given. No we are back with the NCFB, we have a hearing scheduled for 1st week of September of where they will be. We hope to present to them and they should pass orders. If all goes well and on plan, at least from our side, then [we believe] there are actions happening from GSK. They brought their shareholder's approval, but their NCFB is still not finalized. We are hopeful that some of them will fall into place in the next few weeks. And if all goes well, we should say we are hopeful to get the proposed merger done within the calendar year.

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Aditya Soman, Goldman Sachs Group Inc., Research Division - Equity Analyst [57]

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I understand. That's very clear. And if GSK were to sell this, is there any chance that HUL will consider buying back the stock? Or that -- you don't think that's a possibility at this point?

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Srinivas Phatak, Hindustan Unilever Limited - Executive Director of Finance & IT, CFO & Executive Director [58]

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Again, I can't comment on that. I think it would be a hypothetical at this stage.

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Operator [59]

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Our next question is from the line of Amit Sachdeva from HSBC.

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Amit Sachdeva, HSBC, Research Division - Analyst, Consumer and Retail [60]

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So my question is basically on the aspect which is already discussed from one, but I think, do you -- and this is just a scenario, whether years of market development by you is thwarted by a look-alike private label across category at a much lower price? And then you need to fight back with a low price gorilla brand of yours or [engage your one main] brand which probably you won't do because you play the price pyramid. But do you see the structure of the consumer value proposition is somewhat changing with this quest of value-seeking consumer and value retailing with modern trade? And are you sort of worried about this brand which is probably operating across categories? And how are you preparing for this?

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Sanjiv Mehta, Hindustan Unilever Limited - Chairman, CEO & MD [61]

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You know, in simple terms, my friend, you're asking a question is the era of brands over? The answer is no. What you're saying is not something which is playing out today. This has been playing out over several years in the country. There are, across the country, there are several recent brands that might be the lower brands, that might retailer competitive. They play on the price points. At the end of the day, a brand stands for trust, a brand stands for consistency. And when you build a great brand, and especially purpose-driven brands like we have been focusing on, it is not just the functional benefits, but it is the product truth plus the purpose. That's what we have been building on. So we remain very confident that the era of brands will only get further and better once you embark on the pathway to making it distinctive from a purpose perspective as well.

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Amit Sachdeva, HSBC, Research Division - Analyst, Consumer and Retail [62]

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Sure. As I understand from your answer, Sanjiv, is that you are particularly not worried about it. And you know how to handle it.

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Sanjiv Mehta, Hindustan Unilever Limited - Chairman, CEO & MD [63]

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(inaudible) would be cautious. We always remain paranoid, but we are very confident about our brand path.

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Amit Sachdeva, HSBC, Research Division - Analyst, Consumer and Retail [64]

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Understood. That's very helpful. And second question, quickly if I may, is just to understand the slowdown a bit better. It seems that obviously, soaps is giving you [bothers] and oral has been weak on the Pepsodent side. Can you give us a bit of data for growth of nonpersonal wash portfolio within the personal care space and overall growth of the oral side just as an indicator? If you can share.

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Srinivas Phatak, Hindustan Unilever Limited - Executive Director of Finance & IT, CFO & Executive Director [65]

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So we don't split that at a BPC level. So we have never done that, and in this case we are not going to do that. But I think it is suffice to say that (inaudible) products has done well and (inaudible).

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Amit Sachdeva, HSBC, Research Division - Analyst, Consumer and Retail [66]

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But don't you then think, Srini, this is probably not a slowdown issue? It's more like a structural issue when input prices are sort of soft and there's a price competition, especially in the value category like this which tends to escalate?

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Srinivas Phatak, Hindustan Unilever Limited - Executive Director of Finance & IT, CFO & Executive Director [67]

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Don't mind if I keep interrupting. If you step back (inaudible), when we talk about growth moderation, that is not a comment only from a BPC perspective, yes. When I talked about a moderation of growth, it was at an aggregate HUL point of view, if you were to compare to where we were in the March quarter, where we were at 9%. If you were to look at the 3 or 4 quarters earlier, where we were growing in double digits, from that point of view, if you were to come back to the 7%, it's a [close moderation]. Similarly, if you look at Nielsen and if you were to look at the aggregate market growth, you would see that, and for whatever it's worth, we never comment on specific numbers of Nielsen, but Nielsen is also reporting a (inaudible) for 300 basis points for market growth slowing down sequentially in the last quarter until now, yes. And on Personal Wash, I think to an earlier question, I clearly explained to you what is happening to the market. And I've also (inaudible) clearly what are some of our (inaudible) really to do to fix parts of our business, brand and portfolio and make a distinction here.

