Emami Limited (NSE: EMAMILTD) Q2 2025 Earnings Call dated Nov. 08, 2024
Corporate Participants:
Mohan Goenka — Vice Chairman & Wholetime Director
Manish Gupta — President, Sales
Gul Raj Bhatia — President, Healthcare
Rajesh Sharma — President, Finance and IR
Analysts:
Percy Panthaki — Analyst
Harit Kapoor — Analyst
Prakash Kapadia — Analyst
Shirish Pardeshi — Analyst
Naveen Trivedi — Analyst
Vishal Gutka — Analyst
Nitin Gupta — Analyst
Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Emami Limited Q2 FY ’25 Earnings Conference Call, hosted by IIFL Securities Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions]. Please note that this conference is being recorded.
I now hand the conference over to Percy Panthaki from IIFL Securities. Thank you and over to you, sir.
Percy Panthaki — Analyst
Hi, good evening, everyone. We are pleased to host the quarterly con call for Emami Limited. On the call with me, I have Mr Mohan, Whole-Time Director and Vice Chairman; Mr. Vivek Dhir, CEO, International Business; Mr. Gul Raj Bhatia, President, Healthcare; Mr Manish Gupta, President, Sales; and Mr. Rajesh Sharma, President, Finance and IR.
I’d now like to hand over the call to the management for their initial comments and then we will open up for Q&A.
Mohan Goenka — Vice Chairman & Wholetime Director
Thank you, Percy. Good afternoon, ladies and gentlemen. Thank you for joining us today for our earnings call for the second quarter and half year ended 30th September, 2024. At the macro level, the quarter presented some challenges with demand trends similar to the first quarter. High food inflation has continued to impact mass consumers.
On the international front, political unrest in key markets like Bangladesh posed some temporary hurdles. Despite these headwinds, I am pleased to report that we delivered profit-led growth this quarter, underscoring our resilience and strategic agility.
Our consolidated revenues at INR891 crore in quarter two grew by 3%, while the first half of FY ’25 saw a 6% growth with revenues at INR1,797 crores. Our domestic business also grew by 3% in Q2, led by double-digit gains in some of our key brands.
Navratna and Dermicool grew by 10%, while the Healthcare range grew by 11%. Pain Management range grew by 5% and BoroPlus delivered a growth of 2%. Kesh King and male grooming declined by 9% and 13%, respectively.
As you are aware, we acquired the balance stake in our strategic subsidiary, Helios Life Style from the erstwhile promoters. Due to the transition and change of management at Helios, we experienced a one-off decline in revenues in the same in quarter two. We are confident that the business is poised for a strong growth in [Technical Issues].
Our pace of innovation continues with launch of two new products under Dermicool, under the brand HE and three new launches on Zanducare portal. Further, we relaunched our light moisturizing cream under the name of BoroPlus Soft in a fresh new look. Light moisturizing cream segment is highest-growth segment in skincare currently and we believe with the strong association of BoroPlus mother brand. [Technical Issues] Yeah. And we believe with the strong association of BoroPlus mother brand with moisturization, care and trust, BoroPlus Soft has all the potential to become a very significant player, not only in the segment, but also a significant value driver for the portfolio.
Our channel placed play continued to evolve as sales contribution from organized channels, that is modern trade and e-com and institutional sales at 26.6% of domestic business increased by 190 basis points in the first half of the financial year, growing by 14%. Our international business showed resilience in the face of geopolitical challenges with sales growth of 12% excluding Bangladesh.
Overall, our international business grew by 6%, both in constant-currency terms and in INR terms, led by a strong performance in the MENA region. In the first half, International business grew by 9% in the constant currency and by 8% in INR terms. The situation in Bangladesh has improved from the lows of July and August. However, challenges like rising inflation, depleting forest reserves, our ForEx reserves along with political instability continue to impact the business. We are confident of maintaining our market shares even in trouble times.
In the second quarter, our gross margin expanded by 60 basis points to 70.7%, while EBITDA grew by 7% to INR250 crores, with margins expanding by 110 basis points. Profit before tax rose by 13% to INR220 crores, accompanied by a 220 basis points margin expansion and profit after tax surged by 19% to INR213 crores.
For the first half of the financial year, gross margins expanded by 140 basis points to 69.2%, EBITDA at INR467 crores reported a 10% growth, while PBT surged by 15% to INR399 crores and PAT also rose by 16% to INR365 crores. These results highlight our ability to deliver solid financial performance even amid challenging conditions and set the stage for a promising second half.
