Dabur India Ltd. (DABUR) Q4 FY22 Earnings Concall Transcript

Dabur India Ltd. (NSE: DABUR) Q4 FY22 Earnings Concall dated May 05, 2022

Corporate Participants:

Gagan Ahluwalia — Senior General Manager of Corporate Affairs

Mohit Malhotra — Chief Executive Officer & Whole Time Director

Ankush Jain — Chief Financial Officer & Joint Chief Risk Officer

Analysts:

Abneesh Roy — Edelweiss Securities — Analyst

Vishal Gupta — Phillip Capital — Analyst

Percy Panthaki — IIFL — Analyst

Prakash Kapadia — Anived Portfolio — Analyst 

Shirish Pardeshi — Centrum — Analyst

Harit Kapoor — Investec — Analyst

Suresh Maheshwari — Sanco — Analyst

Chinmay Gandre — Reliance Nippon Life — Analyst

Alok Shah — Ambit Capital — Analyst

Palak Shah — Infina Finance — Analyst

Manish Poddar — Motilal Oswal — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to the Q4 Fiscal Year 2021, 2022 Results Investor Conference Call of Dabur India Limited. [Operator Instructions] Please note that this conference is being recorded [Technical Issues]

Gagan Ahluwalia — Senior General Manager of Corporate Affairs

Good Afternoon ladies and gentleman. On behalf of the management of Dabur India Limited, I welcome you to this conference call pertaining to results for the quarter and full year ended 31st March 2022. Present here with me are Mr. Mohit Malhotra, Chief Executive Officer, Dabur India Limited; Ankush Jain, Chief Financial Officer; Ashok Jain, EVP, Finance and Secretary. We will start with an overview of the company’s performance by Mr. Mohit Malhotra, followed by a Q&A session. Over to you, Mohit.

Mohit Malhotra — Chief Executive Officer & Whole Time Director

Thank you, Gagan ma’am. Good afternoon, ladies and gentlemen. Thank you for joining us today. I hope you and your loved ones are staying safe and healthy. It gives me great pleasure to share that during the financial year 2021, 2022 our consolidated revenue from operations crossed a milestone of INR10,000 crores for the first time to touch INR10,889 crores, growing at around 14%. Consolidated operating profit grew at [Technical Issues] tax before exceptional items grew at 7.7%, primarily impacted due to increase in tax rate in the India business. Some of the key drivers of this industry-leading growth have been food and beverage vertical registered a 48% growth during the year. Innovation continued to be the cornerstone of our strategy and the new launches contributed to around 5% of our revenue.

Our continued focus and investments behind our power brands resulted in market share gains and healthy double-digit growth on the same. This year, we gained market shares in 99% of our portfolio. Digital continued to be — continued to gain prominence and now almost quarter of our spends are invested in digital and social media, helping us connect with the millennials and Gen Z better. E-commerce was a outperformer during the year and almost 90,000 villages. Operational efficiency helped us improve productivity. Our greenfield plant at Indore has become operational since December 2021. The new plant will help auger capacities.

This year saw significant inflation to the tune of 12.5%, calibrated price increases across the portfolio and relentless pursuit of cost-saving initiatives across the organization helped reduce the impact of inflation on the portfolio. Coming to the quarter, the operating environment was quite challenging. Inflation continues to be unabated and is reflected in WPI at 14.6% and CPI at 17-month high at 6.95% in March 2022. There has been a softening in demand in the consolidated revenue from operations posted a growth of 7.7%, driven by 8.5% growth in the India business.

On account of high inflation during the quarter, gross margin contracted by 130 bps. As a result, consolidated operating profit increased by 2.5%. PBT before exceptional items saw a growth of 5.1%. PAT before exceptional items grew by 0.4%. Impairment of goodwill of hobby cosmetics to a tune of INR85 crores has been reported as an exceptional item on account of steep currency devaluation of Turkish lira. In terms of categories, food and beverage business posted a stellar growth of 34%. We have outperformed the industry significantly, and our market share in J&N category has seen an increase of 610 basis points during the quarter.

This is further bolstered by strong traction of our drinks and milk shakes portfolio. The food business also performed well with a growth of portfolio recorded a 2% growth on a high base of 33%, leading to a 2-year CAGR of 16.2%. For the year, HPC posted a 12.7% growth. Toothpaste portfolio reported 11.3% growth during the year and our market share in Toothpaste segment increased by 20 bps. Hair Oils posted a 17.1% growth during the year. Our market shares in overall hair oils improved by 70 bps. Even in the subsegments of the perfumed around coconut oil, we have seen a strong market share gain driven by marketing investments and distribution expansion.

Shampoos recorded a 22% growth in the year. Our market share in shampoos increased by 40 bps. Home Care reported a 21% growth, driven by double-digit growth across Odonil, Odomos, Sanifresh franchises. Odonil recorded an increase in market share across all subsegments of air freshener category and Odomos increased market share by 220 bps. Skin care portfolio witnessed a decline of 10.6% during the quarter on a high base of around 40%, leading to 11% 2-year CAGR. Health care portfolio reported a 7.4% growth during the quarter despite a higher base of 23%.

Health Supplement posted a 10% growth during the quarter. Dabur chyawanprash market shares increased by 250 bps and honey market shares increased by 300 bps. Our honey Technical Issues or honorees OTC portfolio on the back of strong growth in our power brands, Dabur honey, it has reported a 17% growth in quarter four. Among channels, e-commerce performed well with a strong growth and account for 6% to 7% of our revenue. Institutional business also exhibited a good turnaround post-COVID. International business recorded a constant currency growth of 10.7%.

Our sub-Sahara business saw a 25% growth. Egypt grew by 12%, and Namaste business clocked a robust double-digit growth. Turkey business was impacted by steep currency devaluation, but saw a 47% growth in constant currency terms. Overall, our business continues to be on a strong trajectory which is visible in our full year results and the market share gains across 99% of the portfolio. Pressure on the cost side due to steep inflation triggered by global environment remains a cause of concern.

