Thank you very much. We will now begin the question -and-answer session. The first question is from the line of Abneesh Roy from Nuvama Institutional Equities.

I have two questions. My first question is on Minimalist acquisition. So, in Beauty business, you're under-indexed in premium versus rest of the Unilever's portfolio in India. So, wanted to understand, once Minimalist, the execution is done, the scale-up in the off-line is done and the synergy benefits, etcetera, are achieved, say, in the next 2 years, where does the numbers move in terms of under indexation? Do you achieve that goal? Second question also on Minimalist. So, these are part of the same question is, from a pricing architecture and product portfolio gap, what exactly Minimalist is addressing ex of the D2C play? I understood the D2C play. But from a pricing and product, is there any gap this acquisition is delivering? And a final question on Minimalist will be, why is it profitable from start? Because generally D2C companies first 4, 5 years, you have seen that huge losses are there. So, what is different here? Could the acquisition by a larger company lead to cost dynamics changing in this and the profitability initially, could it come under question once the acquisition is done?

Yes. Thanks, Abneesh, for the question. So overall, at the Capital Markets Day, we have spoken that we are under indexed on premium as far as Beauty & Wellbeing is concerned and there are many parts of the business, which are today over indexed on premium, but that is not the case of Beauty & Wellbeing. What we want to achieve over the next few years is 900 bps improvement of portfolio shift towards premium. With that, we will more than cover the gap that we have to a fair share for premium. Minimalist acquisition makes a big step in that direction. And we are very confident that with Minimalist with our extension of portfolio within Pond's and Lakmé, further scaling our brand, Simple, Love Beauty & Planet, entering into prestige space, scaling Novology that we launched a few months ago and many such actions put together, we will be able to drive the 900 bps portfolio shift towards premium and more than close that gap that we have to fair share within the premium segment of Beauty & Wellbeing. 17/40 Now when it comes to your question on where does this fit? So, Minimalist sits at a masstige price point, number one. Number two, it has a very strong play online and hence, in e -commerce across pure-play platforms apart from direct-to-consumer sales, it operates in derma / active-led space. If I look at overall Beauty & Wellbeing, the point we mentioned in our prepared remarks that half of the business of the overall category in the market sits with the consumer cohort of affluent and affluent plus. Within that, masstige is a pretty strong segment. And overall, with affluent and affluent plus cohort, the growth of that segment of market is twice than the overall average of the business. And derma active- led business is almost 2/3 of this masstige market segment, which is why this makes an absolutely fabulous strategic fit that we are able to now participate in masstige. 2/3 of that, as I mentioned, sits in dermal active s-led, which is exactly what Minimalist is all , about deeply rooted in product efficacy and consumer love. And with this, our play gets more stronger in e-commerce. Now when it comes to business, you rightly captured this is the prepared remarks that over 4 years' time, Minimalist have become a INR500 crores annual run rate business and has been profitable from year 1. It's a very tight and smart well-managed business model, the way the brand has been crafted meaningfully, the way business model is very efficient across all the lines of the P&L., the way marketing spends have been done. And more importantly, innovation rate - business has been innovating very well and there have been successful innovations, which kept getting added year-on-year. So, it has been a mindful innovation rate with more successful product and hence a very mindful P&L model, which has got deployed. Now going forward, what do we see from here? As I mentioned, there are multiple synergies of Abneesh, we end up having. Our global R&D capability and technology, we will be able to deploy to the brand. Supply chain capacity unlock, supply chain savings and synergies unlock will be able to bring to play. We will be able to leverage our off-line presence and our strong go-to-market structure to take the brands to more premium stores across the country, and we have spoken about in our Capital Markets Day, we have now a separate sales force called Beauty Pro, which basically caters to outlets, which are premium beauty outlets across the country. And we will take Minimalist brands off-line into those markets over a course of time. 18/40 And equally, we will leverage our global presence at Unilever to evaluate and explore international opportunities. So, all these four elements put together, we'll be able to create more value by working with team Minimalist and bringing capabilities of both the teams together and then create bigger brand compared to what it is today and make the business model more stronger, when compared to today. It's already strong, but we'll be able to make stronger. So those are the rational of profitability business model, Abneesh, going forward.

Sure. That's useful. My second and last question is on the 2 good categories in terms of volumes. One is dishwash and detergent. Here, if I see high -single digit volume growth, of course, industry should not be growing at that level given the urban slowdown. So where is the market share gain coming in these 2 specific segments? Is it from the larger national players? And here, the urban growth for you, is it decent? My sense is it should be decent. But if you could comment from where the market share gains are happening. And once this market share gain eases off when it comes in the base, etcetera, then if you could comment in terms of growth, how do you see these 2 specific categories?