Consequently, our Board has declared an interim dividend of 400%, amounting to INR4 per share for FY ’24. As we look ahead, we are optimistic about a strong recovery in the coming months. With the relaunch of Fair & Handsome set for in Q3, and our focused interventions for Kesh King, we are confident that these brands will bounce back and start contributing to the growth in H2.
And with a good winter season forecast, we remain committed to our goals of high single-digit revenue growth and double-digit EBITDA growth for FY ’25, and we are progressing steadily towards achieving these targets. We remain focused on driving sustainable volume-led growth by expanding our distribution reach, investing aggressively in our key brands and capturing market share across our portfolios.
With this, I open the floor for Q&A. Thank you so much.
Questions and Answers:
Operator
Thank you very much, sir. We will now begin the question-and-answer session. [Operator Instructions] We have first question from the line of Harit Kapoor from Investec. Please go ahead, sir.
Harit Kapoor
Yeah. Hi, good evening. So just on, you know, the two brands that have struggled a little bit, male grooming and Kesh King, both have seen kind of five quarters of decline in terms of brand growth. Could you just highlight Mohan ji about how you are looking — what are the kind of key steps in this new phase of relaunch in Fair & Handsome? Any light you can give on that? And secondly on initiatives in Kesh King that you are taking to make changes in this — in this brand? Thank you.
Mohan Goenka
So Harit, you’re right that these two brands have been struggling for some time. Kesh King, particularly the oil and male grooming for some time. So for — I think I had mentioned in the last quarter con call that for that for Kesh King and BoroPlus, we have engaged BCG for the growth of these two categories.
They started the work in August. Of course, they will come with some solutions in the next six to eight months. Hopefully, after that, once we implement the strategies, we will see a significant growth in the Kesh King category.
As far as the male grooming is concerned, we have relaunched the Fair & Handsome just about in this month. There is a substantial change in our relaunch with a new brand ambassador, young brand ambassador. So hopefully, with all these changes, even male grooming with [Technical Issues] of growth. We are very confident of these two brands going forward now. Yeah. Just to follow-up on each of them. Apart from changing communication and brand ambassador, is there anything else there a packaging formulation? Any other change that has been made on Fair & Handsome pricing, et cetera? So Harit, yes, there is a packaging overhauling what we have done here. And yeah, we are changing — we are wanting to go into a larger male grooming space from Fair & Handsome. So we are working towards that. And you will see a significant new launches coming up in the fourth quarter or in the first half of next year?
Harit Kapoor
Understood. And just a follow-up on Kesh King, it seems like category growth is a challenge because you are driving significantly — so you’re continuing to see market share improvement. So how does one address the category growth challenges, does one have to push — move Kesh King out. I mean extend the brand, is that the best way to drive, because the category growth is — it’s hard to mend the problem of category. So just wondered your insight — initial insights on how you are thinking about what’s the real challenge is the because category growth seems to be the problem on the oil side.
Mohan Goenka
So Harit, Kesh King is anti-hair fall, okay, category. It’s an expensive oil, as you know. So — and it sells in the mass consumers, okay? So because of inflation, of course, there has been a challenge as far as this oil is concerned. Shampoo is still doing better than the oil. Now, the only way to grow is hair fall is a big problem. And we don’t see any reason that this category will not grow in future. Of course, we have faced some challenges from some start-ups, so people are trying new products into the category. But whatever said and done, as I said, BCG is actively looking at this Kesh King strategy. And we have planned a significant growth in shampoo for the time being. Once we are ready with the Kesh King oil strategy, we will roll it out. And yes, I agree that it will — we will be launching some extensions to Kesh King oil.
Harit Kapoor
Got it. Thank you so much Mohan ji. I’ll come back for more. Thank you.
Mohan Goenka
Thank you.
Operator
Thank you very much. [Operator Instructions] We have a question from the line of Prakash Kapadia from Spark at PMS. Please go ahead, sir.
Prakash Kapadia
Yeah. Two questions from my end. Can you give us some sense on what is happening in rural and urban markets. And, you know, going forward, what are your thoughts in terms of growth drivers for us? And secondly, if we look at the journey of Emami both in general has been distribution, direct and indirect expansion, penetrating rural, then modern trade came in, then e-commerce came in and now quick commerce has come in. So how are we gearing for this change in evolution in terms of distribution changes happening in the industry? And, you know, where are we in terms of capability in terms of mix, what is happening in modern trade and e-commerce and some thoughts on general trade and quick commerce?
Mohan Goenka
Okay, Prakash, we have Manish, who is the President, Sales on the call. Manish, can you give the answer?
