Emami Limited (NSE:EMAMILTD) Q3 FY23 Earnings Concall dated Feb. 03, 2023.
Corporate Participants:
Mohan Goenka — Vice Chairman & Whole-Time Director
Gul Raj Bhatia — President, Healthcare Division
Rajesh Sharma — President, Finance & Investor Relations
Vinod Rao — President, Sales
Vivek Dhir — Chief Executive Officer, International Business
Analysts:
Percy Panthaki — Vice President at IIFL Securities
Prakash Kapadia — Anived Portfolio Managers Pvt Ltd — Analyst
Shirish Pardeshi — Centrum Broking — Analyst
Gaurav Jogani — Axis Capital — Analyst
Harit Kapoor — Investec India — Analyst
Kunal Vora — BNP Paribas — Analyst
Aditya Sulakhe — Marcellus Investment Managers — Analyst
Sameer Gupta — India Infoline — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to the Emami Limited Q3 FY23 Earnings Conference Call hosted by IIFL Securities Limited. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr Percy Panthaki from IIFL Securities. Over to you sir.
Percy Panthaki — Vice President at IIFL Securities
Hi. Good evening, everyone. From the management, we have Mr Mohan Goenka, Director; Mr Vivek Dhir, CEO, International business; Mr. Vinod Rao, President, Sales; Mr. Gul Raj Bhatia, President, Healthcare Division; Mr Rajesh Sharma, President Finance and IR.
So without further ado, I’ll hand over the call to Mr. Mohan Goenka, who will take us through the [Technical Issue].
Mohan Goenka — Vice Chairman & Whole-Time Director
Good evening, ladies and gentlemen. I thank you for joining us today. I welcome you all to this conference call on Emami’s result for the third quarter and nine month year ended FY23. During the quarter, demand patterns for the FMCG sector remained sluggish, with rural markets experiencing continued demand pressure. Further, a warmer winter season across the country impacted sales even more. However, December witnessed a moderate rebound in demand with easing of inflation.
In the given macroeconomic context, our overall net sales at INR975 crores grew by 2% and revenues at INR983 crores grew by 1% in the third quarter of this financial year, which translates into a healthy three year CAGR of 7% compared to the pre-pandemic period. Our domestic business grew by 1% during the quarter translating into a three-year CAGR of 6%.
Domestic volumes, however, declined by 3.9% in this quarter. The Man Company which became our subsidiary with effect from 1st July ’22 contributed 2.8% to our overall net sales during the quarter. Our NPDs, including digital-first launches, also performed well, contributing around 4% of domestic net sales during the quarter.
Coming to our brand vice performance; Healthcare range grew by 2%, 7 Oils in One grew by 5%. However, BoroPlus range declined by 3% due to warmer winter. Pain management range declined by 2%, Kesh King, by 1%, Navratna declined by 6% and male grooming range declined by 1%.
However, if you look at a three-year CAGR, Healthcare range grew by 8%, 7 Oils in One grew by 13%, BoroPlus grew by 5%, pain management range grew by 6%, Kesh King grew by 4% and male grooming range posted marginal growth.
While rural markets remained muted, urban centric new age channels like Modern Trade continued to grow strongly by 20% and e-commerce by 45% during the quarter. Our D2C portal Zandu care also continued its growth trajectory, led by digital first launches. The contribution of e-commerce channel increased by 260 basis points to 7.9% and Modern Trade contribution increased by 200 basis points to 10.5% of the domestic revenues.
Both Modern Trade and e-commerce put together now contributes to 18.4% of domestic revenues against 13.8% in quarter three last year. During the quarter, our new and digital-first launches have also performed well in these newest channels contributing 14% of sales in Modern Trade and e-commerce.
Our international business grew by 7% during the quarter, translating into a three year CAGR of 13% in-spite of several key market-facing challenges like currency depreciation in Bangladesh, economic crisis in Sri Lanka, Forex and liquidity crisis in Nepal and ongoing political conflict in CIS countries etc. The growth has been mainly driven by strong performances in-markets of MENA, CIS, Bangladesh and Southeast Asia.