Abneesh, it's Rohit, we are seeing growth on -- first of all, it's -- so Home Care has broad-based growth. As you rightly said, the growth is in fabric cleaning, fabric conditioners and dish wash. We also have volume -led growth in Hair Care. We also have volume -led growth in our non -winter skin. We also have volume-led growth in our future market makers, so in skin as well and premium personal wash and premium tea. So, the volume growth is not just narrowed specifically to one sort of category. Of course, it's a way more robust in Home Care, just to give you a context of the fact that we are winning competitively by volume because there are many categories that are growing ahead of the market. Now coming specifically to Home Care. We've been -- this is a category where the growth is driven by a great portfolio, especially a portfolio that's got a good presence in premium Surf Excel. And here is also the category where we entered the liquids market quite aggressively, both in fabric cleaning and in dishwash. We launched brands to serve all price segments like Rin and Sun. 19/40 So, we have many levers of growth, not just driven by the overall upgradation agenda of this category, but also driven by the fact that we're filling white spaces and premiumizing quite well. So, all levers of growth in Home Care are firing. So, I don't think this is a specific event of a quarter. It's just generally the strategy is delivering. So that's basically the underlying trend of Home Care business.

I can Probably just add to what Rohit mentioned, Abneesh. We have experienced -- Home Care typically is a very resilient category as an industry to economical realities. In times of inflation, in terms of deflation, being an essential commodity, essential product, consumers do use it. Even at peak of inflation during 2022, we drove positive volume growth from the category. Unless for example, if you look at tea or skin cleansing, they are very -- they are elastic to price increases and economical realities unlike Home Care. Home Care, to Rohit's point, we also have a portfolio, which is over indexed to premium. And hence, w e also have tailwinds, the way we have crafted the portfolio, which also gives us more amount of growth opportunities.

Just one added flavor to this. In fact, looking at the pack mix changes this quarter across categories for the market, not just for HUL, I was quite -- it's quite important to note that Home Care did not see that much of pack mix downsizing or titration that we've seen across other categories. And the more discretionary the category is, the more titration to small packs one is observing. So clearly, when you go from an essentials, which is the Home Care business, to more discretionary categories, the behavior of consumers to titrate to smaller packs seems to be increasing. Therefore, in that sense, I think the nature of -- the resilient nature of the category plus the stronger portfolio plus the fact that we have very large -scale access packs available in INR10 Surf Excel, for instance, and we'r e getting into liquid sachets as well, makes it somewhat more resilient to different cycles as compared to, say, Skin Care or tea or a nutrition to name a few.

Just one follow-up here, Rohit. In terms of skin cleansing and, say, fabric wash, a lot of things can be common and customers, especially when something he is putting on skin versus, say, on fabric, generally from a logic perspective, the brand loyalty should be higher. My question on skin cleansing is not on -- in 20/40 terms of this quarter. I understand price hikes were taken. So, the customer pushback is always there. But in terms of skin cleansing, do you need a much bigger play in terms of liquids because here we do understand that local players in skin cleansing in the last 10 years have reduced? So, it's not that competition has turned worse. But in detergent, clearly, your liquid play and your aggression clearly is leading to a lot of positive benefits. In skin cleansing, say, 2, 3 quarters down the line when the stability will come in terms of, say , pricing, what prevents high single-digit volume growth in skin cleansing?

So, skin cleansing, actually we are -- so we're getting increasingly confident of the fact that all our efforts that we spoke about 3 - 4 quarters back are beginning to fire. To start with, at the very top, our actions and our portfolio play in skin cleansing, the innovations liquids is working. We are gaining shares, growing quite handsomely. And what happened in Home Care liquids is als o going to happen in bathing market because it's happened in every other category. So, we are now leading the game in bathing body wash. We see our premium brands like Dove and Pears have very strong equities. Pears is a very solid brand, growing consistently even by volume in these circumstances. Dove is getting immense amount of innovatio n support from us. Excellent brand, I believe it could be way bigger than its current scale, and we're working on that too, including investment in marketing quality. Lux is basically the hero of our category. It's done quite well with Stratos and even the sandal variant that we launched is showing good promise. We see Lux as a master brand. It's gaining share. The job we have to do with skin cleansing now really is to address our hygiene segment, a play where the segment is declining, we are holding share in it, but it's so large for us that we need to make sure that our brand Lifebuoy goes back to growth and is vibrant, and we started shipping a relaunch pack as we speak. And we have ambitious plans to make Lifebuoy a fully -- full-service range with core and new benefit spaces and really make it very contemporary. So, Lifebuoy is -- and when that comes to play, I think we'll be back in rhythm. In so far as volumes are concerned, they are linked to price for sure because as prices have gone up, we've had to cut grammages in smaller pack sizes. So, all 21/40 of that impacts volume. So, some buy less prices go up because of high palm costs, there will be some impact to volume. But even in this quarter, for instance, like I said, except Lifebuoy, we’ve seen generally good robust stability and growth in the rest of the portfolio in Personal Wash.

The next question is from the line of Jay Doshi from Kotak.

Would you be able to call out what is your base case expectation from Minimalist over the next 2, 3 years, whatever targets, milestones you may have?

So, I will not share any specific numbers, Jay, but let me just give a little bit of articulation. As I mentioned that this business overall sits at masstige price point and the actives-led space, which is a very attractive space because 2/3 of the market of masstige sits in there. So definitely be high growth. And today, our own 6 big bets within Beauty & Wellbeing, grows at strong double digit. And when it comes to Minimalist, very sharp brand crafted and extremely successful. We do expect high growth from the business to come, especially when we start bringing synergies that I was talking about to Abneesh earlier, synergies of off-line expansion into GT, synergies of international expansion, equally bringing synergies on cost front to drive profitability be it supply chain, be it overall cost structure and leverage that will end up getting. So, we do expect that as we bring the business together and work as team HUL and team Minimalist over a couple of years, we'll start realizing the synergies to drive both top line and bottom-line growth. The market segment per se is very attracted to the point I mentioned earlier. The masstige today segment grows at twice the pace than overall B&W. So that also helps us to ensure that we're able to A. have the play and then we are able to grow it pretty well. So that's how I want you to see it.

