Bajaj Consumer Care Ltd (NSE: BAJAJCORP) Q1 2026 Earnings Call dated Aug. 12, 2025
Corporate Participants:
Unidentified Speaker
Naveen Pandey — Managing Director
Analysts:
Unidentified Participant
Abneesh Roy — Analyst
Percy Panthaki — Analyst
Dhruv Patel — Analyst
Amit Agicha — Analyst
Deepak — Analyst
Ishant Lalwani — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to Bajaj Consumer Q1FY26 earnings conference call hosted by ICICI Securities Limited. As a reminder, all participant lines will be in the lesson 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 updater by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Manoj Menon. Thank you. And over to you sir.
Unidentified Participant
Hi everyone. Representing ISECH once again. It’s our absolute pleasure to host the management of Bajaj Consumer. Care for the results conference call. The company is represented today by Mr. Naveen Pandey. Managing Director, Mr. Dilip Kumar Malu, Chief Financial Officer, Head of Finance. Naveen has joined Bajaj Consumer recently from our side. Wishing him a great legacy creating tenor. Naveen, over to you for the opening remarks post which we open the floor for Q and A. Thank you.
Naveen Pandey — Managing Director
Thank you, Manoj. Thank you so much. Good morning everyone. I’m delighted to be here on my first earning call on behalf of BCCL and look forward to interacting with you on call today. Over the past few weeks I’ve had the opportunity to dive deep into our business. Meet the teams across country. Interact with consumers, customers and other stakeholders. And I feel very excited about the strength and love our brand has with the consumers and customers. I feel very excited about the opportunity which lies ahead of us here at Bajaj Consumer and what we can do with it.
To start with, let me take you through the company’s performance for the first quarter of the fiscal year 2026 before we open the floor for questions. The stand alone sales for the company stood at 244.5 crores registering a growth of 3.2% on a YoY basis. Whereas the consolidated sales stood at 259.5 crores with a galley growth of 7.4%. Excellent. Vishal Personal Care. The consolidated revenue grew by 3.7%. The gross margin for the quarter on a stand alone basis was at 56.6%. An improvement of 140 basis points year on year and 240 basis points sequentially. This was on back of improved product and SKU mix along with price increases in our oil portfolio which helped us deliver this improved grass margin.
EBITDA on a standalone basis grew by 11.6% to deliver 42.8 crores at a healthy margin of 17.5%. EBITDA margins on an improvement of 130 basis points y and y and 340 basis points sequentially. On the consolidated basis our EBITDA margin improved by 30 basis points year on year. However, on a like to like basis the improvement was 100 basis point. Standalone PAC stood at 39 crores with a margin of 16% and at a consolidated basis pack was 37.9 crores with a margin of 14.6%. During the quarter we saw some green shoots in general trade channel which came back to growth after the significant gap.
This performance was driven by urban segment and almond raw oil. The broad based growth in almond raw oil signals an improvement in demand sentiment for the brand in line with our commitment to improve direct reach and build a robust sales process. We continue with our work on the Rohan program. The states of UP and MP which were first to start off with Rohan are showing positive trend and hence we have extended the program across our core markets. So far we’ve already added more than 25,000 new outlets and continue to work on this agenda. Organized fate registered a strong double digit growth year on year in quarter one FY26.
The saliency of this channel now stands close to 29% with organized trade within organized trade. Modern trade and E commerce both grew in their 20s which was driven back to strong performances across chain and supported by customer activation. At a brand level our revenues were driven in the channel by Adho and CNO and at a sub channel level we saw quick commerce and beauty channel leading. The performance within this CSD and CPC channels saw muted performance on account for stock rationalization in the channel and this is by and large in line with the issues which are faced by multiple other corporates.
Our international business had a weak quarter with revenue declining 20% year on year which was linked to the external headwinds like tariff uncertainty and slowdown in rest of world markets. If you look within international business we had a story of two halves. First the businesses which have direct representation that is the countries where we have team on ram primarily Nepal and Bangladesh. Both of these countries showed resilient performance growing double digits. We continue to invest behind our brands in these markets and are expanding our offering and distribution to drive better on brand execution. The second set of markets were the distributor of the export markets which primarily comprise of MIA and rest of world.
These markets declined sharply led on back of a combination of issues of weak demand, tariff issues and distributor transition in a couple of GCC countries. Moving to brand level we’ve delivered a growth of 4% on ADHO and have arrested the volume decline on the brand after several quarters. What is very heartening for me to see is that the growth was broad based and came across package including the small packs and patches which have seen a revival after the gap. These packs are used by new trialists and price sensitive consumers and the revival here possibly signals a broader consumption revival on the plant.