Manish Gupta
Great question. So first of all, I’ll Mohan. Second is opening address, modern trade and income are now contributing a large good chunk and the fastest growing channel, like it’s going to most of the other companies and rightly so. So we might have been a little late to the party, but currently, we are trending in line with the competitor channels and we can be in e-comm.
Within e-comm — e-comm, of course, is the fastest-growing challenge. Just to give you an idea input come over the last 6 months, we have kind of 2x our number, and you thinking that over the next passing quarters which has come in, this is going to grow faster. So — and we are investing both in terms of resourcing and attention and investments to double down on that group.
Now having said that, as you said, the traditional strength of Emami has always been the GT side as well, and I’m happy to share — then on the GT front, we have done a lot of great stuff over the last 10 years, where rural continues to be a stronghold. And we have further tightened our resources there. We have also started looking at premiumizing our general trade channel via initiatives into the supermarkets, the marts and the standalone stores because they are becoming a big force and a [Phonetic] shopping avenue for the urban consumers.
So we are tackling each one of them. Our prime focus right now is to stay strong in rural, premiumized urban GT, stay strong in modern trade, double down on the quick commerce, right, so because consumers have become multichannel, the shopping behaviors are changing very rapidly. And even with that, we are investing in each of the channels to capture the growth.
Prakash Kapadia
Okay. And modern trade and e-commerce would be what 15%, 18% for us as a 25% — 25% plus. Okay. Okay. And Mohan on rural and urban in some thoughts?
Mohan Goenka
So as Manish said, Prakash, that rural has been slightly better than the urban markets, okay? But there is not much of a difference. Of course, in the third quarter, which is mostly led by BoroPlus antiseptic cream and majority of it comes from the rural market. So we will have to see how the third quarter pans out to be. A very, very robust distribution in the rural markets, you know, so if the winters are strong, we will see a significant growth in the third quarter.
Prakash Kapadia
At least forecast seems to be of a very strong winter is what we’ve been reading.
Mohan Goenka
Yeah, the forecast — forecast this year is a strong winter, yeah. And we are seeing some signs of winter in the north now, so that’s what we are — our market is saying that our stocks are now moving from the market.
Prakash Kapadia
Okay. Okay. So the channel pipeline has started?
Mohan Goenka
Yeah, yeah. Now it is getting.
Prakash Kapadia
And you alluded to Kesh King and you gave some insights into BCG. But some of this was tried earlier also because we change the packaging, we tried smaller packs, we tried and expanded the market. We went to rural, but somehow that the volatility or growth seems to be missing despite some of these initiatives which we have taken earlier also. So what is surprising is despite it being a problem solution area, it’s facing such challenges despite not being such a large category. So what are we missing or what is the consumer thinking?
Mohan Goenka
So Prakash, I see, honestly, you are right, we have been trying on this category. And we have a strong belief in Kesh King because it is anti-hair fall. And see, our job is to keep on trying until the time they succeed. So it’s a. So it’s a big, big category. We have — we see a huge future in shampoo and also in oil. So and BCG is as I said, hopefully they should come up with some great solutions. We are ready to invest any amount of money beyond Kesh King, very honestly.
Prakash Kapadia
Okay. Okay. And some of these initiatives should start reflecting from Q4 onwards or next year we should see?
Mohan Goenka
No. So hopefully, from Q4 onwards, because actively the research is undergoing. So once they give some idea, we will roll it out quickly. Understood. That we will be disproportionate spend on Kesh King because we really see a big potential behind Kesh King. Understood, understood. I’ll join back if i have more questions. Thank you.
Operator
Thank you very much. We have next question from the line of Shirish Pardeshi from Centrum Broking. Please proceed with your question.
Shirish Pardeshi
Hi team, Happy Diwali. just a few questions and observations…
Mohan Goenka
Slightly louder, Shirish. I can’t hear you very clearly.
Shirish Pardeshi
Yes. So just a few observations. So far, most of the companies have highlighted to protect the channel hygiene, companies have taken some inventory cut and taken a pause on the primary end, focused on secondary. Second, we also understand a few companies have highlighted there is urban slowdown in consumption. So in your lens, in your product profile, what is your observation if you can give some depth?
Mohan Goenka
Manish, will you take this one — question?
Manish Gupta
As far as channel inventory is concerned, I mean, we don’t — we have issues in certain areas, but it’s not as large an issue as some of our competition had to get into a sale where pretty decently well managed [Indecipherable] and to take care of our profitability of our partners and distributors [Technical Issues] support or other things to ensure that the cycles are right.