During the quarter, our gross margins at 65.9% contracted by 150 basis points due to inflationary pressure and favorable portfolio mix last year. Our EBITDA at INR294 crores declined by 14% over previous year. However, profit after tax at INR237 crores grew by 8% over previous year.
In-line with our guidance shared in the last con-call, we believe this should be the last quarter for margin contraction. With moderation in inflationary pressures and we expect expansion in our gross margins and EBITDA margins in the fourth quarter of this financial year, hence for the full-year, we expect our EBITDA margins to be in pre-COVID levels; that is around 27% for our core business.
Further, the Board of Directors have declared a second interim dividend of 400% that is INR4 per share for FY23 at today’s Board meeting. I’m also pleased to inform that we have appointed Mr. Giriraj Bagri as the Chief Growth Officer to take forward our new brands, innovation, strategic investments and other growth opportunities.
Mr. Bagri is an MBA from XLRI Jamshedpur and has served as the CEO of Raymond FMCG and CEO of ITC Foods division in the past. He has also worked in many consumer companies like Colgate-Palmolive, Kraft Heinz etc. in senior positions. Going ahead, the macroeconomic environment is expected to improve with inflation easing in December and the anticipated stimulus of the union budget should fasten the industry recovery.
The upcoming quarter looks promising for the industry due to declining commodity prices, higher crop realization and continuous government interventions. On the industry front, we do believe that going-forward, D2C and e-commerce would play an important role in the future growth strategy of the FMCG business with omnichannel distribution. We plan to be present in these emerging channels of growth, the foundation of which we have already started building through many of our strategic investments in the new-age companies in recent past.
With this brief, I now open the floor for Q&A. Thank you.
Questions and Answers:
Operator
Thank you. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Prakash Kapadia from Anived Portfolio Managers Private Limited. Please go ahead.
Prakash Kapadia — Anived Portfolio Managers Pvt Ltd — Analyst
Yeah, thanks. Couple of questions from my end. You know, you mentioned in your opening remarks about inflation coming out for bid. So, how does demand look like, what is the sense we are getting on urban and rural demand because currently in year-to-date, we see most of our power brands have shown either muted grow or no growth in some cases, because of the adverse winter. So, what do you think will drive growth for us in 2024.
And specifically on Kesh King, again, it continues to be volatile. And on healthcare now we have a favorable base. So, is there visibility in terms of new product launches and growth coming back on the healthcare. These were some of the questions. Thank you.
Mohan Goenka — Vice Chairman & Whole-Time Director
So, Prakash, the demand, as I said, still seems to be a little muted. The month of January, we haven’t seen the kind of growth what we had seen in the last few weeks of December. So, we will have to wait-and-watch for the complete recovery, I think. It may take a while, I’m not too sure, but hopefully I think this quarter or max I think this should be the last quarter of this kind of a demand scenario. So — but if you ask me as of now, the demand is still little muted.
So, Kesh King, yes you are right, there is ups and downs. There was demand about a few quarters back and discretionary is still under pressure so — and we have seen, you know in Nielsen also that all the oils have not performed well, particularly in this quarter. All the value-added oils, so — which includes the Kesh King. The Nielsen says the total decline of 10% whereas Kesh King has only declined by 3%. So, as I said, overall, the demand scenario has to improve, then only the brands will see some light of the day.
As far as healthcare is concerned, yes, now we have a favorable base and we have launched some key brands under — in healthcare, particularly for D2C. Gul Raj is on — in the line, I think he can throw some more light, what’s new brands we have launched in the healthcare range.
Gul Raj Bhatia — President, Healthcare Division
Right. So, Gul Raj here. So, essentially, we have focused, as Mr. Mohan mentioned, on strengthening our NPD launches in the D2C space and we have launched some brands in the last three to six months and there is a strong pipeline we are planning to launch over the coming quarters. And even in the traditional trade business, we are launching NPDs in some of the segments we are not present in both OTC and in the medico business.