Also inflation is leading to pressure on consumers’ wallet, which is seen in softening of demand in recent quarters. That said, strong summer season, good harvest and prediction of a normal monsoon augers well for financial year 2023. We will continue to focus on strengthening our power brands, distribution expansion, innovation, cost optimization and efficiency enhancement, which will hold [Technical Issues].

Questions and Answers:

Operator

Ladies and gentleman, we will now begin the question-and-answer session. [Operator Instructions] Our first question is from the line of Abneesh Roy from Edelweiss Securities. Please go ahead.

Abneesh Roy — Edelweiss Securities — Analyst

Yes, thanks. My first question is on the toothpaste growth of 2% and market share improvement by 20 bps. Would you be disappointed by this? I understand the two-year CAGR, but when we see the three-year CAGR and given 20 bps is an improvement, but are you happy with that? Is the EBIT ticket innovation now needed here?

Mohit Malhotra — Chief Executive Officer & Whole Time Director

Right. So Abneesh, I don’t think there’s a cause of worry. This is only one quarter. If you look at the syndicated data, syndicated data shows a decline in the oral care category by around 5%. So looking at the category decline of 5%, we registered a growth of around 2.5%, and 2.5% growth is not bad and we inched up around 20 basis point market share. So — and not just Dabur red — Dabur red actually grew at around 5.6%. And this growth is coming on a base of around 45% increase last year. So I think it’s more of a base effect that you’re seeing a little depressed kind of sales in oral care.

Overall oral care portfolio also grew by around 40% last year this time. So that is why I think this will work on a base effect and looking at that growth and two years CAGR have been very robust for our oral care category. And if you look at our full year performance also, so full year also we are growing by around 16% growth rate. So there’s no cause of worry. So I think the herbal category is already around 30% of the total market, and this is trending at a little higher as compared to the other part of the category.

What’s happened is in terms of inflation, the price increases have been more in the non-herbal and less in the herbal category. And therefore, herbal category is a little bit, Patanjali, Dabur, Vicco, lot of herbal players have actually cut back on their expenditures. So because of a lower share of voice, that growth of the herbal category is looking muted. And as it is, I think the overall category is kind of flattening. But our plans remain intact. Our Dabur red is continuing to gain market share across all markets.

We are already a number one brand in Tamil Nadu, in Andhra Pradesh, and in Orissa, we are the undisputed leaders, number one there. Our herbal toothpaste launch that we guys did in South India is trending pretty well. We just really recently launched a charcoal toothpaste in e-commerce, which is also doing reasonably well. So I think on back of all these initiatives, we will continue to trend on the strategy that we had already. So I don’t see any cause of concern here.

Abneesh Roy — Edelweiss Securities — Analyst

So, this quarter everyone has grown in the range of 0% to 5%. But when I see the toothpaste market dip of 5%, I wanted to understand that because toothpaste may not have seen too much of a –cut. So in this kind of a very basic consumption, 5% dip in toothpaste market on Y-o-Y basis, what is your sense? Is it a data issue of Nielsen? Is there a shift back towards tooth powder? Or, I don’t understand how can consumers cut down 5% on toothpaste? What is your understanding here?

Mohit Malhotra — Chief Executive Officer & Whole Time Director

So I think it’s more of a down trading which may be happening I think in the market. That is what we see because rural business is also quite under pressure. And because of the pressure I think down trading is happening, that’s why you see a volume dip actually happening in the toothpaste category and a little bit cutback on the consumer promotions due to inflation, etc. That could be the reason why the volumes are declining. But I think overall in long around 2% base points and the hair oil categories…

Abneesh Roy — Edelweiss Securities — Analyst

Those are bit more discretionary I’ll say — those are a bit more discretionary. See shampoo if you don’t apply, you can do soap, you don’t apply. But toothpaste I can’t understand.

Mohit Malhotra — Chief Executive Officer & Whole Time Director

I think it is more of a down trading and maybe cut back on the consumer promotions. That’s what I think is the reason here. But as far as Dabur is concerned, we are not overtly worried. Our market shares are in the range of around 14.5%, and we are into gaining market share. I think Colgate should be more worried on this issue. And the consumer could be deferring purchases, but this is a necessity item. So I think I don’t really know what could be the reason.

Abneesh Roy — Edelweiss Securities — Analyst

Sure. My second and last question is on quick commerce. So we have seen different you are doing versus the e-commerce general delivery. Is there any specific, either on the SKU front or in terms of any other marketing or pricing strategy, anything different you’re doing here?

Mohit Malhotra — Chief Executive Officer & Whole Time Director

Not really, not really, Abneesh. I don’t think this really impacts us, I think more is going to impact the grocery. For us, it’s not much. Actually there’s been quite a transition which is actually happening from regular commerce to quick commerce. So what’s happened is inventory corrections are happening at most of the verticals of e-commerce, that’s what we guys are seeing.

And therefore because of inventory corrections, our growths have actually become muted in e-commerce for some time, but I think that Amazon has actually changed their vendor from cloud tail to somebody else. So because of that there’s inventory thinning which is actually happening across the board due to quick commerce. That’s pretty much that we are seeing. And there’s no change in the strategy per se from our end.

Abneesh Roy — Edelweiss Securities — Analyst

Okay, thanks. That’s all from my side. Thank you.

Mohit Malhotra — Chief Executive Officer & Whole Time Director

Thanks, Abneesh.

Operator

Thank you. The next question is from the line of Vishal Gupta from Phillip Capital. Please go ahead.

Vishal Gupta — Phillip Capital — Analyst

Yes. Hi, team. First is on gross margins now apart from the RM pressure, what we believe that the salience of high-margin health care port is likely to go down as COVID-led tailwind taper down. So I just wanted to hear your views on gross margin going forward? And second question is on the Juice segment.