You must understand that we are a seasonal business in two three. So we do under most of inventories and all that, but large new products [Indecipherable] we have to go to the extent of cutting down big time of something. Small corrections here and there, we keep taking month-on-month, quarter-on-quarter later. Now as far as the urban and rural mix is concerned, as we said earlier, for us, the unit is quite uniformed. We are by far the number one brand in most of the big categories that we operate in. So we pretty much right to postal start. I hope it answered your question.
Shirish Pardeshi
Yeah. Manish, I understand what you’re saying. But just you just to give you point of view pain management has grown only 5%, even BoroPlus has also grown 2%. This case have taken some new product launches. So I mean the season has not panned out the way it was expected for pain management, especially for BAM. And even BoroPlus is expecting the loading would have started happening. So is that inventory is an issue or there is something else?
Manish Gupta
No, no, no. No. So BoroPlus is very simple. We are looking at quarter two numbers, which is divided by of September. Over the year, the loading for the winter season. Most brands would like to do it from October, November onwards and not September onwards. As Mohan mentioned earlier, we are taking a conscious call that we loaded in line with the season of itrate rather than the chockablock or pipeline for a distributor under capital. So October onwards, that core will start. There might be some little bit here and there, but that’s fine. We’re very confident on the BoroPlus side.
As far as the pain management is concerned, the quarter half 2 perspective that quarter 3 is our biggest season and as we get into winter and onwards. And category is doing well, both in urban and rural, [Indecipherable] is going very well there. We don’t see any major reason for an alarm there.
I mean even if we look from a share perspective, either maintaining or growing our share. So that’s good. In fact, the good point I would like to share is we are now seeing an increased participation from modern credit, quick commerce, towards the OTC category, especially because the — some of the, especially in quick scenario e-comm scenario, they lend themselves to a better category fit when it comes to [Indecipherable] in person averaging solutions. We are conscious of that opportunity, and we want to capitalize on that as [Indecipherable] changes.
Shirish Pardeshi
Sorry to little harp on this point because over the last 4, 5 quarters, we have spent significant amount of money on Project Khoj. So I mean project codes primarily was to other understanding was improving throughput. And if the category has been seeing this kind of import, the sales is not in tandem. So that’s why I was — I was a bit worried in asking this question.
Manish Gupta
No, I understand that. The Project Khoj was about creating our hubs and spokes into the rural market. Over the last three, four years, that work has been done. We have expanded our tags expanded over the year we expanded our hub-and-spoke and now Khoj has officially internally been called off because it has done a job now in the process of gaining the fruits from through our GP network, right? But to say that we are not within the thing, I’m not sure that’s the right way to do it. Market shares are growing on the category. I mean, that’s a good proof of that we are getting the billing from it.
Shirish Pardeshi
Okay. Okay. My second question question to…
Mohan Goenka
Shirish, just to add on Manish’s point, see any investments that you do, you don’t know how the market would behave. You all know that rural markets or whether urban will there is some level of stress as far as the consumer demand is concerned. So these are investments for a very, very long-term investment that we do in rural markets. or growth or expanding outlets in the rural markets. Once the market bounces back, we would be preferably the companies who will benefit the most.
Shirish Pardeshi
I understand. I’m completely with you Mohan ji because you guys are spending more than the industry average. Because then the question is that it’s not sufficiently getting us to the revenue momentum. That’s the big challenge.
Mohan Goenka
But I don’t subscribe to what you’re saying, Shirish, because honestly, if you see the challenge that is on a few brands some of the other brands are still doing much, much better and growing faster than the category. So some brands are dragging the number down. Otherwise, we would have done much, much, much better, Kesh King and Male Grooming, and also, we did not load BoroPlus in the second quarter. So that is — these are the key reasons. International also was double-digit growth, if you would see in the last five, six quarters. because of Bangladesh, we could not grow.
Otherwise, our growth could have been easily 6% to 7%. And also the Man Company, because of the transition, you have seen the growth in the man company and Man Company has not grown. In fact, it has declined in the second quarter. These are certain transitional things that we will have to take into account. I think the brands are very, very robust in these tough times. Let me be very clear.
Shirish Pardeshi
Okay. My second question to Gul Raj ji. What is this driven 11% growth. Is that the channel-specific, if you can give color because Manish just said that the modern trade commerce is showing a lot of momentum. So maybe if company’s average contribution is 26%, is the modern trade is really driving the growth or GT has also been flaring? And some color on the Zandu online, what are the numbers?