We’ve been focusing our advertising on Adho for the past few months and an extensive TV campaign with an investment of over 3000 GRP as we got delivered. We believe that with this along with the increased focus on prime time and top rated shows, we have made a significant improvement in the impact of advertising advertising on this brand. We have also dedicated a significant portion of our campaign to digital channels and have reached over 4 crore consumers through the same. We’ve also used a mix of influencer marketing using a mix of macro and micro influencers to engage with the younger audience delivering engagement rates which are much ahead of the industry benchmark in Coconut Bazaar’s coconut oil continued its growth in Q1 FY26.
As we are aware this category has seen very steep inflation and resulted price increases. Despite the pricing action and the pruning of certain nonprofitable portfolio, we’ve been able to hold our ground and continue to gain market share in this segment on the input cost. LLP prices have been moving in a narrow range in the last two or three quarters. In the other key raw material prices, we are witnessing a 25% inflation in RMO and nearly doubling of prices in Kokora. While from where we are right now we expect the overall basket to remain range bound.
We are maintaining a tight watch on this and are responding to swift changes based on the market movements. As you would be aware, we have previously announced the acquisition of 49% stake in Vishal Personal Care in Q4.25. This was followed by the completion of the balance 51% acquisition in Quarter 1 FY26. With this VPCL has now become fully owned subsidy of bccl. This acquisition aligns well with our overall vision of the company to enhance our portfolio and market presence. For quarter one FY26 on like to like basis, BPL registered a top line of 15.5 crores with a nearly 10% growth on a yoy basis and we began the process of post merchant integration and have partnered with Leasing to help us design and integrate the operations.
Looking ahead, we continue to focus on reviving double digit growth for the business with a strong focus and support to our core brand Almond Broms. We will continue with the efforts being made on expansion and optimization of our distribution network through Project R1. We are committed to sustainable diversification and towards the same our focus on scaling up organized trade through relevant and expanded portfolio and building a stronger space in Natural state and south region through Banjara will continue with these initiatives and supported by calibrated pricing we will work towards delivering improvements for good operating margins in the year.
Thank you and back to you Manish.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchdown telephone. If you wish to remove yourself from the question queue, you may press star and two participants are requested to use hands. It’s while asking a question. Ladies and gentlemen, we’ll wait for a moment while the question queue assembles. The first question is from the line of Avnish Roy from Nuvama. Please go ahead.
Abneesh Roy
Yeah, thanks. I have three questions. My first question is on the rural commentary. You have mentioned that rural GT continues to remain sluggish. This is slightly different than what most of the FMC companies and even say other parts of consumption have highlighted that rural generally is going faster and urban and generally the trend is reasonably okay. So if you could explain that part. That is my first question.
Naveen Pandey
Thank you. Avnish. I think, let me just qualify. Rural is our internal issue. I don’t think so. I was referring to macros. I was referring to our own channel performance here. What we’ve done, as you are, you know, we’ve been following in RO1 as part of the project R1 we are making certain changes to direct distribution, which includes the direct distribution changes in urban and rural. And right now we are in a phase wherein we are executing the changes in the rural and hence there is a certain amount of disruption in our current business there.
We will basically be working and fixing this, which should happen in the next couple of quarters. So the rural sluggishness in our performance is our internal issue. I am not attributing it to any macros.
Abneesh Roy
My second question is on the overall priority for the company from a portfolio perspective. So ADHO has seen a 46% growth in the NP on YoY basis overall is almost flat. So does this point towards that? Now again you are back to more of the coal rather than say something like a coconut air oil. And second subset to this question is 20% plus growth in coconut oil. The pricing itself would have been far, far higher than this. So would you say that the growth has been lower than the market leader here?
Naveen Pandey
Yes, avanish. So let me start with coconut. Our growth would be lower than the market leader. We have taken certain corrections to ensure that whatever revenues we are delivering are profitable and sustainable revenues. Which means that we want the revenue to come with a certain margin profile and not at any cost. So yes, what you can sense is that our volume performance would be lower than the market leader. However, on a trend basis which are as we see, we are seeing market share gains hold. So obviously our primaries have been lower. But I think at an offtake level I still feel confident that the work which we’ve continued on coconut is going to sustain.
Coming to the adho part of the question. Yes. I think, you know, we’ve added back investment to Adho to get to a fair representation of adho. I believe that this brand has a lot of potential and we need to support it adequately to drive growth and consumption on this brand. While this brand is stable and old brand, the overall share of this brand in the industry still has a lot of headroom for it to grow. So with this we will be supporting adho and I think that’s the right inference.