And in the medico business, we launched two new products in the [Indecipherable] segment, in the paste segment. And both have done. We’ve launched them couple of months back. So, we do see both for the D2C business and the traditional trade business, NPD is being one of the growth drivers in the coming quarters.
Prakash Kapadia — Anived Portfolio Managers Pvt Ltd — Analyst
And, as per the current run rate, what will be the OTC and ethical mix?
Gul Raj Bhatia — President, Healthcare Division
It would be in the region of about 2.5:1 in terms of the ratio.
Prakash Kapadia — Anived Portfolio Managers Pvt Ltd — Analyst
2.5 will be OTC, right?
Gul Raj Bhatia — President, Healthcare Division
That’s right.
Prakash Kapadia — Anived Portfolio Managers Pvt Ltd — Analyst
And lastly, Mohan Ji, on rural, you mentioned that remains muted, so is it downtrading, is it LUPs and how do you think rural will recover or what is the sense of rural and urban demand as we move forward?
Mohan Goenka — Vice Chairman & Whole-Time Director
Yes, Prakash. So, I think LUPs are — is slightly growing faster than the larger packs. So, there is definitely some downtrading that is visible. I would say this is across the board, not just food, it is also seen in some of the urban markets also.
Prakash Kapadia — Anived Portfolio Managers Pvt Ltd — Analyst
Okay, okay. Okay, I’ll join back if I have more questions. Thank you.
Mohan Goenka — Vice Chairman & Whole-Time Director
Okay, Prakash. Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Shirish Pardeshi from Centrum Broking. Please go ahead.
Shirish Pardeshi — Centrum Broking — Analyst
Yeah, hi. Good evening. Thanks for the opportunity. Mohan Ji, I have two broad questions. We started the season somewhere in the month of September…
Mohan Goenka — Vice Chairman & Whole-Time Director
Your line is not very audible Shirish, can you be little audible?
Shirish Pardeshi — Centrum Broking — Analyst
Yeah. Good evening and thanks for the opportunity. Two questions from my side. When I look at the winter was expected to start somewhere in month of October and we did some winter product loading. However, winter didn’t pan out the way we were expecting. So, understandably November month was bad. But towards December and January, the winter has picked-up. So just wanted to understand, because you just mentioned that even January was bad. So, is that structural problems that in the mass consumption we are seeing the demand outlook is very-very weak. And maybe if you can add some more color towards the winter portfolio, how do you think will pan out in next two months?
Mohan Goenka — Vice Chairman & Whole-Time Director
So, Shirish, as far as winter is concerned, the loading happens from the month of September, okay. And by mid of December, the winter sales is almost — it starts declining but it is, we don’t load after — post 15th of December. So whatever winter, whether it is severe winter in December or January, those are only secondary numbers not primary numbers, okay. But even though the winter was good in some parts of the country, particularly the North, but overall, it was still weak compared to some of the past winters that we have seen.
Overall, yeah, the season, the number of days were also very-very less this time as well. It may be a severe winter, but the number of days were very less. So, overall, the winter was quite muted, honestly. As far as demand is concerned, I don’t see any structural issue, honestly.
Every company market, we are seeing that there is some pressure in the rural markets due to inflation and which are evident from the numbers. What everyone is reporting. Of course, we have a larger contribution from the rural markets. We may be a little more effected, but I’m not seeing that our shares are being taken away by somebody. Once the market rebounds, I don’t know which month, but I’m hopeful it may happen anytime soon. But once it rebounds, then we are definitely going to benefit from this.
Shirish Pardeshi — Centrum Broking — Analyst
Okay. But just one follow-up, you said that the entire country, the rural is bad. So that’s why I asked you that mass consumption is faltering or is the same issue which you are seeing in the north across south also?