Mohit Malhotra — Chief Executive Officer & Whole Time Director

Hey Vishal, I think clearly get the first part of the question. I think it was on gross margin. Gross margin going forward, you’ll see we’ve got a gross margin compression of around 130 basis points and — which is not so high and the gross margin compression is also coming in from more of our hair care category, where it’s petroleum-linked purchases, which has really gone through the roof and vegetable oils have also shot up. So because of raw material and packaging material price increases, which is cost increases, which actually happened in hair oil business, we’ve seen this kind of a contraction happening.

But for our food business and health care business, they have kind of with the price increases we’ve been able to offset the cost inflation. Only in the hair oil business is where we’ve not been able to offset due to competitive pressures and because we want to take market share gains. But that said, going forward, we are not seeing inflation abating. We’ve again on top of 6%, 7% inflation of last year. There could be a price increase that we will have to take to avoid gross margin shrinkage.

But that said, I cannot really tell you with confidence that there will be no gross margin compression going forward at least for two quarters. I think we’ll have to watch very cautiously and see if we can take any price increases or cut back on the cost because inflationary environment is just going on. And as we speak, the oil is already at 110. So it’s a wait and watch. But second half…

Vishal Gupta — Phillip Capital — Analyst

Incremental pressure from that side? Or are you confident that you will do very well in health care portfolio as well going forward?

Mohit Malhotra — Chief Executive Officer & Whole Time Director

No, see. Last year, health care portfolio came on a very high base. Like in chyawanprash, we grew by around 60%, 70%, almost 100% in Chyawanprash and honey we grew at around 50%. And this year, because of the diversified portfolio, our food portfolio has come in fired. For the full year, foods has registered a growth of around 50% for us. So therefore I think that’s a benefit that Dabur has.

We’ve got a very diversified portfolio. One goes down and the other comes in handy. Last year, we grew HPC at around 33%. And this year we’ve got foods come in. So I think there’s no problem. So as health care portfolio goes down and stabilizes to post COVID, other parts of the portfolio will kick in, which is HPC and food. That’s exactly what you’ve seen happen in this quarter for us. So I don’t think there is much of a problem. So I’ve talked about 610 basis points that we’ve gained.

We’ve gained in juices and nectars. In juices and nectars we operate along with our competitors, which is Tropicana and B Natural, and we’re having a share of more than around 64%. So we’ve gained from our competitors here. So — and plus, we’ve entered the drinks category. In drinks category we’ve already done around INR100 crores of business in the drinks category. So — but the market share gain essentially comes from these two players.

Vishal Gupta — Phillip Capital — Analyst

Okay, fine. Thank you.

Operator

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

Percy Panthaki — IIFL — Analyst

Hi. My first question is on the growth [Foreign Speech] Q4 2019, because Q4 2020 was itself a COVID-affected quarter with overall sales decline of 12%. So that’s a very low base for me to compare. So if I look at versus Q4 2019, the CAGR growth for your overall business is about 5%, and for your health supplements and the OTC business is also in the region of 5% only. So with so much of a COVID tailwind with chyawanprash penetration going from 3% to 8%, etc., ctc. From a pre-COVID level to a today level, the growth in this category is only 5%. So is that something that you’re happy with?

Mohit Malhotra — Chief Executive Officer & Whole Time Director

[Foreign Speech]. There was a lot of uptick, which actually happened in the category, a lot of euphoria and the euphoria is gradually slowly kind of going down. So I think to extend the penetration of this category we’ve done a lot of initiatives on our own. So which is why chyawanprash extended into tablet, chyawanprash available in the powder form, we’re making an entry into MFT, honey has got multiple variants, which have actually come in and honey penetrations have also gone up. And we are consistently increasing our market shares.

So we’ve gained 250 basis points in chyawanprash and 300 basis points in honey. So apart from the category penetration and consumption increasing initiatives, we are also taking initiatives to take up the market shares here. And everywhere we’ve actually taken up the market share. But when you are sitting in a market share level of around 50% plus, then it becomes the little arduous for you to further take up market shares or get reflected in the growth. So that’s why so much of — very happy with the kind of growth that one is actually seeing. But that said, the penetration is going up to your point and more and more players are coming in.

As and when competitive intensity goes up, share of voice goes up and we will be the beneficiaries of that kind of a tailwind coming in. Now if you see, for most of the health supplement, they are more seasonal for us. It actually trends up in summer — in winters and actually trends slow a little bit in summer, summer is actually a low season. When there was COVID, there was a tailwind happening in summer irrespective of the season, season agnostic people used to buy. But now that COVID is behind us, so people are actually now not buying [Foreign Speech].

Percy Panthaki — IIFL — Analyst

Understood Sorry to Sorry to belabor this point a little bit, hello…

Gagan Ahluwalia — Senior General Manager of Corporate Affairs

I just wanted to add to that, that increase of chyawanprash, however, the three-year CAGR is not 5%, it is is 6% for the full year. And in case of honey, it is 11.2%. But the only thing is this quarter it’s a very different quarter. It is also — the CAGR in this quarter is seeming a bit low.

Percy Panthaki — IIFL — Analyst

Okay, okay. So I mean, I don’t expect you to give guidance, but if I am to roll forward for the next two, three quarters versus a pre-COVID level, if I have to see the CAGR for the health supplements business, do you think we can come closer to the double-digit number versus the 5% number that we have right now?

Gagan Ahluwalia — Senior General Manager of Corporate Affairs

There’s still a high base for some of the brand.

Mohit Malhotra — Chief Executive Officer & Whole Time Director

For next quarter, Percy, we have a very, very high base of contextual product that we had launched like Tulsi drops, health juices, etc., which has got a high base in the next quarter. But I think for the full year basis, yes, we should be able to trend at a double-digit CAGRs, definitely for a health portfolio.

Percy Panthaki — IIFL — Analyst

Sure. I just had a few more points on this, but I guess I’ll take it online because I want to ask my second question, which is on the foods business. You’ve mentioned that the foods growth Y-o-Y is 12%. So here I’m assuming foods refers to your homemade brand and the other new sort of initiatives, like papads and pickles, etc. So given that the new product launch intensity over the last 1.5, two years has been quite robust. Again, I was a little surprised that the overall growth, including all these new launches, etc., is only 12% for the fourth business. So I need [Foreign Speech]. I mean, Am I seen the right way or how should like her.

