Godrej Consumer Products Limited (NSE: GODREJCP) Q3 2025 Earnings Call dated Jan. 24, 2025
Corporate Participants:
Vishal Kedia — Global Head of Strategy and Planning, FP&A, Investor Relations
Sudhir Sitapati — Managing Director and Chief Executive Officer
Analysts:
Abneesh Roy — Analyst
Vivek Maheshwari — Analyst
Harit Kapoor — Analyst
Avi Mehta — Analyst
Karthik Chellappa — Analyst
Arnab Mitra — Analyst
Percy Panthaki — Analyst
Jitendra Arora — Analyst
Akshen Thakkar — Analyst
Kunal Vora — Analyst
Aditya Soman — Analyst
Lokesh Gusain — Analyst
Sheela Rathi — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Godrej Consumer Products Limited Q3 FY ’25 Earnings Conference Call.
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. Should you need assistance during this conference, please signal an operator by pressing star and then zero on your touchstone phone. Please note that this conference is being recorded.
I now hand the conference over to the senior management of Godrej Consumer Products Limited. Thank you, and over to you.
Vishal Kedia — Global Head of Strategy and Planning, FP&A, Investor Relations
Good evening, everyone. Welcome to the investor call for Godrej Consumer Products Limited. For GCPL, we will have Mr. Sudhir Sitapati; and Mr. Aasif Malbari. We will start with opening remarks by Sudhir. Following that, we will go into Q&A.
Now, I welcome Sudhir for his opening remarks.
Sudhir Sitapati — Managing Director and Chief Executive Officer
Thanks, Vishal. Good evening to all.
Quarter three FY ’25 has been a tough quarter for GCPL. In particular, our India business has had a poor performance, which has been somewhat compensated by our international business. On a consolidated basis, our organic revenues grew 6% in rupee terms, flat on volumes and minus 10% on reported EBITDA. It is important to note that despite these pressures on margins, as a company, we have held our advertising spend at about 10% and delivered a consolidated EBITDA of about 20%. India has had an unusually tough quarter.
Our volume growth was flat, revenue growth was 4% and EBITDA growth was minus 21%. Our top-line growth has been poor for three reasons. First, there has been a slowdown in the macros and urban consumption. Secondly, high palm oil prices have necessitated sharp price increases, including grammage cuts and trade scheme reductions. This has led to trade destocking. Thirdly, we have had a poor season in our household insecticide category.
Our bottom-line growth performance has been poor due to an unprecedented inflation in palm oil and due to a particularly high base in Q3 FY ’24. Since these issues are mainly transitory, we have chosen not to cut our advertising spends and other investments to increase reach like the rural van program, et-cetera. Despite all this, there are several green shoots in our business.
Firstly, we feel that despite this particular quarter, our household insecticide business is on a good trajectory. We are gaining rapid market-share in infant sticks. Our electrics has started gaining share, albeit in a market that has grown slowly last quarter. Our laundry, air fresheners and sexual wellness businesses continue to grow double-digit volumes with the rest of the businesses growing mid-single digits. Even in soaps where we had a difficult quarter, our revenue growth of near flat is market-beating and our EBITDA margins are at a healthy approximate 20%. We expect majority of these issues to be transitory and hope that in Q1 of FY ’25 — Q4 FY ’25, both our volume and value growth will see sequential improvement. And by H1 of next year, we should start margin growth as well.
Our international businesses have broadly done well. Indonesia continues its solid performance with 6% volume growth, 9% revenue growth and 12% EBITDA growth. Our Africa business continued its solid performance on-bottom line, growing at 109 YYA, so revenues declined at 8%. Our operating margins in GOM are 15% for the past four quarters. We expect that by Q4 FY ’25, we will start reporting positive organic revenue growth. Latin-America continues to do extremely well with volume growth of greater than 25% and EBITDA margins now in double-digits. Both Argentina and Nigeria, which have suffered because of poor macros for past many years may see some fundamentals improving as we enter FY ’26.
We are also incredibly pleased to report that the Dow Jones Sustainability Index has included GCPL as the only FMCG company in India and one of three worldwide to be part of their leadership of the Emerging Market Index and World Index. A score of 83 is one of the highest that consumer goods companies anywhere in the world have in terms of sustainability.