Mohan Goenka — Vice Chairman & Whole-Time Director
When I say entire country, yes, of course we are not — of course, there are some markets which are more of a concern, particularly in Northern India, but yes the demand is muted across the board.
Shirish Pardeshi — Centrum Broking — Analyst
Okay, okay. My second question is on the employee cost. When I look at, the employee cost at the consol level has gone up substantially, is there any one-off sitting in this quarter number or this is going to be the cost going-forward?
Rajesh Sharma — President, Finance & Investor Relations
Yeah. Hi, Shirish Ji. So, the employee costs also include the cost of the new subsidiary, the Man Company and also it is in line with last few quarters. Last year cost was slightly lower, but if you look at our Q2, Q1 cost, it is otherwise in line with that.
Shirish Pardeshi — Centrum Broking — Analyst
So, you mean to say that INR93 crore is going to be the regular costs now.
Rajesh Sharma — President, Finance & Investor Relations
Yeah, around — roughly INR90 crores kind of — yeah. That’s the cost which we have been incurring for a few quarters, yeah.
Shirish Pardeshi — Centrum Broking — Analyst
Okay. And just one last follow up on the amortization. How much MAT credit we’ll be using for next quarter or it will continue in 2024 also?
Rajesh Sharma — President, Finance & Investor Relations
So, there would be MAT credit in 2024 also, So, since we have started accounting for MAT credit from march 2022 onwards, so this will be there for next year as well.
Shirish Pardeshi — Centrum Broking — Analyst
Okay. So, would you be able to guide what will the tax rate we should be considering?
Rajesh Sharma — President, Finance & Investor Relations
I think, considering MAT credit, the tax rate should be roughly 10% to 12% kind of.
Shirish Pardeshi — Centrum Broking — Analyst
Okay.
Rajesh Sharma — President, Finance & Investor Relations
Difficult to estimate the exact MAT credit will be evaluating, but it can be — ballpark number can be in that range.
Shirish Pardeshi — Centrum Broking — Analyst
Sure. Okay, thank you. Thank you, Rajesh Ji.
Operator
Thank you. The next question is from the line of Gaurav Jogani from Axis Capital. Please go ahead.
Gaurav Jogani — Axis Capital — Analyst
Thank you for the opportunity, sir. Sir, my first question is with regards to the margin. You indicated that now we are seeing the bottom of the margin in the cost inflations and you know margins should pick up. So, any guidance in terms of — you can give, particularly from the next year or so, how should we look at the margins to pan-out, because it has been really volatile in the past.
Mohan Goenka — Vice Chairman & Whole-Time Director
So, Gaurav, I think we guided that the margin should be in the range of 27%. And for next year, we are still to work out on our budget. Let us work out on our budget, then we will be able to guide better. But we are very hopeful that there won’t be cost pressure next year, that’s what it looks like.
Gaurav Jogani — Axis Capital — Analyst
Sure. And sir, one question with regards to the appointment of Mr. Giriraj Bagri, we have, in the past, also appointed several consultants. So just wanted to get a clarity in terms of how different his role will be versus the various consultants that we you have appointed in the past and what will be key KRAs and key strategic areas that to look for?
Mohan Goenka — Vice Chairman & Whole-Time Director
So, sir, there is slight difference, he is not a consultant. He has joined as a full-time employee. Of course, there are — he has been designated as the Chief Growth Officer. This designation was not there in our company in the past. So, of course, the mandate is to identify newer growth opportunities. It couldn’t be organic, inorganic. Of course, he has just recently joined. Let us see what he brings on the table.
Gaurav Jogani — Axis Capital — Analyst
Yeah. So, as a company, I mean, what are all the things that you’ll be looking for from him. The things that you guided in your opening remarks as well, a few key areas that you’ll be looking out for.
Mohan Goenka — Vice Chairman & Whole-Time Director
Yes. So, other than the existing brands, he would be looking after all the new growth opportunities, whether it is acquisitions or identifying digital strategy plus new start-up ideas. So, he would be responsible for everything, other than the existing brands.
