Emami Limited

Mohan Goenka

VICE CHAIRMAN & WHOLE TIME DIRECTOR

Vivek Dhir

CEO, INTERNATIONAL BUSINESS

Vinod Rao

PRESIDENT, SALES

Gulraj Bhatia

PRESIDENT HEALTHCARE

Rajesh Sharma

PRESIDENT, FINANCE AND IR

INR807 crore

inflation, rural slowdown and liquidity pressure. In the given context, our overall net sales at INR807 crore grew by 4% and revenue at INR814 crore grew by 3% in the second quarter of the financial year.

4%

owdown and liquidity pressure. In the given context, our overall net sales at INR807 crore grew by 4% and revenue at INR814 crore grew by 3% in the second quarter of the financial year. to high O

INR814 crore

y pressure. In the given context, our overall net sales at INR807 crore grew by 4% and revenue at INR814 crore grew by 3% in the second quarter of the financial year. to high Our domestic business grew by

3%

ven context, our overall net sales at INR807 crore grew by 4% and revenue at INR814 crore grew by 3% in the second quarter of the financial year. to high Our domestic business grew by 1.2% during

1.2%

grew by 3% in the second quarter of the financial year. to high Our domestic business grew by 1.2% during the quarter with a volume degrowth of 1.2% which may appear optically muted. However, give

rs,

of 1.2% which may appear optically muted. However, given the various headwinds in the last 2-3 years, our domestic business grew by 8% on a 3-year CAGR basis. The corrections in pain management and hea

8%

muted. However, given the various headwinds in the last 2-3 years, our domestic business grew by 8% on a 3-year CAGR basis. The corrections in pain management and health care are broadly in line wi

3.5%

mpany, has become our subsidiary with effect from 1st July '22. During the quarter, it contributed 3.5% to our overall net sales. Our core domestic business grew by 5% and including international busin

5%

ing the quarter, it contributed 3.5% to our overall net sales. Our core domestic business grew by 5% and including international business, our Q2 growth is 8% over previous year, excluding the pain m

17%

new subsidiary, Helios Lifestyle. Coming to our brand-wise performance. BoroPlus range grew by 17%; Male Grooming range grew by 2% and 7 Oils in One grew by 1% during the quarter. Due to the muted

2%

e. Coming to our brand-wise performance. BoroPlus range grew by 17%; Male Grooming range grew by 2% and 7 Oils in One grew by 1% during the quarter. Due to the muted demand environment, Navratna ra

1%

performance. BoroPlus range grew by 17%; Male Grooming range grew by 2% and 7 Oils in One grew by 1% during the quarter. Due to the muted demand environment, Navratna range declined by 5% and Kesh Ki

“However, given the various headwinds in the last 2-3 years, our domestic business grew by 8% on a 3-year CAGR basis.”

“However, if you look at a 3-year CAGR, BoroPlus range grew by 5%; Kesh King range grew by 14%; 7 Oils in One grew by 18%; Pain Management range grew by 6%; Healthcare grew by 10%; and Navratna posted flat growth.”

“Hence, for the full year, we expect our EBITDA margins to be in the pre COVID levels, that is around 27% for our core business.”

“And including Helios, how much it will be?”

“And that's my question because this quarter, your Helios revenue will be around INR28 crore based on the 3.5% of consol.”

“And Mohanji, on input cost, is there any visibility that it has peaked out and now clearly, it is coming down, and adjusted for seasonality, the Q3 input cost will be lower than Q2?”

“Normally, there will be some seasonality for Kesh King, right?”

“And next year also, we can assume 10% kind of a tax rate only.”

“What are the things we can expect that got a benefit in this quarter and what else we can expect more in the international business going forward?”

“So we expect similar type of growth in those regions again.”