Sure. And second is your segmental margins, both for Personal Care and Foods have expanded Y-o-Y notwithstanding 24%, 40% inflation, and what we are seeing in rest of -- in the peer group. So, could you please help us understand what's helping you maintain margins for these segments?

Yes. See, F&R margins are -- if I take the first 9 months of this financial year, it's a 19%. And for the quarter, number can go a little up and down depending 22/40 upon what plays out in the quarter. And we believe that margin range of 19% to 20% is pretty healthy for our Foods business. When it comes to Personal Care, again, if I quote a 9 months margin number is at 17.2%. Again, at a 17%, 18% margin band, I think, is a pretty healthy margin for the Personal Care business. So, we do believe that we have the right margin profile. And our job always is within the lines of the P&L, drive higher gross margin. But then that creates capacity for us in the P&L to invest behind the brand, be it advertising sales promotion or for that m atter, capabilities within lines of other expenses. So that's how we were to drive business model for Personal Care and F&R. And the totality of the margin outlook for Hindustan Unilever, the way we want to drive this improvement - mix led, and leverage led. So that's what is the overall margin model in terms of improvement for Hindustan Unilever. But when it comes to PC and F&R, I think we are pretty happy where the current healthy margin levels are and our priority for both Foods and Personal Care is to drive sustained growth.

The next question is from the line of Manoj Menon from ICICI Securities.

Thanks for higher disclosures this time. Just one clarification, team actually on the comment about absolute volumes outperforming the UVG aspect that you also called out, it's not a Home Care driven, it's actually non -home care. The context of this questi on is over the last, let's say, 4 quarters or maybe 3, definitely this fiscal, at least the perception was, let's say, macros or the bottom of the pyramid consumption should get better. Probably this is the first time in a while, it seems you're actually calling out a deceleration or a deterioration. Is that the right interpretation?

I think -- no, no. I think what is -- first of all, rural is stronger. So, in that sense, that's a big part of the population consumer base that is stronger and is getting better. So -- and that does consume largely small packs and lower -tier brands in terms of price points. Urban, yes, the real issue there is we see more recently, demand compression. And importantly, this quarter, we've seen titration from large packs to small packs, across categories, especially the more discretionary the category is, more titration there is, less so in Home Care. 23/40 We have actually grown in volumes because we don't -- as you know about UVG is what we normally report, and it's a combination of volume and mix. We have sustained grow th, growing consistently over 3 quarters by volume, well ahead of the market. We've gained competitive volume share at all time frames, and it's led by categories which have got high volume salience such as Home Care, Hair Care, to name a few. And therefore, I don't think that the takeout you had was in that sense, what we want to communicate. Yes, at this point of time, we have seen a higher negative mix effect than we perhaps seen in other quarters because, one, Home Care is growing , the others, for a mix of reasons, not growing as well this quarter. Second is the specific factor of the pack mix, which is quite unique to this quarter. So, we expect some of this to normalize as we go forward. But these are the reasons why what is otherwise, I think a good volume growth is currently getting diluted by a negative mix, bigger than we would have -- we have seen in the recent quarters. And that's really what's going on. And this is just a shift that I think we need to explain. But medium to long term, we think premiumizing is really -- is where the country -- the market is growing -- going and we are, therefore, making all attempts to drive our mix -- our premium mix higher. And even in this quarter, our contribution of 120 index and above segment is 100 basis points more than last year's same period. And the premium end of the market are growing faster than the mass and popular, although the band is narrowed. So, the general secular kind of premiumization is still inherently true for the country because that's what you would expect to continue given slow PCC. We just have to stay patient and do the right thing because that is the real deal is to actually have a portfolio that's future fit. And every quarter, the things get better, will be to our favor if we are competitive in the near term and future fit in the long term.

That's comprehensive. Quickly on the two questions here, a clarification. On the Stratos formulation, could you just help us understand, let's say, what part of your -- or what proportion of your portfolio ex of Dove and Pears, which I 24/40 presume can't be part of Stratos given the unique formulation it has got. And what part of India, you've already rolled it up?

Yes. So, Manoj, as Stratos exactly rightly called out that more relevant for Lifebuoy and Lux and as we've called in the past as well, we have rolled out Stratos formulation across both the brands, Lifebuoy and Lux, and across many WIMI geographies. Now overall rollout always depends upon the innovation pipeline as well as to what mix are we running in different parts of the country. But let me say that a large part of the country across WIMI clusters, across both the brands, we have moved to Stratos formulation. There are some pockets of brand geography combination because of the innovation footprint, we will make the move in next couple of quarters, but a good part of the country today has already experienced Stratos formulation across both the brands.

Understood. I do recall the commentary in the July exactly 6 months back about, let's say, thousands of tests you have done, etcetera. What I was only trying to understand and gain confidence was the fact that the product has actually gone into different p arts of India, different maybe seasons, etcetera. And -- can we conclude that maybe, let's say, 80% confidence that, let's say, the risk associated with the formulation change is very low today?