Gaurav Jogani — Axis Capital — Analyst
Sure. And sir my last question is, with regards to the project Khoj, so if you can give an update on to where we are and how are we looking to expand it, given the current situation of demand not picking up?
Vinod Rao — President, Sales
Yeah, this is Vinod Rao here. So, we are not stopping any investments on project Khoj, and we will be expanding also because we are realizing all the KPIs, all the action standards that we had decided in the beginning of the year, we are realizing those in terms of cost to sales are improved. We’ve optimized the current network and also saved on some of the subsidy cost that we used to run in the past. And so, as a system, we will — we are on track. We are now present in 42,000 towns and villages across the country. We hope to reach close to 50,000 by the end of the year.
Gaurav Jogani — Axis Capital — Analyst
Sure. And sir, this — if you can quantify some bit in terms of the sales, you know how it has able to boost the sales at least in the big target markets that we have been able to expand this distribution fees?
Mohan Goenka — Vice Chairman & Whole-Time Director
Sure. So, despite our headwind at least in the rural channel we’ve able to remain flat in the years. The nine-month rural channel growth is around flat and by rural, I mean the sub stockers network that we handle. And we’ve generated close to around INR67 crores of business till-date. It will end to close something around INR83 crore, INR85 crores by the year end.
Gaurav Jogani — Axis Capital — Analyst
And so, what kind of investments would we have made in this, this [Indecipherable]?
Mohan Goenka — Vice Chairman & Whole-Time Director
So, the cost to sales are not too high. So as the total network cost in our sub-stockist channel and the rural channel, it has marginally gone up by around 7.8% and the cost remain low, so it’s in the 6% ballpark range, total rural cost.
Gaurav Jogani — Axis Capital — Analyst
So, thank you and that’s it from me.
Operator
Thank you. The next question is from the line of Harit from Investec. Please go-ahead.
Harit Kapoor — Investec India — Analyst
Yeah. Hi, good evening. So just to two questions. First was a clarification…
Operator
Sorry to interrupt sir, we’d request you to please speak a little louder or use the handset.
Harit Kapoor — Investec India — Analyst
Hello?
Operator
Yes sir, go-ahead sir.
Harit Kapoor — Investec India — Analyst
Yeah, yeah. So just two questions. Firstly, on the margin for FY23, Mohan Ji, you mentioned 27% could be the core margin, so this would exclude Man company, right.
Mohan Goenka — Vice Chairman & Whole-Time Director
Yes Harit
Harit Kapoor — Investec India — Analyst
Okay, perfect. Perfect. And the second question was on healthcare. So, it seems like now you would probably be lapping up any high base, especially on some of the portfolios which were COVID contextual. So, I just wanted to get your sense of what maybe post Q4 should this portfolio see acceleration, especially because of the kind of initiatives you’ve taken on innovation and your D2C portal as well or are you still — are you saying that this would also be pretty much fully predicated on the macro. Just wanted to get your sense on that.
Gul Raj Bhatia — President, Healthcare Division
So, Gul Raj here. So, as you mentioned, definitely after quarter four, when the base effect of the higher base wears out, we would be seeing an acceleration of growth in the coming quarters from quarter one onwards. This should be driven both by NPD and other initiatives we’ll be taking. And while, as you probably know, what had happened during the two years of COVID, consumers had gone for very-high levels of health supplement and humidity product purchases, they’ve now gone back to the pre-COVID kind of scenario.
So, we see the market coming back to the pre-COVID levels in terms of the purchases, we’re not seeing any external environmental factors in terms of impacting the health supplements or healthcare product’s growth in that sense. So, it will be back to the pre-COVID days and in our case, we have a relatively low share in some of the categories such as immunity, such as digesters etc., so we would want to gain market share. Even the market is not as buoyant as it was in the last two years.