Mohit Malhotra — Chief Executive Officer & Whole Time Director

No, actually what has happened is that we have lapped over the base when we had actually launched it. So that’s why you’re seeing a little muted growth because when you launch it you put a lot of inventory. But otherwise the food business is doing very well for us. And the — the three-year CAGR is in the range of around — around 12% or so for the foods business also.

Percy Panthaki — IIFL — Analyst

Okay, okay. Yes, that’s all for me. Thanks and all the best.

Mohit Malhotra — Chief Executive Officer & Whole Time Director

Thanks, Percy. Thank you. The next question is from the line of Prakash Kapadia from Anived Portfolio. Please go ahead.

Prakash Kapadia — Anived Portfolio — Analyst

Yes, thanks for the opportunity. On the juices and the nectar market, has that also contracted? You did talk about market share gains for us. So if you could comment on that? And what is the outlook in the summer season for the juice and the Glucose segment?

Mohit Malhotra — Chief Executive Officer & Whole Time Director

[Foreign Speech] 35% here. So going forward I think the summers are protracted and more severe. So we feel the juices and nectars and also drinks category will do great for us and it’s actually trending very well in the month of April also.

Prakash Kapadia — Anived Portfolio — Analyst

And you did mention about some kind of down trading. So on hair oil, toothpaste, the market has declined. So that is specific to Hindi-speaking belts or is it entire rural India, if you could give some insight that would be helpful?

Mohit Malhotra — Chief Executive Officer & Whole Time Director

I think there is a little down trading happening. And there’s, earlier — it’s a little different conversation, maybe I’ll talk about rural and urban first. We’ve seen a little setback coming in from rural. And Dabur if you find, for the past couple of quarters our rural was always firing ahead of urban. But what we found in this quarter is that the liquidity crunch a little bit and demand compression which is happening in rural India. And therefore our credit has also gone up in rural. So I think rural is the one which is actually, because of that pressure that part is not working well.

And even in urban India we find a little bit of down trading happening on all the portfolio. So be it the shampoo portfolio, be it hair oil portfolio, be it oral care portfolio, our price points of INR10 and trade though.

Prakash Kapadia — Anived Portfolio — Analyst

Yes, okay. That’s helpful. And assuming this inflationary environment continues, would HPC get more affected if this kind of a scenario remains from our entire product basket.

Mohit Malhotra — Chief Executive Officer & Whole Time Director

Ya, HPC is more effective. That’s what we mentioned that HPC categories are actually not doing so well. And that’s where shampoos and oral care and therefore hair oils come in. I think health care is a little agnostic to the recessionary environment and so is out-of-home production, out-of-home consumption of produce is concerned. So definitely, HPC will be more impacted.

Prakash Kapadia — Anived Portfolio — Analyst

Understood. And just one data point, could you tell me the absolute growth for honey and chyawanprash on an annual basis in percentage terms? How much did it grow by value percentage?

Ankush Jain — Chief Financial Officer & Joint Chief Risk Officer

[Foreign Speech] and Honey, plus 1%, and a CAGR of 19 plus.

Prakash Kapadia — Anived Portfolio — Analyst

Understood. Thanks. All the best. Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Shirish Pardeshi from Centrum. Please go ahead.

Shirish Pardeshi — Centrum — Analyst

Hi, Mohit, Ashok Ji, Gagan Ji, thanks for the opportunity. Indeed, I have a few questions, which I’ll try and ask in t parts. The first part what I wanted to check. If I go back in the history, our healthcare business has steadily grown from 23%, 25% and last two years, it has — last year, it grew to 39% contribution and this year it is now settled, you guys are working closely with the Ayush Ministry. So there’s a lot of ammunition at the back end which you are trying to develop. So will this contribution of health care will remain between 35%, 36%? Or do you think it will go back to, say, less than 30%?

Mohit Malhotra — Chief Executive Officer & Whole Time Director

Yes Shirish, in my view I think it will settle somewhere at around 30% because the way the food is actually growing for us and also the headroom that we have available for HPC, so I think health care should settle at around 30%, and that’s what we guys are seeing. The foods portfolio which used to be 20% got shrunk to around 14%, 15% is also inching up to around 19% for us. It’s not because health care is not doing well, its because the other portfolio [Foreign Speech].

Shirish Pardeshi — Centrum — Analyst

One follow up Mohit. Any update on the Ayush Ministry efforts, what we were trying to do back in quarter four.

Mohit Malhotra — Chief Executive Officer & Whole Time Director

Maybe see, we are still collaborating with the Ayush Ministry. So we’ve done a lot of clinical trials on our products along with Ayush Ministry, and we are using the data for communicating to consumers in our name like IU64 we guys have launched and a skew of NPDs with collaboration of Ayush Ministry we are rolling out. So that initiative is still on for us.

Shirish Pardeshi — Centrum — Analyst

Okay. My second question is on oral care. When you mentioned that the category decline which is happening, I mean it could be short term, but steadily the last four, five years naturals has picked up. So when you say down trading which is happening at the low end of the natural, say Babool and maybe the lower-end pyramid Cibaca type products which are growing faster, your data points?

Mohit Malhotra — Chief Executive Officer & Whole Time Director

No, not really. I think down trading is happening across the board. It is just not the economy segment where the down trading is happening because unlike other categories where you’ve got distinct brands in oral care, every brand is existing in a INR10 price point. So be it a Colgate or be it brands like Babool did see down trading. But that said, Babool is under pressure because of what I told you is rural under pressure. So Babool sells well in our rural India. So that’s under pressure because of liquidity issues. And that’s a separate discussion. But though down trading is seen I think across the board, across brands.