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Operator [68]

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The next question is from the line of Harit Kapoor from Investec.

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Harit Kapoor, Investec Bank plc, Research Division - Analyst [69]

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Just 2 questions. Firstly, on the raw material and the personal product portfolio, so the margins in this quarter in personal products, would they reflect the full impact of the lower cost of raw material for soaps?

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Srinivas Phatak, Hindustan Unilever Limited - Executive Director of Finance & IT, CFO & Executive Director [70]

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So Harit, (inaudible) I said look, some parts, if I'm talking about the July interventions, which I talked about correction in the range of 4% to 6%. That's an intervention done in July. It's not going to be in the quarter.

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Aditya Joshi, Religare Capital Markets Limited, Research Division - Research Analyst [71]

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No, I was just trying to understand whether the raw material, which was lower for soaps, would the higher gross margin now would have fully reflected in Q1 the impact of a lower raw material? The context of the question is could you see a slightly lower segmental margin going forward as you start to pass on these benefits. That's the question.

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Srinivas Phatak, Hindustan Unilever Limited - Executive Director of Finance & IT, CFO & Executive Director [72]

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So as I said, I think, look, it's the default of function of outlook of [basic] commodity. Commodity continues to be benign. Because I don't give guidance, I don't get into specifics. Good to say that, and that means I'm not seeing any inflation potentially from the inflation. That is a benefit that you will get, and you need to pass it on.

And second is we also need to (inaudible). You know there are multiple levers. In this case, we are actually investing behind the product. We are actually investing behind the brand. So simply put, to that extent, am I happy to take some lower margins in my Personal Wash? The answer is yes. It's still healthy. But then, when I look at it as a portfolio, and Sanjiv talks to you about how we play the portfolio and how play the overall category, I think we still have enough ammunition to continue to invest behind it and do the right things at that and a BPC level.

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Harit Kapoor, Investec Bank plc, Research Division - Analyst [73]

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That's very clear. So very clear. The second question was on the overall market. So in any of phase of moderation of growth, you do see an element of down trading. Just wanted to understand from your sense how you've seen that this quarter. Is there been a consumer down trading either into the smaller side SKUs or even at a brand level? So just wanted your overall sense of that, even from a market perspective.

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Srinivas Phatak, Hindustan Unilever Limited - Executive Director of Finance & IT, CFO & Executive Director [74]

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So early days, we haven't seen. Maybe we'll continue to monitor it. At this stage, we haven't seen anything to specifically call out, yes. To be honest, we haven't seen it. But it's important for us to keep a close eye on that. For the quarter and in June, we haven't seen it.

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Suman Hegde, Hindustan Unilever Limited - Group Controller [75]

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So if we don't have any more questions on the audio line, there are some questions on the web options. Some of these in some form have already been answered and hence, we will not proceed to answer to the same. Just going on to the web options questions now, the first question comes from Manish Ostwal from Nirmal Bang Securities. Just a feedback on the comment the company has given and the question being, "In your assessment, when will you see demand in the market again start to improve?" I think this has already been answered, Manish, earlier by Sanjiv and Srini.

Then the second question is outlook for operating margins and levers for improvement. Again, we don't give an outlook for margin going forward. And I think we have explained the lever for improvement as well in the earlier question.

The next question is from [Rakesh Roy] from Asset Team (inaudible) Investment [Intermediates Limited]. The question is, "Can you give us the rural and urban volume growth during the quarter?" We don't specifically call out breakup of the rural and urban volume growth, and we have indicated, for trend line perspective, the oral market has moderated and urban growths are in line. And more [granular], the rural growths are now in line with urban in the last 3-month cycle that we've been seeing.

The next question is from Shirish Pardeshi from Centrum Capital. "If I consider Nielsen commentary, have you seen sharp demand deposition than not specifically in Home and Personal Care?" is the first question. Srini, would you like to take that?

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Srinivas Phatak, Hindustan Unilever Limited - Executive Director of Finance & IT, CFO & Executive Director [76]

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So overall if you see from a (inaudible) point of view, I mean, we've had good growth in UP and we have in certain critical markets setup. So there is nothing to comment about any sharp demand deceleration in these markets. What we are seeing is a moderation across but nothing specifically to call out and I've given you an example with a couple of space.