Gul Raj Bhatia
Yeah. So thanks, Mr. Shirish. And I’ll answer both the points that you raised on channel and the online contribution. So from a channel perspective, the growth has been driven predominantly by the GT business in terms of having performed well on the OTC side and on the medical or ayurvedic medical business, the pharma ayurvedic business.
Online has also done well. especially e-comm. But since the contribution is relatively smaller yet for e-comm modern trade, obviously, they’ve done better than the GT growth. I mean, for the last few years, and hopefully, over the coming years also, both e-comm and Moderna will perform better than the GT business. But the GT business also has done reasonably well in terms of driving this 11% growth.
Coming to the online part, the online business Zanducare. We’ve done well both on Zanducare and we now have a fairly robust product portfolio, which is doing well, both on Zanducare, and we’ve also, as you know, extended it into modern trade. We’ve always been selling it on Amazon and other strong marketplaces, and they are also doing pretty well.
So from an online perspective, we are focusing on three channels, our portal Zanducare, the various demarket places and modern trade and all three are doing reasonably well.
Shirish Pardeshi
Okay. Okay. That’s really helpful. Mohan ji, my last question, you said that you are quite optimistic. So give us some two, three parameters on which you are confident that things will change in quarter three, quarter four.
Mohan Goenka
So Shirish, as I said, see, one is Bangladesh is as far as international is concerned, I think it was due to the Bangladesh market. That will grow in the third quarter.
Again, the Man Comapny, which was doing exceedingly well because of the transition, it de-grew in this quarter. But I’m hopeful that in the third quarter, it will again start growing. That is the second…
Male grooming is a complete relaunch. We have done in the month of November. So hopefully, maybe if in this quarter or in the next quarter, you will see a significant growth coming in from Male Grooming. Testing may take some time before we get the results from the BCG and we are predicting a good winter this time. So if the winters are good, then hopefully, that should give us at least 1% or 2% additional growth. That’s what so we expect at least 7% — 7% to 8% growth in this quarter.
Shirish Pardeshi
No, I mean, in the presentation, I saw that there is a relaunch of HE and now we are getting into even the perfume and the cologne. So is there any strategy for this segment to look at or is this is just going to complement our male grooming portion also?
Mohan Goenka
No, so he was always a male grooming. We only had deo, and these are only to target some upmarket consumers. If you have seen the packaging of HE, it targets to a very, very urban consumer. We are trying only in e-comm right now. If we see some momentum, then we will go into the modern trade.
Shirish Pardeshi
Do you have any particular target for the new product contribution for FY ’25?
Mohan Goenka
We have a target, which is about 1% of our sales. So, that is what is the target. But it all depends, some projects get delayed in launches, then the targets come down.
Shirish Pardeshi
Okay. Thank you and all the best.
Operator
Thank you so much sir. We have next question from the line of Naveen Trivedi from Motilal Oswal. Please proceed with your question, sir.
Naveen Trivedi
Hi good afternoon, everyone. So, my question is, again, on BoroPlus range. Last year, we had seen a weak revenue growth year. And on top of if I look at the first half number also, we had done around 3% growth. Although you didn’t talk about the second half quarter pickup should be there. The our base numbers are favorable. But looking at the annual numbers, do you think this BoroPlus as a range can do around high single rate to low double-digit range if the winter poised well for this year?
Mohan Goenka
Definitely, Naveen. I expect if the winters are good, we must see at least double-digit growth, why single-digit growth. Even if the winters are not so good, we will definitely expect about 7%, 8% growth in the BoroPlus range. You have seen the summer, you know, what the summer was strong this time we grew disproportionately in our summer brands, right? So if the prediction goes right, we expect better numbers for sure.
Naveen Trivedi
So this double-digit, you are saying for the second half or you are saying for the year, sir?
Mohan Goenka
Full year for the second half, basically.
Naveen Trivedi
Sure. And if you can also give us some sense about — because we have done a lot of brand expansion under BoroPlus soaps and facewash and all. So if you combine all expansions, what is the mix of the initiatives which we have driven, how much do they contribute to the brand?
Mohan Goenka
So BoroPlus antiseptic cream, then we have BoroPlus winter lotion, then we have BoroPlus soap, and then aloe vera gel, prickly heat powder, these are some of the categories under BoroPlus. And now recently, again, relaunched BoroPlus Soft, these are some of the categories. So about 75% — 75%, 76% is antiseptic cream, balance 25% is the rest of the categories.
Naveen Trivedi
Sure, sir. Sir. And just one thing on the Helios. You mentioned about the quarter we had some 9% decline because of the ownership change. Do you think the — we will be able to recoup in the second half or you think that the — now the second half will be as normal as we have seen in the first quarter?