Yes. So, answer is yes, and I would not say 80%, Manoj, I'll say 100. We are very confident that Stratos formulation is the right thing to do. And now having been in the market for the last 6 to 9 months' time across multiple WIMI clusters and across both the bran ds. We only feel more confident with the feedback that we've got, that is the right thing to do. The point that Rohit mentioned earlier and also what we spoke as part of the prepared remarks, what we're now doing with Lifebuoy would not have been possible if at all, we've not made the first move with the product formulation change in the first place. So, we believe it's the right thing to do in terms of unlocking space in the overall formulation to do more innovation and then add more elements to the product portfolio in terms of overall product quality for us to do the right thing. So yes, we feel very confident.

Understood. And lastly, honestly, in my mind, actually the elephant in the room is actually Horlicks. It's been -- I understand that the macros are not necessarily 25/40 favorable for growth and that too for something which is, let's say, fairly discretionary within staples. So, I get that aspect. But only one top question, which in my mind is, let's say, what you are thinking about Horlicks medium term, let's say, the actions which you could do. For example, let's say, conceptually my understanding, I understand price elasticity matters, but I thought this is a category in which, let's say, the consum er say, okay let's put this way. So there's an adult consumption, there is a kids consumption, right? Now I thought the kids consumption part of it is fairly inelastic because it's sort of a product, which the, let's say, the mother would save elsewhere to buy. And we have seen a lot of pricing action. So, the only question is, do you really think that there is any -- I know that there's a premiumization aspect you're doing, but I'm talking about the Horlicks core. What are the interventions, let's say, you will not tell the details, but do you think that there is material changes you need to do to drive growth on your own?

Yes. We are -- so we have, as we've said before because this brand has seen a lot of focus from all of us, we have -- this category, we have seen its market share growing, including as of date. We have seen its penetration growing. In fact, amongst our UBS or unmissable brand superiority scores, it's amongst the -- these two brands, Horlicks and Boost amongst the best. These are iconic brands in South and East. And we have also seen the brand scores getting stronger. One place which has been a challenge is consumption, which is titrated down with, of course, some inflation coming in, in the recent past. At this point, what we're trying to now do is to improve the price pack architecture to incentivize large pack usage because by driving more large packs, we know that those houses use more of the category compared to the ones that use small packs. So, we are trying to incentivize consumers to buy more large packs. We're also working on how can we make the product and the core even more stickier by improving its taste, and we have various -- we're looking at various routes to make the core stronger, in the core product because I think that's -- everything else is basically green. 26/40 So that's the job we're doing at this point. And once we have something proven ready, we will share that with you. So, we are on it to make sure that we address every possible potential opportunity we can get to drive more consumption, including, of course, white spaces. But I guess the main thing is basically to get the core to basically grow in volumes. And there is, unfortunately, the compression that's coming on account of urban, discretionary dampener, which does impact our categories in HFD way more than it does, say, other categories.

The next question is from the line of Arnab Mitra from Goldman Sachs. Please go ahead.

Actually, my first question was again on the outlook. So there has definitely been a change in what you saw as an outlook 3 months back versus now, which was stable consumption to moderating consumption. I think you partly answered it in the previous quest ion, but is this change because you saw a worsening of trends towards the second half of December quarter, including the small pack down trading that you mentioned? And if that is the case, could it get worse before it improves at the market level? Or do we have to take out a message that the worst is behind, and things should improve from here given the cyclical factors?

Yes. So, Arnab, important question, we should spend some time on it. So, we had spoken in the previous quarter that the demand trends are stable. When we saw muted, we had a comment in the last quarter that we expect demand trends to be stable, which means it will be at a similar level as we saw in the previous quarter. And now having experienced one more quarter, we see of a similar view that the moderation that we have seen will be there in near term to continue. And as we unpack similar trends, Arnab, as we saw in the previous quarter as well that overall growth in urban has been moderating and the rural recovery, which has been gradual, it has been recovering gradually. Now we know that with a good kharif crop, a lot of balance sheets have got repaired in households and a good amount of improvement in reservoir levels, which has led to a better sowing, which we've seen for Rabi. And hence, we do hope and expect that India will end up seeing better Rabi outcome. And that 27/40 should be a good amount of news for rural consumption going forward as the crop gets harvested. We know that the pace of recovery typically 3 macro factors will end up determining, be it employment, be it real wage growth or for that matter of food inflation. And we are watching these 3 macro factors. But where these factors are today, we believe that the moderate overall subdued atmosphere for growth for FMCG industry will continue near term. Now rural - Rabi, in my mind, is one green shoot, which hopefully we'll have seen in the quarter. Small part, I just want to also just respond back to even some time back, the same question had come. We believe this is transitory in nature. If I look at even last 5 years, COVID, post-COVID, when I look at the peak of inflation in '22, we have seen this behavior where impacted disposable income of household typically leads to titrating volumes of purchase they end up doing. And we certainly then start seeing the behavior coming in, in terms of consumers. And which is what we saw. We did not see that behavior till the previous quarter, that was a new behavior that we saw in current quarter, December quarter. And when this behavior comes, it does remain for a couple of quarters. So, we do believe that this will be there for a quarter or 2 more. And -- but it is transitory in nature. I don't think so this is a long -term conversation and it should go away in a quarter or so. And hence, on that element of market growth, we are hopeful. Now pricing over in the market still is benign. There is inflation in skin cleansing, there is inflation in tea, but both these commodities at the end of December quarter and in January has come off. So, tea, for example, came 7% off compared to what we saw in September quarter. In fact, palm oil, crude palm oil, it went up to INR1,150, INR1,200, and it has come down to more line INR1,000 as we speak in early part of January. So, we do believe that overall commodity inflation for FMCG, it will support. It will support the recovery of consumption overall. So hence, we are hopeful that we should see better times, but the pace of recovery will get determined, basis what happens with employment, real wage growth and food inflation. 28/40