Abneesh Roy
And last quick question. I mean you have worked in much larger companies than Bajaj consumer in the earlier role. Of course this role of MD is obviously much much larger role in a smaller company. I wanted to understand few things on that. What was the thought process and when you compare Bajaj consumer to say someone like Americo, pepsi, Asian paints, etc. Obviously those are much larger company. But still wanted to understand for a sales or a distribution or a sales automation etc perspective, given the smaller size of the company, what is left to be done? You can never match Asian Paint or Americo given the scale is very different.
But from a initial two weeks analysis, what is really needed in these three aspects? If you would clarify on that. Thanks
Naveen Pandey
so avnish. I think. Thank you for that question. I think every company has its own ethos and its own strength. What I feel very excited about being here at Bajaj is that our brand is very very strong. We are the premium most brand in the category. We have tremendous love and stickiness from the consumers and that is something which I find very exciting. What if I were to say one thing which I would try and get in is I think I would try and get in a bit more agility and I think that’s something which we can learn from a lot of organizations.
We are a small organization. I would like us to be nimble, I would like us to be more agile and we will work towards delivering that so that we can drive a more sustainable, profitable growth for the organization.
Abneesh Roy
Thanks all the rest of my.
Naveen Pandey
Thank you. Thank you. Avnish.
operator
Thank you. The next question is from the line of Parsee Pathanki from IFL Securities. Please go ahead.
Percy Panthaki
Hi sir. I just wanted to understand the gross margin movement. Sequentially the gross margin has gone up by nearly 250 to 300 basis points. What is really driving that?
Naveen Pandey
So as I said, there is a combination of mix, there’s a combination of selective pricing, you know, which is driving the gross margin expansion and also we’ve reduced certain trade investments and spends. So it’s a combination of these three things which is driving the gross margin improvement.
Percy Panthaki
So are all of these initiatives sort of recurring in nature? Do we see the gross margins at this level or higher or do you think that it can reverse back?
Naveen Pandey
Well, our full set of initiatives are not yet basically into base in quarter one. I think we will see to see. We will, we will. You know, we are yet to get some further benefits which should accrue to us in the balance of year.
Percy Panthaki
Understood sir. And second point is that over the last few years, if you see Bajaj Consumer has lost a bit of market share and has lost a lot of margin. This company used to be close to. A 30% EBITDA margin company and now it is close to about 13, 15% EBITDA margin. Maybe those 30% now numbers were not sustainable in the first place. But my question to you is, given that there is work to be done both in terms of market share as well as margins, how are you going to sort of look at the next one to two years? Do you think that bringing the margins back so that the portfolio is healthy enough to reinvest and grow, that’s the right first step? Or do you think you first need to push more on volume growth and then margins will be sort of coming a year or two down the line?
Naveen Pandey
I honestly believe life was that simple. Whenever we say this or that, usually the answer is both. Yes, you know, we will attempt to bring both margins up to respectable level which allow us for enough, you know, investment ability into the business to invest organically into our brands as well as give us scope for, you know, inorganic at a certain point of time. And yes, we will need to drive growth as well. So I guess the focus would be both. Time will tell how successful we will be implementing, but I think for us it’s not either or, but it’s about the balance growth.
So it has to be a balanced, sustainable, sustainable, profitable growth is the way we have internally coined it. We would want to grow profitability and we would want to grow revenues along with it and we wouldn’t really want to make a trade off call over the next few quarters on this agenda. I understand it’s tough, but that’s what we stand up for.
Percy Panthaki
Understood Sir. Since you have spent so many years in several FMCG companies, notably even in Marico which is also largely a hair oils company, looking at the portfolio of Bajaj consumer, looking at the size of the company, etc. What do you think over the medium term is appropriate EBITDA margin for a company like this?
Naveen Pandey
Firstly, I would want to abstain from giving guidance. But let me try and put it this way. As you exactly said, our peaks are possibly not sustainable, but where we’ve ended up over the last few quarters is also unsustainable. So I think we need to figure out a path in between and get there which is more going to be in line with some of the better managed and run FMCG companies in our sector. So right now we are below sectoral average at least I would want us to get to sectoral averages and then look at further improving from there.
But right now we are under the sectoral average and that’s something which honestly needs to be addressed first.