Mohan Goenka
Sorry, which category you asked?
Naveen Trivedi
[Indecipherable] the maintenance be lost 9%, yes.
Mohan Goenka
Now Helios, the transition is still on. So hopefully, it would be completed by mid of November. And then, we expect the growth coming in. Hopefully, this quarter should grow not so handsomely, but yeah, we will see some growth in — but fourth quarter should be better than the second and the third quarter.
Naveen Trivedi
Sure, sure. Thank you so much sir. That’s all from my side.
Mohan Goenka
Thank you.
Operator
Thank you. We have next question from the line of Vishal Gutka from HDFC Securities. Please go ahead sir.
Vishal Gutka
Yeah. Hi team. I had just one — two questions. First is on Kesh King. So how do you see competitive intensity in bakeoffs SR acquired being acquired by Dabur given that it has a much repin terms of competition. And on the end, you have brands like Adivasi oil, which are selling at a a very aggressive discount given that they’re getting shelf space now. So I just wanted your view on that.
And secondly, on pain management, growth of 5%, although my thought process was that monsoon season of the second quarter is a very important quarter for the pain management portfolio. So, just wanted to hear your thoughts that why growth has been subdued [Phonetic] that some winter also play an important role in driving the performance of poor pain management?
Mohan Goenka
So we will have to wait and watch, Vishal, how the competition does what they do. As far as we are concerned, we never take anyone lightly, and we are framing the strategy for Kesh King mentioned. So — and I also mentioned that we will spend disproportionately on Kesh King because we are very, very bullish.
Adivasi oil doesn’t conflict with our consumer base. Adivasi oil absolutely goes in the new consumer that will grow the market further, I believe. And Pain Management, yes, 5% growth we had in the second quarter. But the third quarter, we have started handsomely at least in the month of October. So — and as Manish said, that the categories are also growing. We are also seeing some growth coming in from quick com and e-comm under Pain Management. So hopefully, you’ll see better numbers in the third quarter.
Vishal Gutka
Great. Sir, last question on my side on the urban demand because most of the companies are like a stress in urban demand. What is your assessment? How are you doing going forward urban demand with regards to the portfolio that you have?
Mohan Goenka
So Vishal, now we are — slightly, we are getting a new mix. You would see that 26% of our business now comes from MT and e-comm. That is primarily urban. And some of the new categories that we are coming in are also urban driven, whether it is HE Man Company or [Indecipherable], some of these brands are mostly urban brands. So we will have a good mix of urban and rural going forward. We are still very, very bullish on the premiumization. We will keep on launching some of the brands or products under our existing brands. So yeah. Great, great. Thank you and wishing you all the best for future quarters.. Thank you Vishal.
Operator
Thank you very much. [Operator Instructions] We have a question from Percy Panthaki from IIFL Securities. Please go ahead sir.
Percy Panthaki
Hi sir. Just one question on the subsegments of hair oil. So this hair fall defense category from whatever data you have from syndicated sources or consultants or whatever, do you find that this hair fall defense category is growing slower than the overall hair oil category or that is not the case?
Mohan Goenka
Percy, that’s not the case. As I said, hairfall is a big, big issue, both, in urban, rural, male, female everywhere, okay? And what we have seen is that some of the start-ups, there are multiple start-ups who have launched these hair fall oils, which is mostly sell-through e-comm. So that has, I think, slightly dented the sales of Kesh King. So I’m not seeing that the category is shrinking or the category will go down because this — the problem is not getting solved. Hair fall, in fact, it is increasing with stress levels being up.
Percy Panthaki
So, sir, do you think that there is a case to have different variants within Kesh King with different ingredients like [Indecipherable] oil, you can launch a variant with Bringha oil or something like that, which would help sort of address different kinds of customers with different needs.
Mohan Goenka
Absolutely. See, so as I said, BCG is on it. Let us give at least one or two quarters to them. let them come up with the right strategy.
Percy Panthaki
Right. Right. Understood. Also wanted to understand, see modern trade, quick commerce or e-commerce, et cetera, as you said, is like close to 25% of your sales now, which means as a percentage of urban it is probably close to half of your sales. And obviously, this number is only going to increase as we go ahead because these channels are sort of gaining favor among customers. So, do you think that from a slightly medium-term perspective like a 5- to 10-year perspective, if these channels are becoming very heavy we need to also think of our portfolio from that lens as to what kind of products and what kind of categories would be more amenable to selling in those channels? I know we have now Man Company and some of the other products like that, but do you think we need to do more on that as well?