Shirish Pardeshi — Centrum — Analyst

Okay. My next question is on the international part. I think after a long time we are seeing a consistency and the credit goes to you because you have seen and you have taken that seriously. I think if you can help me to understand the top line will still grow double digit, but any terms you would like to help us understand profitability part?

Mohit Malhotra — Chief Executive Officer & Whole Time Director

Sorry, Shirish, I couldn’t get the question. Could you please repeat it again?

Shirish Pardeshi — Centrum — Analyst

In the international business you have grown strong double digit and there is a consistency which I’m seeing. But if you can guide on the profitability part, how do you see the next two to three years how profitability will pan out?

Mohit Malhotra — Chief Executive Officer & Whole Time Director

The international business is doing well for us and most of the headwinds are actually behind us. So except for the inflation, inflation is hitting international business quite a bit because of it being a personal care business and personal care business dependent on the oil and oil derivatives, that’s why. But overall, I think international business is doing pretty well for us. The most profitable part of international business in Middle East and North African business, which contributes around 40%, 50% of our total turnover. That is doing exceedingly well.

For the full year, we’ve grown by around 13%, and their profitability is significantly higher as compared to other parts of the business. So what is not doing well for us is Turkey business for which we’ve actually taken impairment and therefore profitability is under pressure. The U.S. part of the business is also doing well and profitably so. So sub-Sahara Africa is also doing well. Egypt business, which is also very profitable, is also doing well for us. SAARC business is growing at around 15%, and that also we expect almost double-digit growth going forward next year. So I don’t see any profit pressures coming out of international business going forward.

We have taken and we are taking a lot of price increases because of per capita income, the higher increases where we exist. So we think we’ll be able to pass on the inflationary pressures to the consumers in terms of price increases. So we budgeted a lot of price increases and — but in international, we think we are in a good space there.

Shirish Pardeshi — Centrum — Analyst

Okay. My last question, I picked up during the opening remarks, you mentioned that inflation is hitting at 12.5%. Is it that current inflation which you wanted to refer? Or if not, then what is the current inflation we are seeing right now? And what the price increases we have already taken in thinking of taking more?

Mohit Malhotra — Chief Executive Officer & Whole Time Director

So we talked about the full year inflation. Full year inflation number is around 12.5%. If I look at the inflation of the last quarter, which is almost like around 16%, Shirish, which is very high, out of which 9%, 10% is the India inflation. And we expect this inflation to be around 8%, 9% going forward also. So we are not seeing any signs of the inflation kind of abating. So that’s a big pressure. And our flexibility of passing on this entire inflation in terms of price increases is there, but this would only tell on the volumes.

And therefore we are kind of pushing back not really taking very heavy price increases and waiting for competitors to take price increases before we take price increases. So that’s why it’s telling there could be a near-term pressure on the margins because of this. But for the full year, we expect the inflation to be in the range of around 7% going forward next year. So second half of the year we see a little bit of comfort happening from inflation. We have taken a 5.6% of price increases to hedge this inflation. But if inflation continues, then we may have to take another round of price increases.

Shirish Pardeshi — Centrum — Analyst

So if I work backwards, 7.7% was growth you have said and 5.6%, so roughly about 2%, 2.5% is the volume growth in the quarter.

Mohit Malhotra — Chief Executive Officer & Whole Time Director

That’s right.

Shirish Pardeshi — Centrum — Analyst

Okay. Thank you, Mohit, and all the best to you and the team.

Mohit Malhotra — Chief Executive Officer & Whole Time Director

Thank you, thank you, Shirish. Thanks.

Operator

Thank you. The next question is from the line of Harit Kapoor from Investec. Please go ahead.

Harit Kapoor — Investec — Analyst

Yes. Hi, good evening. So my first question is on the innovation intensity. In an environment where the global markets are weak, there is down trading across the board and you have challenges on inflation where you will look to kind of cut cost on the opex line. Could this help us — do we expect for the next six to nine months some of the innovation initiatives to kind of be pushed back a little bit as you look to kind of balance in core revenue growth as well as margins?

Mohit Malhotra — Chief Executive Officer & Whole Time Director

Yes, so Harit, we are not looking at cutting back or pushing back on the innovation. I feel innovation and renovation is part of doing business here. And now the way market dynamics have actually developed, channel dynamics have developed, we have enough avenues to put out innovation, test the test balloon, see how it actually fares and then roll it out to mass. And we have enough avenues where cost effective innovations can be rolled out and testing can be done like e-commerce.

E-commerce is where we are very aggressive on innovation, our innovation percentage for the overall business is around 5%, but on e-commerce is in the range of around 11%, 12%, and that will continue. And as and when innovation is tested out there on e-commerce, we will roll it out in modern trade and in selective OFO. So we will not put it out in GT. The innovation in GT, we are not very aggressive in terms of doing. That will be very calibrated in doing because that’s costing us arm and a leg. But as far as e-commerce is concerned, we will continue with the innovations free the way it has been for us. So we want to target a innovation rate of around 4% to 5% going forward next year also.

Harit Kapoor — Investec — Analyst

Okay. Got it, got it. And the second question is on the toothpaste side. If I remember correctly, you had mentioned a while back that the market share number was a bit higher at about 16%, 17%. But maybe I got that wrong, and I think you mentioned about 14.5% this time around. So is that — I just wanted to clarify on that.

Gagan Ahluwalia — Senior General Manager of Corporate Affairs

Harit, I think there’s a difference between volume and value market share.

Harit Kapoor — Investec — Analyst

So that 16%, 17% was volume. Got it. That’s it from me. Thanks.

Operator

Thank you. Our next question is from the line of Suresh Maheshwari from Sanco. Please go ahead. [Phonetic]

Suresh Maheshwari — Sanco — Analyst

Yes. Thank you for the opportunity. Am I audible?

Operator

Yes, you’re audible, please go ahead. Thank you for the opportunity. Will you be passing on the rise in input cost pressure via price hikes in the coming quarters? And could you give some color on how the margin trajectory would look like for the next two years?