Harit Kapoor — Investec India — Analyst
Right. The reason I ask is I — my assumption is that the healthcare portfolio at an overall level is also margin-accretive. So that could actually lead to overall margin-accretive growth for the company next year. So that was the context of my question. Okay, got it, that’s it from me. Thanks.
Operator
Thank you. The next question is from the line of Kunal Vora from BNP Paribas. Please go ahead.
Kunal Vora — BNP Paribas — Analyst
Yeah, thanks for the opportunity. Can you share your thoughts on FY34, would it be fair to assume high-single-digit or double-digit revenue growth and where do you see it coming and like how do you see the volumes and pricing screen out next year?
Mohan Goenka — Vice Chairman & Whole-Time Director
So, Kunal. As I said, we are yet to work on our budgets, but now that the base is favorable for a lot of our healthcare range and also for the pain management, so we are very hopeful that next year, we are definitely going to see at least 10% to 12% growth is what we should expect from most of the product range. Of course, the market sentiments have to improve, but even though not considering the market, I think we should grow at double-digit numbers.
Kunal Vora — BNP Paribas — Analyst
Understood. Second question is, how has been your experience with the digital-first brand, Man Company, and would you look to buy more such brands, especially as many of the start-up are facing funding issue?
Mohan Goenka — Vice Chairman & Whole-Time Director
Yes, so we are — we maintain what we have said in the past that we are looking for some startup opportunities. We keep on evaluating them and if it fits within our strategy, then we will definitely look for a strategic investment.
Kunal Vora — BNP Paribas — Analyst
Would it mean you’re happy with the experience you had so-far with whatever you’ve done?
Mohan Goenka — Vice Chairman & Whole-Time Director
Yeah, very much. We have invested in four companies and all of them are very-very promising.
Kunal Vora — BNP Paribas — Analyst
Okay, okay, perfect. And lastly, where are the Fair & Handsome creams versus, two three years back, you’d hired a consultant and implemented some decisions, how has been the experience so-far from that?
Mohan Goenka — Vice Chairman & Whole-Time Director
Yes. So, we had hired VCG for Fair & Handsome. And since then, we had seen some bit of growth, but last two, three years have been a little challenging due to the COVID scenario. So, the — and now you all know that discretionary — there is a pressure on the discretionary aspect. Let us see, I think market going forward should improve for all of our brands.
Kunal Vora — BNP Paribas — Analyst
Okay, okay. That’s it from my side. Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Aditya Sulakhe from Marcellus Investment Managers. Please go ahead. Aditya Sulakhe, the line for you has been unmuted, please go ahead with your questions.
Aditya Sulakhe — Marcellus Investment Managers — Analyst
Hello? Yeah, can you hear me?
Operator
Yes, you’re audible.
Aditya Sulakhe — Marcellus Investment Managers — Analyst
Yeah. Yeah, thank you for the opportunity, sir. So, I had just two questions. So, first was that, if you could touch upon why there was a de-growth in the pain Management system — I mean Pain Management segment? and the second was that on the Pain Management segment, has [Indecipherable]. So, are you seeing any pressure from regional players in that segment?
Mohan Goenka — Vice Chairman & Whole-Time Director
No. Aditya, there is no pressure from the regional players as much. It is only due to the base, you know that pain management, we have seen a little bit of decline. We had a very high base.
Aditya Sulakhe — Marcellus Investment Managers — Analyst
Okay. And sir, how would you categorize the future prospects?
Mohan Goenka — Vice Chairman & Whole-Time Director
Future, I have said — I maintained that for almost all the brands, we see a very bright future. We have not seen any competitive intensity increasing in any of our categories. So, once the market sentiments improve and now we have a favorable base, we are very hopeful of getting double-digit numbers for most of our categories.
Aditya Sulakhe — Marcellus Investment Managers — Analyst
Okay, thank you, sir.
Operator
Thank you. We have the next question from the line of Shirish Pardeshi from Centrum Broking. Please go-ahead.