Mohan Goenka
Percy, I don’t have an answer very honestly, 5 to 10 years is a long period. But yeah, we definitely believe, yeah, as you said, e-comm, MT quick comm are the new future distribution channels. Whatever needs to be done, we will to be successful in these channels. If you would remember about five, six quarters or seven, eight quarters back, no one believed that Emami can do 26% from e-comm and modern trade because people believe we don’t have the products for modern trade and e-comm. But that’s not true. So, whether it is Navratna or BoroPlus or Zandu Balm or any of these brands, they very well sell in modern trade and e-comm.
Percy Panthaki
Got it. Got it. Got it.
Mohan Goenka
How will we get 26% contribution of MT and e-comm.
Percy Panthaki
Got it. Just the last question is, you mentioned some time ago that 75% of BoroPlus is antiseptic oil and 25% is the other variant.
Mohan Goenka
Antiseptic cream.
Percy Panthaki
Sorry, antiseptic cream and other variants is 25%. Would you be able to give some idea as to what this ratio was, let’s say, five years ago? And how do you think it can evolve five years from now?
Mohan Goenka
So exact numbers, I will not be having, Percy, but I think five years back, it would be almost 90%, 92% would be antiseptic cream, 7%, 8% would be other brands. In the last few years, BoroPlus lotion, BoroPlus aloe vera gel and BoroPlus Soap, these have gained significantly.
Percy Panthaki
And do you think this trend can continue like this 25%, can become sort of meaningfully larger over the next five years or so?
Mohan Goenka
Yes, definitely. So we also believe there is strong growth potential in BoroPlus and that’s why we have given two brands to BCG. One is Kesh King and one is BoroPlus. It’s a very long-term strategy, yeah.
Percy Panthaki
Got it, got it, Mohan ji. We can go back to the queue.
Operator
Thank you very much. We have next question [Operator Instructions] We have a question from Nitin from Emkay Global Financial Service. Please go ahead sir.
Nitin Gupta
Yeah. Thanks a lot for the opportunity. First question is with respect to digital brand revenue decline of 9%. So when you are talking about transition and change in management, what exactly is all about? Is there any change in the supply chain, which is leading to this decline or is just the top management chain that is driving the decline?
Mohan Goenka
It is the top management because the promoters are now out, and they have handed it over to us. So we are now managing the Man Company and Brillare. So it is just a transition because we will have to take over, we will have to hire people. We will have to do all this. So it is taking 1 or 2 months. That’s it. It is just the top people.
Nitin Gupta
So in terms of hiring more people…
Mohan Goenka
[Indecipherable] motors who are managing this business, all of them around out of this.
Nitin Gupta
Okay. So can we assume that like it was not planned well or it was bound to happen?
Mohan Goenka
Any transition, Nitin, takes a while. Of course, we plan before we do any transition, okay? But it is very, very difficult to know exactly what is going to happen. So this was a big transition because startups works very differently. And as I said, there were multiple promoters who are driving the Man company. So now as it has come — and hopefully, we’ll see some growth from third quarter.
Very recently, for these startups, we have hired CEO, Mr. Vikash Mittal [Phonetic]. So hopefully, he has just joined, and now he’s going to take over and grow these brands. He’s a highly seasoned guy, Vikash? So of course, he has targets to grow these Brillare and Man Company. So he also needs to settle down. He has just joined about 10 days back.
Nitin Gupta
Okay. Thanks a lot. And second question is with respect to this A&P spending. So there’s a 5% on a Y-o-Y basis, so can you consider this…
Mohan Goenka
Come again. Sorry, come again, it was not clear.
Nitin Gupta
I’m talking for the perspective of A&P spending, advertise and promotions. So there is a decline of 5% on a Y-o-Y basis. So this is more related to like the relaunches on the launches we are planning in Q3 — that’s why there is a cut in Q2 or how should we read it?
Mohan Goenka
So Nitin, if you see H1 — if you see the H1, the growth has been almost 7.6%, you know, in the H1 because of some of the relaunches and we have cut on the Q2, but we will make it up in the Q3 or Q4, okay. But we are definitely not cutting down our advertising budget, okay?
Nitin Gupta
So my point is…
Mohan Goenka
Because our margins from day one, I’ve been telling that our margins are expanding, and we want to invest behind our business. So we will do that.
Nitin Gupta
Okay. Thank you. So that means that in the second half, we will have a higher spending?
Mohan Goenka
Yeah, definitely.
Nitin Gupta
Okay. And will that have any impliction…
Mohan Goenka
And despite of that, our margins will still expand.
Nitin Gupta
Okay. The second half, you are expecting EBITDA margin to expand?