Ankush Jain — Chief Financial Officer & Joint Chief Risk Officer

Yes. Hi, Suresh. In fact, yes, there are input cost pressures as we speak. While last year we saw almost 12% increase in input cost at a group level. And even going forward it remains unabated. And therefore in near term definitely we see some margin pressures. However, we would be taking calibrated price increases depending on competitive intensity in the relevant categories, plus also strengthening or hardening our cost-saving initiatives program for that.

So though there would be definite pressures on margins, but I think as an organization we are doing all the efforts either in terms of price increases or cost. But to give you an exact range in H1 looks difficult at this point of time because it is very volatile and uncertain given the supply chain pressures as well.

Suresh Maheshwari — Sanco — Analyst

But how would it look at — how can we look at it from a two-year perspective, like the trajectory, if you could give some color on that?

Mohit Malhotra — Chief Executive Officer & Whole Time Director

Yes. Suresh, we want to maintain our margins, so definitely. We have an operating margin which is going on. We want to currently maintain and we are targeting to maintain our operating margins. So if it calls for optimizing our media, we will optimize our media to cut on employee expenses, to reduce our fixed overhead, variable overheads, we will cut that. We want to maintain our margin. That’s what you’ve seen in the current year also, while there is a 20 bps of contraction which is happening, but broadly we’ve been able to maintain our operating margin percentages. So that’s the way we would want to go.

Operator

Thank you. We have our next question from the line of Chinmay Gandre from Reliance Nippon Life. Please go ahead.

Chinmay Gandre — Reliance Nippon Life — Analyst

Yes. Thank you for taking the questions. So just wanted your read on — I mean, we hear about higher crop prices in terms of wheat and some other crops. So I mean, is it not really translating into net income for the rural side of the economy? And is it not really kind of helping us kind of studying the demand over there. So I just wanted a read on that.

Mohit Malhotra — Chief Executive Officer & Whole Time Director

Yes. So I think you’re right. The monsoon has been — the prediction of the monsoon is good. Even the harvest is going to be good, plus farmers are getting a better price for wheat as it gets exported. So I think we are also of the view that the rural economy will turn around. There is an immediate pressure that we see in near term. But overall I think over six months’ time rural should recover, and that should help Dabur also.

So this is in addition to all the initiatives that we are taking in terms of rural expansion, whether expanding our villages or expanding our direct reach our Yodha program. So this will really help us. So we are very confident and feel that rural will actually recover. And it’s only in past one quarter that we’ve seen a rural pressure, otherwise has been pretty resilient on the business for us.

Chinmay Gandre — Reliance Nippon Life — Analyst

But I mean the rabi harvest would have been, I mean, kind of translated into some kind of income for the farmers and community in the rural area. So that — right now we are not seeing anything on that front, right? I mean, those income translating into savings for them and maybe beneficial in terms of demand.

Mohit Malhotra — Chief Executive Officer & Whole Time Director

Not really. No, no. Not really. For the first time actually we’ve seen the rural pressure building up and therefore liquidity constraints in rural and consumption pressures also and there a squeeze in the wallet of the rural consumer. And that is being felt for the first time because earlier we to get back our money from rural in around 12 days’ time. Now the circle, the cycle is actually almost doubled. We are getting back our money in the rural at around 20 days. So credit is also going up.

That is a very clear signal that there is a compression in consumption, which is being visible in rural. So — and this is in the Hindi Heartland more that we have seen. So we have to wait and watch. not that we see any green shoots at the moment. I think it’s a wait-and-watch situation, which is very volatile as the food prices and the inflation is not abating, which could be putting a pressure on the rural volume.

Chinmay Gandre — Reliance Nippon Life — Analyst

Yes. Sure, sir.

Mohit Malhotra — Chief Executive Officer & Whole Time Director

Thank you.

Operator

The next question is from the line of Shirish Pardeshi from Centrum. Please go ahead.

Shirish Pardeshi — Centrum — Analyst

Yes, hi. Thanks for the opportunity again. I have three questions, maybe Ankush answer. One is, what is the capex which you are looking for FY 2023? And I did see from the presentation that our tax rate has gone up. So maybe for the modeling purpose, if you can help, what is the tax rate we are looking for FY 2023?

Ankush Jain — Chief Financial Officer & Joint Chief Risk Officer

Sure, Shirish. On your first question on capex, as you know, we are already putting up our greenfield plant in Indore, and that will therefore entail some capex. And therefore, in next year we are looking at an India level almost for INR400 crores capex in FY 2023, including this new greenfield and then some ancillary capex. On your next question on tax rate, are you referring to this year versus previous year?

Shirish Pardeshi — Centrum — Analyst

Ya, I think in the slide, I’m expecting — I mean, this year already you have said that from 17.6% it has gone up to 22.4%. What we should take next year?

Ankush Jain — Chief Financial Officer & Joint Chief Risk Officer

It should be around 22.5% to 23%, depending on country mix and other stuff, but broadly in this range at a consolidated level.

Shirish Pardeshi — Centrum — Analyst

That’s what’s I picked up. You said between 22% and 23%.

Ankush Jain — Chief Financial Officer & Joint Chief Risk Officer

Yes.

Shirish Pardeshi — Centrum — Analyst

Okay, okay. Thank you.

Operator

Thank you. The next question is from the line of Yash Maheshwari from Samco Mutual Fund. Please go ahead.

Suresh Maheshwari — Sanco — Analyst

Thank you for the opportunity again. I think I had dropped off last time. So if maybe a quarter of our spend account for [Indecipherable] please me correct me if I got it wrong. Could you provide some sense on how these expenses are being apportioned into the business…

Mohit Malhotra — Chief Executive Officer & Whole Time Director

There is an echo, we can’t hear you. I guess there’s an echo, we can’t hear you.

Operator

Yash, I request you to please use the handset, thank you. Yash, if you are able hear us, we would request you to please use the handset mode and proceed with the questions.

Suresh Maheshwari — Sanco — Analyst

Alright. Am I audible now?.