Thanks, Ritesh. That's very helpful. My last question is actually on Minimalist. So, it seems a very attractive space to be in an attractive brand that they have built. The concern is that sometimes in these very fast -growing small companies are acquired by really large companies like HUL, it could lead to a little bit of loss of direction, the founder would probably leave after some time. There are more systems and processes to follow, decision -making and slowdown. How do you guard against all of this, especially because this is a very dynamic, fast-growing business? And how do you think of the integration between HUL and Minimalist in this context?

Yes. So, what we have done -- Arnab, you're absolutely right. Integration and operational model framework extremely critical to get it right as part of any acquisition and equally applicable in case of Minimalist as well. We have put a lot of thinking behind it, and we've had a good amount of conversation with the founders, and we have a very clear playbook how we're going to operate the business. But we don't want to lose agility of the business. We don't want to lose speed of the business. But equally, we want to bring all leverage of scale , of technology to the business so that we get best of the both worlds, which is why our team Minimalist and team Hindustan Unilever will come together to ensure that we do best what is required for the brand. Synergies of off -line distribution, synergies of international expansion, synergies of supply chain, cost, procurement, capacity, all that once we add with a very tightly written integration and operating model framework, this should be a success going forward. So, we are very confident that we have put lot of thinking behind this element as well apart from all commercial elements of the deal as part of the conversation. So, we believe that we have the right model to go forward.

Also -- yes, go ahead.

And when I look at what we have done, Arnab, in Indulekha, these are 6x, 7x since we acquired. We have exactly done in the same space there as well. OZiva, which we have experienced now for the last 2 years, the business is more than 2x, 2.5x since we acqu ired the business, and we have exactly had same operating framework. 29/40 So now we have experience of 2 such brands, which have brought high-growth businesses operating in a fabulous agile manner. We acquired them and we integrated them beautifully in the business, and we have kept the mojo of these brands within the organization in terms of growth and pace. So, we feel confident that now it's the third time end up doing the same thing, and we feel very confident about it.

So, what I was saying was that we want to preserve the magic, the logic, the fundamentally robust business, the 2 great founders have built. They're very inspiring founders. They personally curated and crafted the brand. It's very sharp. They have consumer connect. They have agility. They have their own R&D, their own factory, etc. So, we have a -- we want to preserve that magic. At the same time, as Ritesh is saying, we want to leverage the reason why this -- their membership of family makes sense like access to offline or international, our leverage of our costs, the supply chain and so on and so forth. There's a lot of opportunity to do that. But in the next -- at least 2 years, we want them to operate like a speed boat. We will offer them whatever they need to become more successful. Of course, basics like safety, health and make sure that everything else is absolutely world standard will be another advantage they will get. But the idea is for them to fly with us, offering them the enabling ecosystem and also to learn from them at the same time as giving to them. So, we feel very excited. We'll be very, very mindful and intentional about building this kind of a model because we learned with OZiva as well that has operated sort of like a speed boat outside the mother system. That is kind of just done well. It pivoted f ast. It's leveraged up wherever they needed us. It's been rightly managed. There are HUL people there, but they operate in the start -up as if they were founders there, too. So, we will -- we've learned from that, and this is going to be the way we will build these speedboats. And eventually, when they get to a scale of pace where we can think of next phase of integration we will, but we'll be very, very mindful of this area.

Thank you. The next question is from the line of Vivek M from Jefferies. Please go ahead.

Two questions. My first question is the same on the demand trend. So, we met in November, I think, end of November, and you have had, let's say, a particular thought process on what you were seeing on the ground, and it looks like that December has moderated. So, what Arnab asked, I have the same question that I understand this is transitory, but do you think that it can get worse as we go forward before it starts to stabilize and then get better? Is there that risk as we head into, let's say, March and June quarter?

No. So, Vivek, as we have seen multiple parameters, of course, all of us read all economical parameters, but more importantly, as we see consumption trends up and close across the length and breadth of the country across channel, we don't believe there's a -- let me say, there's a material issue, which is going up. And hence, yes, there is a moderation in urban demand, there is a gradual recovery of rural. That trend is playing out as we have spoken consistently for the last couple of quarters. Small pack size, we mentioned is more transitory in nature. We've seen that happening, it self -corrects itself with things improving. But overall, I don't believe that we will have, let me say, more stress coming in, in terms of consumption trends go forw ard. From here onwards as a lot of, let me say, resources deployed to drive employment in the country to improve food inflation levels that you see in the amount of work which is happening. I already see, I'm saying the latest data, which comes out in terms of crop. And we're hoping the outcome, which comes out at the end of this season of vegetables will further support the food inflation in terms of being -- managing it at a lower level co mpared to where it is. So, when you look at all the signs plus repaired balance sheet flows, kharif and good sowing for Rabi, so hence, a better outcome once the crop is harvested. So, things should look better from here. It's just that in near term, where we are in short term, we believe that the current trend is what we believe subdued will continue. But I don't think so this will last for many quarters. And hopefully, we also start seeing them building on from where we are at this point in time. 31/40 Commodities overall for FMCG are also behaving. They are benign at an aggregate level. Yes, there is some inflation somewhere, some deflation somewhere. Sequentially, the peak of increase is also coming off. So, we believe that even commodity atmosphere within FMCG should also support the recovery of consumption growth going forward.