Percy Panthaki
Understood sir. And last question, if I might squeeze in on the top line. You have Adho which is large part of the business and you have the other sort of brands which are coming up and I know it is not again either or issue and you will concentrate on both. But what I wanted to understand from you is that where is the larger sort of deficiency in the organization right now? Is it that ADHO is sort of weakened over a period of time and you need to strengthen that or do you think that, I mean ADHO on its own can deliver only so much and it is doing what more or less it can.
Of course it can be improved but nothing major deficient and therefore you will focus more on diversification for growth.
Naveen Pandey
So firstly I think in the past few quarters has underperformed in the medium past and it’s also been along with the category sluggishness. But I think as you pointed out there has been a market share erosion. Which has happened over a period of time. So yes, we need to strengthen Adho to get back to the strong position Adho held. I really believe that the brand at the consumer end is strong and if we can get our act well, there is an upside available in adho. Having said that, yes, portfolio diversification is also an important bet for the organization. But what we need to do is we need to choose our battles well and we need to choose battles where we can sustainably create a second leg and a third leg to the organization other than tactical plays. So. So what you will see is that we will build on a portfolio diversification but it would be a thought through diversification and you will see us acting behind strengthening the core brand which is Adho for us.
Percy Panthaki
Got it sir. Thank you very much.
operator
Question is from the line of such. RIT Patil from iSight Fin Trade Private Limited.
Unidentified Participant
Good morning to the Bayas team. I have a question for Mr. Akash Gupta. Gupta online. Yeah. Yes sir. Hi, this is Sukhur Patti here. From a finance point of view as the business looks to scale beyond the core portfolio, how are you thinking about. Capital allocation across innovation, distribution and brand. Building and what integral guardrails or contingency framework do you have in place if certain growth initiatives under deliver on the. ROI or margin expectation? Yes, thank you.
Unidentified Speaker
Yeah. So on the I think Naveen has already given a little bit our view on the margin side that we are under the average of the industry. So we will first our objective is to keep it to the industry level that there and the existing brand has a lot of potential and we have address internally which we will follow. But definitely the major guardrail is on the EBITDA and the growth side we are targeting that the core brand should grow as well as the other brands. We will keep on investing and we have a target of investing in the innovation as well.
We have our innovation center where we are scaling and we are building products over there.
Unidentified Participant
Okay. So just to close the loop, Another. Question for Mr. Naveen Pandey is that. When you look at how your competitor. Is approaching for example product innovation, GTM or capital allocation, what is the one thing that Bajaj consumer is doing differently. That will that you think will matter. The most over the next 12 to 18. 18 months?
Naveen Pandey
Yeah, I don’t think so. I would get in I would like to get into comparison of strategy with the competition. But I guess I’ll talk about what we are trying to do which is different than what we’ve done. I the first I think which will stand out is we need to get Adho into the growth directly. We need to focus on gaining share on Adho and getting Adho back. We have to look at our overall margin profiles and that means basically making the investment in the portfolio in a manner which is sustainable over a long term period.
So I guess these are the two things that you will expect which would be slightly different from what we’ve done over the past few quarters. But I would really like to refrain from comparing ourselves to competition. Okay, great.
Unidentified Participant
Thank you very much for the guidance.
Naveen Pandey
Thank you.
operator
Thank you. Next question is from the line of. Dhruv from Ford Capital. Please go ahead.
Dhruv Patel
Hi. My question is mainly on subsidiary that we have brought into the standalone business. Can you just. You went over the revenue numbers that I kind of missed the growth number and how much would be your estimate of the overtime margin for the company and in the same line what would be the pattern?
Naveen Pandey
So what I can give you is that for Vishal personal care quarter one was 15.5 crores of net revenue. This was close to a 10% growth. Like to like on there last year quarter one EBITDA before one offs. There have been some one off expenses in the company on account of long term incentive payoff. But if I were to take that out, which is what my understanding they were wanting to do, it would be low teens margin.
Dhruv Patel
And pack margin would be on the same line.
Naveen Pandey
Yeah, you know the company is, you know the company does not have any debt. It’s free of debt is not very big a line you would have seen. So yes, the standard flow through will happen, you know if you were to take off runoffs.
Dhruv Patel
Okay, great. My second question is on the. Is on the distribution strategy that you guys had which was I believe 1775 or 75,000 outlets added from Banjara’s distribution and all of the north Indian distribution channels that you have maintained from the ADH1 coconut oil business. There was a. On the last call we spoke that both of these basically distribution profits would be aligned together to have like a portfolio growth. Is that plan turning out as it’s supposed to or the distribution has not been integrated?