Operator

The audio is still not very clear, but

Suresh Maheshwari — Sanco — Analyst

Am I I audible now?

Operator

Yes.

Suresh Maheshwari — Sanco — Analyst

All right. So as you mentioned in your opening comments, nearly a quarter of our spends account for digital, please correct me if I got it wrong. Could you provide some sense on how are these expenses being apportioned? And how — do you see the e-commerce channel developing over the next two, three years?

Mohit Malhotra — Chief Executive Officer & Whole Time Director

Right. So Yash, we are already — you’re absolutely right. So almost quarter of our spends, around 23% are total advertising spend is being spent on digital. In digital, there are 4, five revenues on which we do spending; A, advertising on digital, which is not linked to e-commerce on different channels like YouTube, Google, etc., Instagram that we advertise. So that is programmatic sort of buying that we guys do, number one. Number two is influencers.

Then we take influencers across the year across the year, across different, whether it’s taking the food bloggers or it’s taking the mommy bloggers or the chefs or the celebrities. So that is what — that is where we actually spend money. The third avenue is which we spend money on the e-commerce portals, on search engine optimization on respective platforms like Amazon and Flipkart, etc. That’s where we spend money. Plus we develop customized campaigns on digital also. We’ve developed almost 576 campaigns in financial year 2022. And on 273 days on year we guys are visible and got around 970 million views on the same and around four billion impressions.

So we reach out to maximum number of people who have got a connectivity to smartphones and therefore try to create a connect with them. So that is how the money is actually spent on different brands on digital. As far as e-comm is concerned, at the moment, e-com contributes around 6.5% of our business. In next four years, we want to see this actually triple in terms of around 19%, 20% of our total business should be coming from e-commerce in the next four years’ time.

Suresh Maheshwari — Sanco — Analyst

Sure, sir. Thank you so much.

Mohit Malhotra — Chief Executive Officer & Whole Time Director

Yes, thanks.

Operator

Thank you. The next question is from the line of Palak Shah from Infina Finance. Please go ahead. Palak Shah, your line is line unmuted. It seems we have lost the line for Palak. We will move to our next question, that is from the line of Alok Shah from Ambit Capital. Please go ahead.

Alok Shah — Ambit Capital — Analyst

Hi, thank you for the opportunity. Mohit, I just have one question.

Operator

Alok, request you to be please be a bit loud.

Alok Shah — Ambit Capital — Analyst

Hello. Is it better now?

Operator

Slightly better, if you can use the handset mode, yes.

Alok Shah — Ambit Capital — Analyst

Okay. So, Mohit, I just have one question. From the cash balance which we had in FY 2021 of around INR4,000 crores, that balance has now moved up to about INR6,000 crores. My question is are we looking to.

Operator

I’m sorry to interrupt, Alok, the audio is not very clear.

Alok Shah — Ambit Capital — Analyst

Is it better now? Hello, is it better?

Operator

Yes, yes, this is better.

Alok Shah — Ambit Capital — Analyst

Yes. Sorry for this. Yes, Mohit, just one question. In FY 2021 our cash balance was around INR4,000 crores, and which has naturally now moved up, now it is at around INR6,000-odd crores, while the dividend payout largely remains the same. And I understand that INR6,000 crores is quite a sizable balance looking at our scale size. So I just want to know that — what is the thought process of the management board, etc., with respect to this cash which is largely getting communicated? That’s it. Thank you.

Mohit Malhotra — Chief Executive Officer & Whole Time Director

Right. So Alok, this money is actually kept for acquisitions basically. So we are continuously scouting for any synergistic acquisitions in the India business. And as and when the valuations become more reasonable, we want to acquire companies, whether in the space of e-commerce or which is more energetic or strategic fit to us. That’s why this cash is actually kept for us. So we are continuously on a look out here. As and when we get a reasonable sort of strategic fit company, then we may look to acquire also, and this is a means for inorganic growth for us.

Alok Shah — Ambit Capital — Analyst

Got it. But if you’re looking at scouting for some e-commerce or smaller opportunities, then that acquisition may be to my knowledge some INR500,000 crores, right? Or are we actually looking at some big inorganic foray into some new category per se?

Mohit Malhotra — Chief Executive Officer & Whole Time Director

See, options are open for all the channels. E-commerce is one pivot, other could be in a food company or could be HPC company or could be a health care company. So we really don’t know the ticket size. So as I told you that we are scouting out. So depending upon — it’s not just e-commerce, it could be in several areas that one is actually looking at. That’s why the sum of money is large.

Alok Shah — Ambit Capital — Analyst

Okay, okay, all right. Thank you very much.

Mohit Malhotra — Chief Executive Officer & Whole Time Director

Thank you.

Operator

Thank you. [Operator Instructions] our next question is from the line of Palak Shah from Infina Finance. Please go ahead.

Palak Shah — Infina Finance — Analyst

Okay, thank you. Thanks, Mohit. First question is regarding what Percy was alluding to that three-year CAGR number, and Mohit you mentioned that it is a market share gain over the last three years as well, right? So indicated, if the — if your growth is 5% and you’ve actually gained market share in the last three years, does that actually mean the category is flattish to negative growth?

Mohit Malhotra — Chief Executive Officer & Whole Time Director

So we did not, which we clarified that it wasn’t the 5% growth, it was actually a growth of around 26% on a full year basis, 26% growth. It wasn’t a 5% growth. So I think that number was wrong. In chyawanprash and honey, both it’s around to that level, 26% and 11% growth.

Palak Shah — Infina Finance — Analyst

No, I’m just referring to Q4 number. If I take Q4, 2022 versus Q4 2019, you have a 5% CAGR over the last three years on a health supplement and OTC as well?

Ankush Jain — Chief Financial Officer & Joint Chief Risk Officer

Palak, what we missed also think is that in this quarter what had happened, the onset of early summer also impacted chyawanprash and honey, plus a lot of consumers had bought chyawanprash and honey by end of Q4, because of Omicron and so on, sorry Q3. And therefore to that extent probably it got impacted. But by and large if you see on an annualized basis, the CAGR remains strong.