Yes. I just wanted to complement Ritesh's response from a lens of what does HUL do, right? And I think we cannot forecast the future with a high level of accuracy but what we can forecast is what we should be doing. So, what we are doing is we're, first of all, focused on excellence in our execution and a volume-led competitive outcome. That is the winning metric for all our teams that are we growing in every segment, every geography, every channel. And if we are not, then we address those every brand and we fix them and we move. And so, our overall rubric is are we growing competitively, largely volume led. And we are -- and our volumes are indeed well ahead of the market. Of course, they're diluted by a deeper negative mix this quarter. Number two, we want to go where the growth is because there is growth in the market, e.g. e -commerce, e.g. parts of rural, e.g. small packs, e.g. some categories like essentials like Home Care, Hair Care. So, we are going to basically go where the growth is and pivot our investments there. And number three, we have to be future fit. So, we have to build a portfolio that in good times is going to be in the right places. So Minimalist is an example of plugging a gap benefit, price and channel gap that gives us in the portfolio we can fully play with and as tailwinds come back and they will because that is the nature of the game and our PCC is so low, they have to, that we will be better positioned, stronger company at that point of time. And it could be a quarter or 2. It could be 3, we can't say for sure, but it's not - - we're not working on hypothesis that this is going to be forever. We think this is going to get better. We can't say specifically when.

Sure. I absolutely understand that. And yes, the trends are like quite difficult to predict. Rohit and Ritesh, in the context of what you have said and let's say, 30th November or somewhere there versus now, do you think there is also a risk to this negati ve mix what you have seen so what you mentioned in this quarter, premiumization continues? 32/40 But do you think that temporarily that -- because rural picks up, urban moderates and on top of that, if there is a small pack phenomena also because we haven't seen really, let's say, negative mix in your business for a long time, but do you see momentarily that is something that is also possible?

Yes. So let me just comprehensively talk about mix within Hindustan Unilever now. And so, as we spoke earlier that overall, Home Care growth ahead of rest of the business, number one. Number two, small pack growth, which is something -- is a trend breaker in the quarter, negated by the uplift, which we typically get because of premium growing ahead of the rest of the business. On a net basis, the mix has been negative for the quarter. If I look at mix going forward, I do believe and we do believe at this point in time that the impact of small pack negative mix should self-correct in a quarter or so, number one. Number two, our own drive to make portfolio more premium, that should continue building further mix possibility within our own performance going forward. Look at Beauty & Wellbeing. So, Beauty & Wellbeing for the first half of this financial year grew in mid-single digit. Current quarter, it grew at 1% impacted by delayed winter. If I take winter out, even in this quarter, Beauty & Wellbeing grew at mid-single digit. So, there are also those factors which are more here and now for this quarter. Going forward, they will not be present. So, we do believe that our overall trend of premium growing ahead of rest of the business and our own play of driving more premium going forward, that should help us to keep building mix. So hence, I would say this is more of a conversation which has got accentuated given the development of small pack in the current quarter, but we don't see concern going forward in terms of mix improvement.

Got it. And last, a small question on Minimalist, whatever purchase consideration that you have paid or beyond that also, when you have bought it, I'm guessing that there will be not just a brand that you are getting, the idea would also be your existing p ortfolio you learn from Minimalist, let's say, promoters, founders, management, etc. So, in your purchase consideration, is there a part of the consideration paid for the learning that you will have for your own beauty business also? 33/40

No. So, when we acquired this business, I quoted a number that on secondary buyouts that we have done pre- money at INR2,955 crores at 5.9 sales multiple. And this price, this is to acquire the brand as of now, we acquired 90.5% of that enterprise value, and we'll acquire the balance 9.5% in 2 years' time. And we do believe that once we have acquired this business, of course, this is all subject to getting closing done over the next 1 quarter with all the conditions. And once everything is done, what we want to do, Vivek, is to get synergies together of both the businesses. And we have a lot to offer, as I articulated earlier, Rohit also summarized them. So, the way we see going forward, we will end up bringing synergies on both sides to the table to make the brand bigger, to make the business model more stronger and more profitable compared to where it is and keep the pace of growth which the business has had. So that's what we want to do going forward. But the acquisition price that we paid is for acquiring the brand and the business.

No, sorry, that's what I understand, Ritesh. But I'm saying on the strength of, let's say, Minimalist brand, do you think your base portfolio also benefits quite a bit on when you discuss with QC, when you discuss with e -commerce platform?