Naveen Pandey
No. So we’ve just started the pilot and distribution integration. What we are doing is we are doing a phase wise approach. So the one of the premise of Bandara’s acquisition is that we have a very big distribution in south where Banjara has a reasonable distribution and in the combined setup we can leverage that distribution to even carry BCCL brands and the rest of the BCACL system. Exif can carry Banjara brands. But we are going systematically brick by brick on process of that integration. We’ve identified a certain pilot markets where we are carrying out the pilot of integration.
We will get our learnings and then we will implement them across and scale up. So this distribution integration is going to be from my estimate around a four quarter exercise to a five quarter exercise. And we will do it gradually as to ensure that we do not disrupt the strength and the advantages of the system as we intend to leverage them.
Dhruv Patel
Okay, just a clarification on the science. What do you think will be faster integrating Thanjara’s products to your northern distribution channels or increasing your south distribution for ADH1?
Naveen Pandey
See, I think both will happen. What I’m just saying is that it will happen brick by brick. For example, taking certain projects of Bandara into some specific channels or market pockets could be an easy extension for us. And as and where we find that opportunity, we will do that. Similarly, adding some product portfolio from BCCL into Banjara could be a quick opportunity and we will again do that. What I’m saying is integrating of an overall system so that you say that there is only one system running and there are not remnants of two system is something which is four, maybe five quarter, six quarters away anywhere in that range and we will take it up.
We don’t have a, you know, we don’t want to, you know, put a gunpoint onto the system to integrate. I think a larger exercise is to get the benefit of the acquisition and we will focus and approach it that way.
Dhruv Patel
My last, just a last number that I wanted in the last quarter you mentioned some integration costs that were extra bringing the margins down between the acquired company and dpcl. How much of those investments are yet to be made in current year?
Naveen Pandey
So I think, you know, if you look at our total, you know, expense lines which are there, they already have some numbers in factor. I don’t, I don’t think so. We will have more than this coming in. But this basically, you know, you can assume a similar trend on cost lines. Basically, you know, for the next couple of quarters as the process goes on then we will, as we start leveraging this basically number could see a correction.
Dhruv Patel
Okay. Okay. Thank you. Thank you.
operator
From the line of Sahil Shirshad from Delta Investment Advisors.
Naveen Pandey
Can you speak little now? We can’t hear you.
operator
Sure. Sir, the next question is from the line of Sahil Sharshat. Please go ahead.
Unidentified Participant
Hi. Thank you so much for this opportunity. So I have two questions. One is what kind of sales we are and market change we are market share gains we are seeing from Project R1. And my second question was on the revenue split between Adho and non Adho products product portfolio from E Commerce and Quick Commerce. If you can share those numbers. Thank you.
Naveen Pandey
Hi Sahil. So Project R1 is still in a very urgent nascency phase. What we’ve done is we’ve executed certain changes in the market and we are leveraging the impact of them. I would not really want to basically state that the changes, whatever we are seeing right now are only on behalf of Rohan or on behalf of advertising. I think we would want to wait a few more quarters to see what is the sustainable benefit which we derive out of these. And as and when we are ready we will be glad to share them with you.
With regards to the performance of the mix of the channel wise growth is there. All I’ll say is both Adho and CNO have grown robustly in the modern trade channel. It will be a bit sensitive for us to give sub channel wise brand wise numbers. I hope you’ll appreciate that.
Unidentified Participant
Thank you. Thank you.
operator
Thank you. The next question is from the line of Amit Agicha from HG Hawa. Please go ahead.
Amit Agicha
Yeah, good morning sir.
Naveen Pandey
Yes Amit, please go ahead.
Amit Agicha
Yeah. Thank you for the opportunity sir. How do you plan to address the international business headwinds from tariffs and wash and like? Are there any new export market being targeted to balance?
Naveen Pandey
So yes, we do export to the US and right now that market and the export to that market is under question and we are trying to figure out what do we do. Unlike some of our larger industry colleagues we do not have multi country manufacturing basis wherein we can use some of our other countries to do that. So it’s a bit difficult for us. But we will soon figure out and we are hopeful that this issue should be passed as soon. But yes, we will obviously figure out alternative mechanisms if we need how to do that.
Having said, please do realize that the question which we are talking about is not even a percentage to our revenue. It’s fairly materially insignificant to our overall business and performance.
Amit Agicha
My second question is what are the synergy targets from VPCL acquisitions? Like what is expected payback period for the acquisition investment.
Naveen Pandey
So you know what I would, you know I would rather than giving you a payback period I will give you the, you know, the rationale behind the investment. So what we’ve done is we’ve acquired an organization which is roughly 50 crores of revenue and size. It operates in the natural and herbal segment, we believe this is a segment which is growing ahead of the B2C growth rate. We have the opportunity to take this company which is fairly regional in the south to rest of the country and to channels like modern trade and E commerce and to the export markets which itself will provide a huge growth potential.