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Suman Hegde, Hindustan Unilever Limited - Group Controller [77]

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Second one being, "How much is the non-sales contribution to overall sales?"

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Srinivas Phatak, Hindustan Unilever Limited - Executive Director of Finance & IT, CFO & Executive Director [78]

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(inaudible) we seriously don't give out (inaudible) details to granularity into the public domain.

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Suman Hegde, Hindustan Unilever Limited - Group Controller [79]

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I think sales contribution of modern trade has already been answered. E-commerce is about 2% to 3%. Any color on CSD, business, [they're asking] ?

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Srinivas Phatak, Hindustan Unilever Limited - Executive Director of Finance & IT, CFO & Executive Director [80]

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So I think that's an interesting question. And I think what we have now seen is that -- it's been a bit of an erratic demand pickup from CSD channel. That's because, as you are all aware, a lot of changes have happened to the model, and we still haven't come into a predictable pattern to it. But we do see some quarters or some months where there are orders. We again see some months where they don't order. And we said that from a June quarter, they have orders and we've had reasonable growth from the channel. But there's also (inaudible) for receivables threshold which is building up, while we had some pressure in the month of March with our collections in the month of April and May. And towards the later part of June, again we have started to see a bit of slowdown in monies coming through and debt has been realized. So suffice as to say a little bit erratic, but we continue to be (inaudible) to really satisfy the demand, consumer demand, and also keeping (inaudible).

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Suman Hegde, Hindustan Unilever Limited - Group Controller [81]

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The next question is from Anubhav Sahu from Investment and Research. "In case of Oral Care, are we seeing some incremental market share gain? And if so can you please elaborate where are we seeing better demand? Is it in the southern markets? Or is it more of a hinterland given the superior distribution reach which has helped during current macro slowdown?"

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Srinivas Phatak, Hindustan Unilever Limited - Executive Director of Finance & IT, CFO & Executive Director [82]

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I think roughly we have talked about the oral care business. Ayush is predominantly south. I think that's done well. Close Up is straight across various geographies. I think with the right price product portfolio architecture, communication and distribution, we have started to see good traction there. I think the proposition on Close Up is very clear. That's helping us. And possibly, as Sanjiv alluded to, I think we need to sharpen our proposition from Pepsodent, and that is actually work in progress.

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Suman Hegde, Hindustan Unilever Limited - Group Controller [83]

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The next one is from Arnab from Credit Suisse. "Has there been any impact of a slowdown in the rate of premiumization and in category?" I think, Arnab, it was taken earlier in the [down trading] question that Srini has answered.

Is there down trading any particular category, either in brands or [tax] sizes? I think this again has been responded to in the earlier questions.

Moving on, the next question is from Naveen Trivedi from HDFC Securities. "With growth moderating, how are you seeing [LUP] performance across categories." Srini?

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Srinivas Phatak, Hindustan Unilever Limited - Executive Director of Finance & IT, CFO & Executive Director [84]

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So there's no discernible trend that you can draw from, whether it's [LUPs], big tax fall or large (inaudible). There's been an overall moderation, and we have seen the different levels of certain different geographies and different parts of our portfolio. But at this stage, there's no dependable pattern that you could draw to them and talk about it in an [instant].

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Suman Hegde, Hindustan Unilever Limited - Group Controller [85]

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Thanks, Srini. I think one more question from Shirish Pardeshi from Centrum Capital. "How much is rural contribution in quarter 1?" Shirish, as rural contribution, it could differ, or course, quarter-on-quarter. Anywhere between 30% to 35% of our portfolio comes from rural.

Yes. I think there are no more questions on the web options for today evening. So that's all we have. With that, we now come to the end of the Q&A session.

Before we end, let me remind you that you can have the replay of the event. A transcript will be available on the Investor Relations website in a short while, and you can go back and refer to it. A copy of the results and the presentation is also going to be there on the website, and you can refer to that as well.

Thank you very much for your participation today evening and have a great day. Thank you.

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Sanjiv Mehta, Hindustan Unilever Limited - Chairman, CEO & MD [86]

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Thank you.

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Operator [87]

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Thank you very much. Ladies and gentlemen, on behalf of Hindustan Unilever Limited, that concludes this conference call for today.

Thank you for joining us, and you may now disconnect your lines.