That is absolutely right. Although we have not monetized that in our business case, but it is absolutely our intention to osmosis of learning how they are built. And we do have Love Beauty and Planet, Simple, Novology, these are almost digital-first brands as well and OZiva. So, there's definitely going to be a cross learning and synergy, but it's not something that we have currently captured as a value, but there is definitely the value that we're looking to get from this relationship.

Super, thank you and wishing you all the best.

Thank you. The next question is from the line of Percy Panthaki from IIFL Securities. Please go ahead.

Just wanted to understand, apart from the winter care portfolio impact, is there any other sort of a little bit of slowdown that you have seen in BPC? A few quarters ago, you had said that the premium part, which is approximately INR2,000 crores, that is g rowing at 20%. So, is that 20% growth rate maintained? 34/40 And secondly, the slowdown that we saw in the mass skin care over the last 2 quarters or so, has that remained at that same level? Or has it accelerated? So that's my first question.

So yes, the INR2,000-odd crores portfolio that we have, Percy, at the 6 big bets we've spoken about, the growth trajectory of that portion of the business continues to remain strong. And even this quarter, we have grown in good double digits that portfolio of INR2,000 crores, both in organized trade and, of course, a pretty good amount of growth in e-commerce as well. On mass skin cleansing, let me hand over to Rohit.

On mass skin care, that is an area we do feel that there's an improvement sequentially. There's work to be done. If you really ask me, that's the sort of primary area in skin care that we need to address and we have started doing that, as we mentioned in our Capital Markets Day. So, Glow & Lovely is a very big brand. As you know, it's got the highest unmissable brand superiority score we have. It's got a 60% - 70% rural penetration. And over the last few years, it's seen under rural stress, a category drop out leading to loss of penetration. In urban areas, consumers have also evolved, temperatures are high. So, considering all of this, we are already in the middle of a revamped brand. We have, at the very top end, already started entering serum , sunscreen and face cleansing, but they are a smaller part of the total game plan. We just recently launched actually Glass Bright, which addresses the urban consumers' need for light sensories and it's a premium proposition. It's got good technology, great -- it's a very premium formulation and product with a carton pack, etc., but at a very affordable price. So, Glow & Lovely, urban will, therefore, have a pretty much a contemporary brand for brightening available at a very good access price and in a rural, which is, of course, the large part of the Glow & Lovely business, we are in the middle of revamping and relaunching the core, and that will be in the market in the next few weeks. And you will see that, that is a reset of the product, the pack. It's a complete re- expression of the brand Glow & Lovely, which still builds on the essence of transformation of how you -- your confidence and your presence. And that will 35/40 be something in this space of beauty from within and brightening from within. And we'll just wait -- you have to wait for a little bit to watch that in the market, but that's coming soon as well. So, we are putting a whole lot of effort behind Glow & Lovely because it's so central to our core business and that's been an area of decline and concern over the last few years and quarters. And once that is addressed, I think the rest of the business as Ritesh mentioned, non-winter grew as well, mid- single digits, the 6 big bets grew double digits. And if winter had come on time, you would have also seen. So, I think generally, that's the main focus for us to address.

Got it. My second question is on the macro. So rural is doing decently well, urban is under pressure. What would require in the macro to change for the growth at an industry level to improve?

I think we -- while we can -- I mean, as you can speak to macroeconomic interventions, and we have a competent institutional -- the government is addressing all of this as are so many other people. So, I think I don't want to comment very broadly towards what macro....

Not what the government should do, but what are the macro indicators that you think need to improve? Is it food inflation, which is the main problem? Or is it real wage growth? What exactly is the problem, 1 or 2 macro indicators, which if they improve, you think your growth can improve?

That's all of the above. The 3 things that we believe as we do all the specialists we speak to is, of course, the real wage growth, food inflation and employment levels. And if those 3 improve and consumer confidence, then we see the urban consumption also click up. I think the stress started coming in more for food inflation. If you just correlate, I'm not giving you causality, then our food inflation comes down because winter has been good for crops. It's already coming down. And then I guess it will start impacting the urban markets positively. But like I said, I'm always as a person, not very -- I don't like giving macroeconomic views because it's not my area of competence. What I can speak to is what we are doing, which is even in this market circumstances, we're looking to go where the growth is, invest in growing our market share largely led by volume, which is more users and ensure that we don't take our eyes off the longer term and keep doing the right thing. So that's the mantra 36/40 that I will keep going back to because that's the only 3 things that we as a company can control.

Got it. One quick question in the end. I recently noticed in a shop in Bombay that for Lux, the old and the new formulation are both available in the same shop, and this is after 6 to 8 months of launch. So, what is the logic behind this kind of a strategy of sort of having both of the formulations available at the same shop? I'm sure it's been long enough for the pipeline to dry up by now.

So, I can't speak to the -- I mean I'm sure you would have seen what you will have seen in that one particular store. But generally speaking, there is an overlap because we don't totally dry the pipelines for this category, and we've done these transitions over many years, not -- I mean, many times. And Lux is growing market share with the new formulation, the new pack, the new advertising, Lux Sandal is in the market. So, at this point -- and the brand is getting -- becoming a master brand. So, all the signals and outcomes on Lux brand are strong. So, on the aggregate, based on all data points beyond just that one outlet, things are looking good, and we want to make Lux even stronger.

So, have you stopped producing the old formulation complete now?

Yes, of course. Yes, we have.