The secondary hypothesis for us is that we have at the core very weak distribution system in the south. And VPCL comes in with good distribution in Karnataka, Andhra Pradesh, Telangana, Tamil Nadu, Kerala. And combining our system and our go to market with BPCL will allow us to scale our core business of Bajaj in the southern states. Overall, we would like Bajaras to grow ahead of, you know, our core business. And we believe that is possible. And it will be an accretive and a positive profitable growth addition to our portfolio.
Amit Agicha
What is the total number of employees post acquisition? Both Merch.
Naveen Pandey
Sorry, I was not able to hear you clearly.
Amit Agicha
If you can, the total number of employees of both the companies BCCL and vpcl.
Naveen Pandey
So you know we can get give you offline some of these numbers. I don’t have them on hand on the numbers. But you know if you have a specific question I will get my investor team to get back to you.
Amit Agicha
Okay. Thank you sir. All the best. Thank you.
Naveen Pandey
Thank you.
operator
Thank you. Before we take the next question we would like to remind participants that you’re. Muklan Sharon, want to ask a question. The next question is from the line of Gaurav Gandhi from Glorytail Capital Management. Please go ahead.
Unidentified Participant
Hi. Thanks for the opportunity. Despite launching various new products in skincare and hair care segment for past two years the visibility at the store or modern chain still remains very very low. What are our plans exactly? Are we not being fast or aggressive enough to reach end consumers with our new products? Sir, your comments.
Naveen Pandey
Thank you Gaurav for that question. See Gaurav. When we are looking at NPD introductions we are going to look them in specific spaces which might include specific channels and specific market segments. We will basically try and work in a frugal manner so that we can get good returns in terms of revenue on back of the investments behind advertising and other non advertising spends which we make to seed and establish that brand. We are at an organization not at a scale wherein we would want to go ahead behind certain products and take them all India all channel on day one.
That might happen in certain cases in products and categories we feel very confident about. But in multiple cases we will choose our markets and we will choose our channel segments. We will prototype our Mix, we will get it to grow to a certain scale and then expand it rather than taking it across the country on day one. So I think that is something which you should keep in mind as you look for our products and look for our strategy.
Unidentified Participant
Sir, in that case, do you feel the new products which the company developed over the past two years are strong enough for attracting consumer? I mean, we understand that the brand, Bajaj brand is strong, but product has to be good as well for consumers to come and buy it again and again. So your thoughts on this and how do you see the new product development in the company?
Naveen Pandey
So I think the products, I’m not talking about the products, the products are strong, but there is a cost of advertising and there is a cost of seeding the product into various markets. So we might choose in certain case that I might want to play on products in the digital space wherein the cost of creating advertising and getting revenue out of it pays back for me. And we might choose that unless and until the brand reaches a certain scale, I might not want to get into general, I might not want to get into mass advertising because that is a very substantial upfront investment in terms of advertising cost.
So that is what I mean. Obviously, when we will do products on regard of basics like basically the quality of the product, you know, ensuring win sensorial, we will obviously take care for every single launch that, you know, we do not put out anything, you know, in our portfolio which our consumers are not proud of, which we ourselves are not proud of.
Unidentified Participant
All right, sir, thanks. And all the best for the patient.
Naveen Pandey
Thank you.
operator
Thank you. The next question is from the line of Deepak from Unified Capital. Please go ahead.
Deepak
Hello. Thank you for the opportunity. Firstly, Naveen, I just wanted your top down view on the category. If you can spell out how you view this category, the hero category in terms of competition because it’s quite commoditized with a lot of regional brands. And how do you see the category growth in general? Because what we read from other companies is that the growth is saturated at a certain level. So if you can just spell out your thoughts on the category group.
Naveen Pandey
Right, Deepak. So Deepak, you said, you know, give or take a $2 billion category which is one of the highest penetrated categories in the country at 92, 93% household penetration. It has a very high frequency of usage. It has a very high salience. This is a product category you will find in every single home of the country. What has happened over a period of time is that if you look at the larger hair care at certain point of time in the country, only hair oil was part of hair care and now there are various products which have come in competing for hair care and this has led to the overall category growing very significantly.