Palak Shah — Infina Finance — Analyst

So, here what happens on an annualized basis where we also have a COVID wave that was there in Q1 and Q2, that base is also helping us out because Q4 is more normalized with non-COVID that’s why I’m comparing with the non-COVID quarter four of 2019. On that three-year CAGR basis it’s a 5% growth, and we have gained market share. I just wanted to figure out whether the market — the category itself has stagnated or because last two years you have been talking about the higher penetration level and acceptance at the consumer level.

Mohit Malhotra — Chief Executive Officer & Whole Time Director

So I don’t know whether I got your question correct, Palak, but what happens is that quarter four is a non-season quarter for chyawanprash and health supplements like I alluded to earlier. The category size actually shrinks quite a bit. So people don’t purchase these health supplements during this quarter. So therefore the penetration also goes down and the category really shrinks. So there you’re talking about, I think the 5% CAGR growth, but COVID was anomaly in between because there the seasonality did not apply. And now again we are back to the same seasonality while the penetration levels have gone up for us.

Palak Shah — Infina Finance — Analyst

Got it. Got it. I’ll take this offline. Secondly, on — sorry.

Ankush Jain — Chief Financial Officer & Joint Chief Risk Officer

Palak, just to clarify, chyawanprash even for three months of quarter four is 26%. But if you see health supplements as a whole, it is appearing to be 5% because glucose actually declined in Q4 of 2019.

Alok Shah — Ambit Capital — Analyst

Okay. Okay. Okay. Got it. Got it.

Ankush Jain — Chief Financial Officer & Joint Chief Risk Officer

So therefore if you break it into different products, then you will see a reality position.

Palak Shah — Infina Finance — Analyst

Got it. Got it. Got it. Secondly, in this quarter we have shown a phenomenal savings in — or cut in our E&P spend, but our other expenses jumped up quite a lot on a sequential basis. Would this be linked only to the ongoing inflation on the distribution side or there is some other cost attached here?

Mohit Malhotra — Chief Executive Officer & Whole Time Director

I think this is on account of freight being higher. Our freight has actually gone up by around more than 20%, and the travel expenses are higher. What’s happened is the food business has actually gone up. And because of the food, the number of cases that we sell, actually if you see a volume growth, our volume growth is actually 12% in terms of tonnage and in terms of cases that we sell. And the freight has been used for that 12% volume growth. Therefore, the freight is very high because of the food business doing well, plus we had a shortage of our capacity in the foods business. So therefore we did outsourcing of a lot of drinks and a lot of juices, because of that the processing charges have gone up. That is all coming in the other expenses. That’s why you see the higher other expenses on account of the mix changing towards the food business.

Palak Shah — Infina Finance — Analyst

Got it. Got it. But then effectively at least in the next two quarters we would have a higher cost because in India the petrol prices only went up at the end of March and 1st week of April. So sequentially we’ll have a higher inflation on that front, right?

Mohit Malhotra — Chief Executive Officer & Whole Time Director

It also yes.

Palak Shah — Infina Finance — Analyst

Got it., got it. Thank you, thank you so much for this. Have a good day.

Mohit Malhotra — Chief Executive Officer & Whole Time Director

Thanks, Palak.

Operator

Thank you. The next question is from the line of Manish Poddar from Motilal Oswal. Please to ahead.

Manish Poddar — Motilal Oswal — Analyst

Hi, iust a couple of questions, if I can. First one is, have you called out new product contribution for the full year?

Mohit Malhotra — Chief Executive Officer & Whole Time Director

NPD contribution around 5%.

Manish Poddar — Motilal Oswal — Analyst

Okay. And would you be able to — what was the number in FY 2021?

Mohit Malhotra — Chief Executive Officer & Whole Time Director

Around 5.5%, Manish.

Manish Poddar — Motilal Oswal — Analyst

And just in terms of international geographies, would you help us, let’s say, with the broader outlook, or let’s say, just in terms of headwinds do you face headwinds in any particular geography as such?

Mohit Malhotra — Chief Executive Officer & Whole Time Director

So with — business overall, Manish, is doing well for us. So I’ll go one by one. So Middle East and North Africa business for the full year we’ve grown by around 13%. And there is a headwind in terms of inflation there because most of the portfolio is actually petroleum-linked for us, and therefore there’s a huge inflation which is hitting us, which is putting pressure on our gross margin. So we are taking lot of price increases in the MENA region. So — but that said, overall the business is doing well for us and we are looking at a double-digit growth in the current year also.

Our Sub-Sahara business is also doing well, again divided into three pockets, which is South Africa, East Africa and the West Africa, that continues to do well. We did a management change a couple of years back and that’s giving us rich dividends for Sub-Sahara Africa. U.S. business is also trending at a high single-digit growth rate in dollar-denominated, so that’s doing well. I think SAARC business with Nepal and Bangladesh is also doing well, growing at around 15% for the full year. Next year also we’ve taken a double-digit growth here.

The only business which is giving pressure to us is a Turkey business where currency has depreciated and that’s why you’ve seen a goodwill impairment that we have seen on account of currency. So currency depreciated by 40%, while the business has grown by around 49%, 50% in the last quarter. We see a negative 17% consolidation happening in India on account of currency depreciation. So that is a very big headwind. And so that’s a pressure point. Otherwise, I think the rest parts of the international business is doing well for us.

Manish Poddar — Motilal Oswal — Analyst

Great. Thank you.

Mohit Malhotra — Chief Executive Officer & Whole Time Director

Thank you.

Operator

Thank you. ladies and gentlemen, that would be our last question for today. I now hand the conference over to Ms. Gagan Ahluwalia for closing comments. Thank you, and over to you.

Gagan Ahluwalia — Senior General Manager of Corporate Affairs

Thank you, everyone, for your participation in this conference call. The webcast audio recording and transcript of this call will be available on our website, and stay safe and healthy, good evening.

Operator

[Operator Closing Remarks]