Shirish Pardeshi — Centrum Broking — Analyst
Sir, good evening. Thanks for the opportunity. I have one broad question on the international market. If I go back last four, five quarters, we have highlighted many pains and there were some distribution issues. And then war happened. While last quarter we have shown a very strong growth of 17%, but this quarter, the performance was little weaker. So, what are the corrective measures we can expect and what are the things which we’re exactly doing? Because I think last call, Mr. Dhir said that things are in control and things will improve from here. Barring apart the currency headwinds, is the things are under control or we will have more pains in the international markets yet to come?
Vivek Dhir — Chief Executive Officer, International Business
Hello, I’m Vivek this side. Possible when you look at the international market, we have demonstrated a decent growth. So, even in this quarter growth is around 7% and that is we have lost some growth in one of the markets on account of non-supply of good. So that will be rolling over into the quarter four and will bounce back into the double-digit growth, so a decent double-digit in excess of 15%. So, one of the products we couldn’t supply it. This has led to this particular problem [Phonetic].
But [Indecipherable] when you see the international market. So, our western side of the business is still doing well, but the Indian subcontinent called the SAARC market or something, it’s still under pressure quite a bit of pressure due to currencies in Sri Lanka, even Bangladesh currency had sank reasonably after September. So, this is one quarter where we had that position against INR also. So those things are still to catch up. It will take some time to have that into the impact. But overall, I think business is still very much under control to deliver double-digit growths in coming quarters too.
Shirish Pardeshi — Centrum Broking — Analyst
Vivek, I do understand what you’re saying. But, if I look at during the COVID period, even international business on a base was very weak. So, on that 7%, I’m sure you are not agreeing with the growth, but I’m only saying that do we really have a good handle what are the issues or whether if there is an issue with the product profile or even the portfolio which is weaker, because I can understand India winter was bad, but I think the international winters, should not be a bad situation at this time.
Vivek Dhir — Chief Executive Officer, International Business
No, on international when you talk about say winter fall, the BoroPlus has delivered a very decent growth in markets of Russia and CIS, and it has delivered a decent growth in Bangladesh as well. This is a very small band in Bangladesh, but Russia and CIS, it’s a very decent brand. It’s almost close INR80 crore plus brand in those market and they delivered a growth.
So, every brand in quarter three have delivered a growth except one brand where we had some unplanned maintenance in the factory and we couldn’t supply those good, which happened and those pending orders will be delivered in this quarter. So, barring that, every brand has grown. Say Navratna has delivered us a growth of around 19%, Fair & Handsome is also 19%, Creme 21 is very-high around 85%, 7 Oil is also 12%, BoroPlus is 50%. So very decent growth, but one — barring one brand which we didn’t supply, the things have been very much under control.
Shirish Pardeshi — Centrum Broking — Analyst
But, do you mean to say that now January the shipment has happened?
Vivek Dhir — Chief Executive Officer, International Business
Between January to March, because there again capacity also after the maintenance, all back orders cannot be supplied in one month alone. It takes some time. So, the deliveries will happen by — most probably by March itself most of the pending deliveries should be there and we should be back on that brand as well.
Shirish Pardeshi — Centrum Broking — Analyst
Okay
Vivek Dhir — Chief Executive Officer, International Business
So, all brands are performing very well for us in the marketplace. We don’t have any issue.
Shirish Pardeshi — Centrum Broking — Analyst
So, you mean to say that — you mean to say that international business on a Y-o-Y basis should, when we consider four quarters over FY22 when we compare FY23, the international growth should be in the range of about 14%, 15%, that’s what you are trying to say?
Vivek Dhir — Chief Executive Officer, International Business
No, it will be in the range of around 20%.
Shirish Pardeshi — Centrum Broking — Analyst
20%?
Vivek Dhir — Chief Executive Officer, International Business
So, for nine months, first nine months we are close to 20%. And most probably in quarter four which we, Jan to March quarter, we should be delivering something similar.