Having said that, only hair oil within that space has been growing despite all of this at a moderate rate which is in line with any other high penetrated category in the country. So when we look at this, we have to look at what is happening at the behavior at a consumer end. Consumer still believes in oiling. The consumer is still committed to a certain regime and these kind of behavioral changes don’t happen in a very short period of time. These are generational and in India oiling is a generational habit. So I don’t see that this is something which is going to drastically change or disappear or move anything in the near to medium term or even slightly longer term period.
What we need to do is that obviously as the consumer preference, consumer needs, the sensorials are changing and as a category we need to get our act better in terms of responding to some of those consumer cue changes. But the basic necessity of the category and the salience and the regime of the category I think is very strong. And that is what I’m excited about to work, you know, here to see that how we can address the consumer needs in a much better manner. I hope I’ve been able to give you a flavor of what you asked.
Deepak
Yes, so that was quite useful. So what you said is that in the hair oil category you were trying to pursue growth through the Adho segment. So if you can give out a broad roadmap of what you want to do in terms of product, any pricing tweaks and the channel. And you also mentioned that given that hair oil will have moderate growth, so you’ll have to diversify. So on new products, what are you thinking of ramping up in the medium term?
Naveen Pandey
Pradeep, let me talk about what I can at this moment and I’ll refrain from what I’m not ready about. So what I think a large part of our strategy would be strengthening Adho. Adho is one of the most premium brands in the entire category. We believe it has very, very strong consumer love and with renewed investments and focus, we can get this brand back into the growth territory. And as that happens that generates a lot of funds for the organization. There is a lot of opportunity in terms of premiumizing this brand further to create extensions in this brand to solve for various smaller segments of need.
And I think those are some of the experimentations which we will do. Over a period of time, we’ve already made foray into other hair oil segments like coconut based, your AMLA based and other oil. I think there is an opportunity for us to revive our portfolio and to see how we can deliver sustainable, profitable revenues there. That would be another segment of focus for us. And the third would be that we have a portfolio of herbal natural products which we acquired to Banjara. How we can grow that, We’ve had extensions on almond drops which have been outside of the hair oil segment which have had some good traction.
We’ll have to figure out how we can scale them up in sustainable manner over a period of time. So I think these are some of the immediate term things and I think they’ll keep our hands full for the next few quarters. Beyond that, what more we would like to do, I think I’ll come back as and when I’m ready with my own thoughts.
Deepak
Sure, that’s quite useful. So on the adho growth part which you’re trying to pursue now, you also mentioned that margin is something that would also be a focus area. So in terms of growing the portfolio, do you not see the margins come on the way of growing the portfolio?
Naveen Pandey
Yeah, Deepaksi, I think if you were to look at it, look at it from the other ends, there is no, I think either or scenario. We have to try to do both. I think as and when there is a trade off call to be made, we will not shy away from the trade off call. And if there is a trade off call to be made, we would basically trade in favor of revenue and market share. But I don’t believe that time is now. I think we’ve reached to a level of margins which were much, much below what has been our own average.
We had reached a level of margin which was below the category level and hence we should, I think see an improvement there and should see an improvement in revenue. I don’t believe we are at a level of margin wherein we are sacrificing growth for margin and that is something which we will never do. But yes, in terms of endeavor, we would want to expand revenue in a profitable, sustainable manner.
Deepak
Okay, so just to understand this point in another way, how are we going to get back the margin profile to the desired levels? You mentioned that we desire to be in the mid range of 15 to 30. So how is that going to happen?
Naveen Pandey
So Deepak, as I said, what is. Okay, so let’s look at what has driven the margin improvement in the quarter in question. As I told you about, we worked on mix which is added to the margin. We’ve taken selective pricing which is not fully in market, which is in process, which will happen in there and subsequent quarters which is basically leading to a market expansion. And we’ve also corrected and pruned a certain amount of trade and customer spends which we were doing, which basically releases again into the margin which again has been executed in a partial manner which is adding back to our margin profile.
So by and large it’s a little bit of this which will come in and then the next level of kicker will come in. As our revenue start growing, there is going to be a denominator effect which is going to add some more. So I think it is with this what we would expect, you know, a certain amount of work over the next few quarters and after that, you know, we look at the, you know, next leg of initiatives towards that. But this is the first leg.
Deepak
So. Goran Navin, thank you and all the best. Thanks.
Naveen Pandey
Thank you, Deepak.
operator
Thank you. The next question is from the line of Ashant Lalwani from Ashika Institutional Equity. Please go ahead.
Ishant Lalwani
Hi sir, thanks for taking my question. So over the past few years our. Fixed asset has been more or less flat. So are our current plants fully utilized also any further plan for CAPEX in. The coming few years?