Got it. Okay, that's all for me. Thank you.

Thank you. We have the next question from the line of Latika Chopra from JP Morgan. Please go ahead.

I have a few questions. The first one is just trying to get flavor on…

Sorry to interrupt, Latika, but you are not clear.

Yes, is it better now?

Slightly better. Please go ahead.

Okay. My first question was if you could provide some flavor on the growth for modern trade channel during the quarter. Did it have any bearing on offtake of larger packs versus smaller pack? And on the second question was on Oral 37/40 Care, if you could give us some flavor on this mid-single-digit growth? Was it pricing led or it was a balanced volume and price led? Thank you.

Yes. So overall organized trade, if I just probably bucket and that's how we typically want to speak. Overall, organized trade, if I look at modern trade e - commerce put together, they have grown in double digit. Overall, if I look at the segment and growth like everything else put together, even that has slowed down compared to the previous quarter. So, we have grown at double digit. And we know that, Latika, whenever we grow in a channel double digit, especially modern trade and e-commerce as an organized trade, there's always a growth of the geography, but equally important is the channel shift where consumers have moved from other channels into buying into modern trade and e-commerce. But the secular trend of, let me say, consumption getting further built into organized trade, that has continued. And in terms of small pack, large pack, overall, the portfolio that we sell in organized trade is typically more premium compared to general trade. So, the conversation on large pack, small pack is more accentuated, I would say, in general trade, both rural and urban as compared to organized trade.

Understood. And any color on the Oral Care underlying volume...

Oral Care.

Oral Care grew mid -single digit, driven by pricing and driven by Closeup, which is the master brand that we have, which has been doing pretty good business for us.

All right. Thank you so much for the clarification.

Thank you. We have the next question from the line of Sheela Rathi from Morgan Stanley. Please go ahead.

My first question was with respect to the Beauty & Wellbeing margins. For last few quarters, we have been seeing a decelerating trend. So just wanted to understand -- and I understand that we are making investments here, but just wanted to understand where the margins should stabilize? 38/40

Yes. So, I think you self-answered the question and very clear that A - beauty margin enjoys a healthy margin compared to the total aggregate Hindustan Unilever. And this is an area we've called out consistently that we will invest, and we are investing in more innovations, more investments, more capabilities. And we know that as we end up growing the business ahead of the average of HUL, the mix benefit will come, and hence, it will self -pay in terms of P&L ROI. And so, we are okay for the margins to drop so far as the growth is above average growth of HUL. The phase that we are in now, we are doing the job of building portfolio and building the number 1 beauty portfolio in the country today. And the point I was mentioning earlier that 900 bps is the portfolio shift that we want to do in a few years' time towards premium and that's the job we're at. So, you will see more innovation intensity. You will see more launches as you already have seen this quarter. And also going forward in March quarter as well, it's a busy quarter for us in Beauty & Wellbeing. So, we do believe that we will take some amount of margin basically decline in Beauty & Wellbeing compared to the healthy levels of around 30% that we have today, but it will more than pay back in terms of its economical value within the P&L if the growth keeps happening above average growth of HUL.

Understood. My second question was on Minimalist. I think it's a very interesting acquisition, and it ticks the boxes on a lot of things. It's a sizable business, online business, even profitable business. My question here is, at the CMD, we had called out that we'll be making disproportionate investments in the Beauty & Wellbeing category? Is this going to be a continuous thing that is we will look for more synergistic investments going ahead? Or we'll wait for some more time for this particular business scales up and then we look for more opportunity?

Yes. See, there are 4 different routes that you want to take to build portfolio in B&W. Number one, we want to take our current large brands and expand them into more demand spaces. Exactly what we have done with Pond's and Lakme and took them to serums, t ook them to face cleansing, took them to sun care. As appropriate, we've expanded them into more demand spaces, the 6 big bets within B&W, as we call them. 39/40 Second route for us is to bring brands within stable of Unilever into India as relevant. Simple, Love Beauty and Planet are classic examples where we got global brands into India. So, there's a second way in which we are building portfolio within B&W. Third is launching our own brand, leveraging technology that we have globally as Unilever and bring new products in the marketplace to address demand space gaps that we have. So, the derma gap that we had is where we launched Novology as an intervention. So that's a third route for us to make portfolio shift. And the fourth route, which we had called out, we will do bolt-on acquisitions as we get the right target. And Minimalist is a classic example. At this point in time, it was OZiva sometime back, it was Indulekha sometime back. So as and when we come across a business, which we believe is a fabulous fit and we can A -, we can add value and we can create more synergies, we will go ahead with it. We are very selective about it. And hence, the pace at which we'll end up doing, it is not concentrated on one area within the 4 steps of, let me say, inorganic. We want to do all the 4 areas to build our portfolio.

Thank you. Ladies and gentlemen, I will now hand the conference over to Ms. Shilpa Kedia to take up questions from the web. Over to you, ma'am.

Okay. Thank you, D orwin. We do not have any new questions on the web. With that, we now come to the end of the Q&A session. Before we end, let me remind you that the playback of this event will be available on the investor website in a short while. Thank you, everyone, for your participation, and have a great day.

Thank you. On behalf of Hindustan Unilever Limited, that concludes this conference. Thank you all for joining us. You may now disconnect your lines. 40/40