Mohan Goenka
Yeah.
Percy Panthaki
So first half also, it has expanded it will continue through the second half year.
Nitin Gupta
Yes, yeah. And lastly, on other income, like there is a jump. So any one-offs sitting here?
Manish Gupta
Yeah, Nitin, the other income has primarily gone up because of on account of higher interest income, higher mutual fund gains on liquid investments. And also we are having higher surplus funds this year compared to last year. So it is mostly in normal course of business.
Nitin Gupta
Okay. Thanks a lot.
Manish Gupta
Thank you.
Operator
Thank you very much. We have a question from the line of Ankit Shah from RK Advisory [Indecipherable]. Please go ahead.
Analyst
Hi team. Thanks for the opportunity. So, sir, my first question is on since we are visible that the A&P spends on the seven Oils in One. So are we planning to grow the brand size going higher, if yes, then the target, if it’s possible?
Mohan Goenka
So Ankit I think 7 Oils in One is definitely a focus brand. The brand size is around INR45 crores in the domestic business. We have been focusing on this brand for the last few years. and it still remains under the focus. So there is not much change in the strategy of 7 Oils in One. It will continue the way it is.
Analyst
Okay, sir. Got it. Sir, my other question will be on — if you could share the impact of the new product launches and the marketing campaign that we did in the H1 FY ’25, you can just show — throw some light on that.
Mohan Goenka
So in my con call, I’ve said we have recently launched some new brands, which has happened in this quarter. We will have to wait and watch the results in the subsequent quarters. So I have been maintaining this that we will be aggressive in our new launches going forward also. And the total new launch contribution we expect is around 1%.
Analyst
Okay, sir. Got it. That’s all from my end. Thank you, sir.
Mohan Goenka
Thank you.
Operator
We have next question from the line of Shirish Pardeshi from Centrum Broking. Please go ahead.
Shirish Pardeshi
Yeah. Thanks for the opportunity. Rajesh ji, just a quick question. We have taken some MAT credit. So I just wanted to understand the tax rate for — and how much MAT credit is available for the second half?
Rajesh Sharma
So for H1, the tax rate average tax it is around 9%. So for the full year also, it should be in the range of 9% to 10%.
Shirish Pardeshi
Okay. That will remain at 9% to 10%?
Mohan Goenka
Yes.
Shirish Pardeshi
Okay. And the second question is that with TMC coming under our belt, do you think we will do the in-house manufacturing or will continue the manufacturing supplies from the outside?
Operator
No, we’ll continue the way it is, Shirish. We are not changing anything right now. It will come from the existing units.
Shirish Pardeshi
Okay. No, I was just saying because now we have no control on the company. So the profitability is going to be taken at some point of time in the future, what will the course of action?
Mohan Goenka
No. So right now, we don’t have any plans to move the factories to — to move the operations. It will gradually happen if it happens.
Shirish Pardeshi
Okay. And just one more question on the TMC. Once now, we have — so you said that you’re basically now trying to reorganize and get it merged. So initially, we have seen some feedback from the channel and this — but if we build a number for the next two to three years, what kind of potential this brand can become? I mean, would this [Indecipherable] as per your estimate, you are saying about INR200-odd crores? So how much the growth, especially for TMC can happen? And what are the growth drivers? And what are the channel expertise we will try and establish?
Mohan Goenka
So Shirish, man company is about INR180 crores. At least in the next three to four years, we expect the sales to go to about INR300 crores, INR350 crores. That’s what is the target given to Vikash. And of course, it sells mostly through e-comm, and we will roll it out in some other channels going forward. We’re also seeing substantial reduction in costs and that would be deployed in advertising. So, how we operate other Emami brands. Similarly, we’ll also print the Man Company. Of course, the contribution will be far more from digital or e-comm and MT.
Shirish Pardeshi
Okay. Okay. And any word on the Axiom, what is happening there? I mean last time we had the update about what before the plant is going to get scheduled. And is the production and the product has started going into the market?
Mohan Goenka
Yes. So should you see us the production is on from Jammu. Of course, this is an off-season for juices. Now the next year, we will be supplying from Jammu only.
Shirish Pardeshi
Okay. Thank you Mohan ji and all the best.
Operator
Thank you very much. As there are no further questions from participants, I now hand the conference over to management for closing comments.
Mohan Goenka
So thank you, everyone, for joining us today for our Q2 earnings call. Thank you, IIFL. Thank you, Percy, for arranging this call for us. Thank you.
Manish Gupta
Thank you.
Operator
[Operator Closing Remarks].