Shirish Pardeshi — Centrum Broking — Analyst
Okay. Okay, sure. Thank you. Thank you. My other question was to Rajesh Ji. Now, you did mention that the raw material inflation which is there, but when we look at the raw material inflation, at least the companies are confirming that the input material prices are coming down. So, is that we are holding a high price inventory and that’s why the margins you are saying that will improve from the next quarter or we want to spend more on marketing and even trade promotions?
Rajesh Sharma — President, Finance & Investor Relations
Shirish Ji, you’re talking about the COGS pressure on — in Q3?
Shirish Pardeshi — Centrum Broking — Analyst
Yeah.
Rajesh Sharma — President, Finance & Investor Relations
So, I think the pressure is easing out. And from quarter four onwards, we would in fact see some benefit. If we look at our quarter one quarter two pressure, the pressure has eased out in quarter three and what Mohan Ji said in his opening remarks from quarter-four onwards you should start seeing some gross margin benefits only.
Shirish Pardeshi — Centrum Broking — Analyst
So, like last quarter Mohan Ji gave the guidance that the margin may decline about 200 basis points. So, you mean to say that we will reverse the margin to maybe say 67%, 68% back in quarter-four?
Rajesh Sharma — President, Finance & Investor Relations
Yeah, we should see some better margins. Difficult to give a number, but I think YoY margin should be better.
Shirish Pardeshi — Centrum Broking — Analyst
Okay. Yeah, thank you Rajesh Ji.
Rajesh Sharma — President, Finance & Investor Relations
Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Sameer Gupta from India Infoline. Please go ahead.
Sameer Gupta — India Infoline — Analyst
Hi, Mohan Ji and rest and thanks for taking my question. Sir, what I heard is that you are mentioning double-digit growth in most categories in FY24. Now, this quarter, even adjusting for the base, if I look at the three-year CAGR, it is trending at around 6%. So, there is a bit of inorganic in this, there is a bit of pricing, high pricing growth and inflationary times in this. So, what exactly are our efforts towards distribution, new product development. Any other efforts that you would want to elaborate that gives us confidence of this double-digit growth even if the demand environment doesn’t pick-up?
Mohan Goenka — Vice Chairman & Whole-Time Director
So, certainly Rajesh said that there is some benefit of the base — there is some benefit of correction in the base at least for this year. Of course, there would be some price increase also that we’re taking for next year, and there are some corrective measures in almost all the brands, because of the muted demand that we have seen, we would also get a little aggressive on our marketing strategy because of the correction in the raw material prices.
So, there are a couple of things that we are planning for next year. As Vinod also mentioned, we are continuing with our expansion in Project Khoj, we haven’t stopped expanding in our rural initiatives or distribution initiatives. E-com modern trade continues to be the focus area. A lot of new digital first brands that we have planned would be rolled-out next year. So, there are a couple of things, let us see how market behaves. Even though the market still would be muted, we are hopeful to see some good growth in the next year.
Sameer Gupta — India Infoline — Analyst
Got it, sir. Just a follow-up here. You would still depend on the overall macro environment to improve to clock a double-digit growth, is that a fair understanding. You might not get double but 7%, 8% type maybe, but getting double you might still need a fair recovery in consumption, fair assumption?
Mohan Goenka — Vice Chairman & Whole-Time Director
Yeah, definitely, at least for some categories which are absolutely discretionary like Kesh King, Fair & Handsome, we will need the markets to improve. But other than that, I am hopefully if winter or summer is good, then there would be recovery in Navratna or BoroPlus or some of the other products.
Sameer Gupta — India Infoline — Analyst
Great sir. That’s all from me. Thanks for taking the question.
Mohan Goenka — Vice Chairman & Whole-Time Director
Thank you.
Operator
Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for closing comments. Over to you sir.
Mohan Goenka — Vice Chairman & Whole-Time Director
Thank you, Percy. Thank you IIFL and all the participants for joining us today for this earnings call of Emami Limited. Thank you. Have a good day.
Operator
[Operator Closing Remarks]