Vinod Rao

5

Percy Panthaki

4

Mohan Goenka

3

Moderator

3

Prakash Kapadia

2

Rajesh Sharma

2

Gulraj Bhatia

2

MODERATOR

1

Vivek Dhir

1

Shirish Pardeshi

1

Mohan Goenka

Ladies and gentlemen, good day, and welcome to Emami Limited 2Q FY'23 Earnings Conference Call hosted by IIFL Securities Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing “*” then “0” on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Percy Panthaki from IIFL Securities. Thank you, and over to you, sir. Hi. Good evening, everyone. This is Percy from IIFL. We are pleased to host the management of Emami Limited today. On the call with us are Mohan Goenka, Director; Rajesh Sharma, President, Finance and IR; Vivek Dhir, CEO, International Business; Vinod Rao, President, Sales; and Gulraj Bhatia, President Healthcare. Without further ado, I'll hand over the call to Mr. Mohan Goenka. Over to you, sir. Thank you, Percy.

Percy Panthaki

channels, GT, MT and e-comm. And both e-com and Modern Trade channels are comparable to general trade EBITDA levels. And last question on your Digital First launches. So you have used the word organic in two of your product. So for example, in 7 Oils in One, how is the price premium versus the base product? And similarly, when I see apple cider vinegar, even Dabur has done that. So two sub-questions here. So will you also follow largely Dabur's strategy of doing a lot of such products on the e-commerce which say Dabur has already done. And similarly, what's the price premium of Zandu apple cider vinegar organic versus say Dabur's apple cider. So yes, Abneesh, we have for a long time, we have decided to do a launch, a lot of digital-first brands particularly on our existing range and also on the Zandu D2C platform. That is very, very clear. Of course, the Digital First brand comes at a premium. So 7 Oils in One is almost at a premium of around almost 50%, 60% premium to our existing ran

Vinod Rao

long that the situation has become dire and if we don't do it, then the brands are getting affected. Percy, I would say that there is a definite decline in the input costs. The pressure is easing. We are very confident that the markets should improve today or tomorrow. In fact, let me also share that we are happy to see the numbers coming in the last 10, 15 days, post all the holiday season. So there is some buoyancy coming in, in the wholesale markets, particularly for the winter products and it is across the board. So this was in expected lines. If the trend continues for another 30, 40 days, then we are very, very optimistic that you would see some good numbers coming in for everyone. So see, we would have to increase our advertising because you are also right that for quite some time, the advertising was subdued. We are expecting the market to pick up. So this is an important raw material for all of us if you want to grow the market. And Mohanji, on input cost, is there any visibil

Percy Panthaki

So, this year, Q2, was it more or less in rupee million terms, the sale value for Q2? Was it the same as Q1 or it has dipped yet?

Prakash Kapadia

Navratna, despite the sales base not being too high, it has actually de-grown. So could you give us some sense what is happening in the Hindi-speaking belt in terms of demand scenario? Is customer addition an issue or repeat purchase an issue for Navratna? the Extra Thanda oil, which Prakash, honestly, this is not just for Navratna. It is across the oil portfolio. You would see there is some down trading. People are not using oils as much as they were using earlier. Also, unfortunately, Navratna, is showing some decline, particularly post COVID because if you remember, COVID, people were very averse of the cold, getting cold because of multiple reasons. So they had stopped using a lot of these products, which caught cold. So since then, we are seeing a little pressure on the Navratna portfolio, the base particularly on Navratna Oil is still growing, but Extra Thanda is pulling it down. But anyhow, I think now that the COVID is completely out of this thing, we are hopeful that in the ne

Rajesh Sharma

Yes, right. So this quarter, INR23.5 crore amortization is without Kesh King. This is primarily on account of Dermicool, Creme 21, et cetera. So this would continue for some time. And lastly, Rajesh, tax rates, we've seen some MAT credit being used in the first half because of which the tax rates are lower. So for '23 and '24, what kind of tax rate should we assume for the whole year? So we have started accounting for MAT credit since the March quarter last year. And this would happen, I think, for another 2, 3 years. So at least for this year, I think average tax rate should be below 10% kind of. And next year also, we can assume 10% kind of a tax rate only. Okay, until the time this MAT credit is not fully utilized. Okay, understood. And other OpEx is also up quite sharply. Is there any one-off, Rajesh, in the other OpEx, excluding the ad spend because it's up almost, I think, 44% on a year-on-year basis? This has also gone up because of the integration of Helios, which became subsid