Naveen Pandey
So as of now we have, we have capacity headroom, you know, in our plans to look at that, you know, we have enough headroom maybe for the next couple of years, two to three years of growth. Having said that, we keep on looking at the efficiency of operations which is going to be there and hence if we need to make any delta or changes, they might not be very significant to our balance sheet size. So. But we are not. So if you’re wanting the question, is there any going to be significant CAPEX commitment over the next couple of years? The answer is no.
However, you know, we will, you know, I would reserve the right to relook at it as we are looking at the overall manufacturing efficiency and the cost structure over a period of time.
Ishant Lalwani
How. Many plants are currently owned by us and outsourced plants.
Naveen Pandey
In terms of, you know, if you were to look at, you know, our own plants, you know, we have in Dehradun, Guwahati and Fonta and we have one, you know, large basically third party facility which is there besides this, we work with certain number of smaller sized third parties. So some of our smaller products.
Ishant Lalwani
Yeah, that’s a problem.
Naveen Pandey
Thank you.
operator
Thank you. The next question is from the line of Madhav from Shravas Capital. Please go ahead.
Unidentified Participant
Hi Navinanti, thanks for the opportunity. Slightly harping on the same margins though. You did answer it Partly. I was trying to quantify the same. Right, so from a current mid teens margin, I mean if you want to go to the midpoint of our highest and lowest, it’s around almost 800 basis points. Right. Though we can’t take the, I mean price increases to the extent we want which will impact our volumes and also the amp can be significantly cut because you have to revise the category. Right. It’s a classic thing between the level and the deep sea.
From that then can you just Quantify how this 800 basis points can come through? I mean if I actually split the usual number. Just trying to think a lot on how the 800 basis points can come through.
Naveen Pandey
Madhav, I was specifically going against but let me try and share with you what I can. I think first of all we’ve reached operating margins which were to the level of less than 15% in the past and we’ve come to an operating margin which is in the range of 17 to 18% as we speak. The by and large industry, if you were to look at our industry operates at, you know, in the low 20s, you know, or low to mid-20s is where basically a larger peers operate. I think for the step one is for us to target that rather than to get into a number which is beyond that and that is the first which would be the next few hundred basis points in new month, you know, and that will.
I would not want to, I would specifically say that I would not want to comment on the time frame, et cetera, which we will look at getting there. But yes, directionally we want to further improve from our 17 to 18% margin. It will come on back of mix improvement, it will come on back of better realized value on a per kg basis for our product which will be both a little bit of price pack changes or pricing or reduction in terms of the spends and it will then also come on back of little bit of optimization of spends on a percentage basis as the denominator effects start kicking in and we are able to grow the business.
So I think this is what you should look at a short to medium term plan which we are working on and please look at it more like a plan rather than as a guidance.
Unidentified Participant
Also just wanted to understand you were speaking on this whole diversification having a second or third degree growth drivers, right? I mean historically during the last 10 years we’ve not forayed beyond our core category of hair, oil, etcetera There were no marks slightly. Not that we have any right to them, but given your experience in other consumer categories, any plans where we are forwarding from our core.
Naveen Pandey
Sorry, I was not able to hear you. Can you please repeat?
Unidentified Participant
What is the tasking is you were speaking on the second and third degree growth drivers which is required to, you know, for a top line kicker beyond our core category. Not that we have any right to win other than our category, but given your experience in other consumer categories. I was just trying to understand this whole diversification and additional growth. Are we looking at any other categories?
Naveen Pandey
Sorry mother, I would not want to comment on anything which we have not actually done so far. What is not in the market is not something I can comment on.
Unidentified Participant
Thanks man. Thanks.
operator
Thank you. I would now like to hand the. Conference over to the management for closing comments.
Naveen Pandey
Thank you once again I would like to take the opportunity thank you all for taking the time to attend the call and for your questions over the next few weeks.
operator
Ladies and gentlemen, we have the management line disconnected. Please stay connected while we reconnect the management. Ladies and gentlemen, we have the management line reconnected.
Naveen Pandey
Thank you. Apologies for the disconnection. I would once again like to take the opportunity to thank you all for taking the time to attend our call and for your questions over the next few weeks. My priority is to close the medium term and long term priorities for our business which will help us drive sustainable, profitable growth for the organization. And as and when we are ready, me and our investor relations team will reach out to you, establish, connect and have a more meaningful engagement around these issues. So once again thank you all for taking time time and attending the call.
Thank you. To the ICICI team as well. Thank you.
operator
Thank you on behalf of ICICI securities limited that concludes this conference. Thank you for joining us and you may now disconnect your lines.