Thank you very much. And we’ll now open the floor for questions.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to please use handsets while asking a question. Ladies and gentlemen, we will now wait for a moment while the question queue assembles.
We have the first question from the line of Abneesh Roy from Nuvama Institutional Equities. Please go-ahead.
Abneesh Roy
Yeah, thanks. My first question is on the soaps business in India. So one is you did mention the destocking of the channels given the price changes. Second is the customer, of course, whenever inflation happens and price in soaps did go up by smaller pack. From a one-year perspective, would you expect all these to normalize? So what it means is, say, in Q1 FY ’26 and you did say H1, you would expect normalization. Would you expect that from one year your growth rate at least should be fully normalized? So whatever say you are missing currently and say even in Q4, although sequential recovery will happen, does that get overcompensated in H1 of FY ’26?
Sudhir Sitapati
Yeah, I think, see what will happen in soaps and we’ve seen this cycle many times, palm oil prices are actually on their way down though PFAD, which is a derivative has still not fallen. So you know, over a period of time, we end-up taking prices up. We’ve been quite aggressive in price increases. As I said, our revenue growth on soaps was near flat, which is very competitive in this current market. And we expect because price increases have to happen gradually, we expect over the next two quarters, three quarters for margins to normalize. Even now with this situation, our EBITDA margins in soaps are just short of 20%. So it’s still a healthy margin at a time like this.
It’s also like in the last few years, we’ve genuinely improved our margins in soaps. So even in a tough quarter like this, our margins are pretty good, but I expect them to come to better levels in the next two, three quarters.
Abneesh Roy
My second related question is in detergent, we have seen the legacy players and you also the large players do quite well in liquid detergent. And when I see body wash, the numbers in soaps, etc., don’t reflect the same buoyancy, what we see in liquid detergents? So, in body wash, is it that the new players say we have seen ITC, Colgate-Palmolive, lot of D2C companies also make lot of headways, they have started their advertising also. So, how is the performance of legacy companies, the larger soap companies in the liquid format of that? And when you compare that to detergent, why the difference is there?
Sudhir Sitapati
So, I think there are two questions here, Abneesh, I don’t want to comment on others. As far as we are concerned, we are behind the curve on-body wash. The good thing is that body wash as a category is behind the curve on liquid detergents. Liquid detergents in India is exploding, body wash is going fast, but it is — body wash is still a fraction of the overall soap market, whereas now liquid detergents has become a substantial part of the detergent market. We hope that by the time body wash becomes a substantial part of the body wash market, the actions that we take-in the next few years will give us our fair share of body wash as well.
Abneesh Roy
And reason for that would be underinvestment by the legacy players or the washing machine helping in the — in terms of the recommendation, is that — because that’s the only difference I see between the two categories? What is the reason for liquids doing much better there?
Sudhir Sitapati
I don’t know, Abneesh. I don’t want to speculate. I mean, I think if you ask the question on why laundry liquids is doing well, it is a combination, as you correctly said of washing machines and also there has to be a right price to the — to the upgrading format. So laundry liquids in India have are at the right price to detergents. Why body wash has not done as well as laundry liquids in India? I can’t fully have that I guess or if I do have a guest, then I’d rather keep it to myself, so that we can act on it.
But it’s — yeah, so — but I think the important thing is it’s still early days in body wash, whereas it’s not such early days in laundry yet. And I think the good news is that we are extremely pleased with our performance in laundry liquids. I mean…
Abneesh Roy
My — yeah.
Sudhir Sitapati
Go on, Abneesh.
Abneesh Roy
Please go ahead. Please go ahead.
Sudhir Sitapati
No, no, I was just saying that we are winning market-share even in a quarter like Q3, which typically we lose a lot of market-share because it’s an easy quarter. But Farab has been certainly in the history of GCPL and probably in many companies, one of our most successful innovations.
Abneesh Roy
My last question is on the rural India. So clearly gradual recovery is happening. You have spent significant amount of money in terms of the van operation. So if you could talk about any benefits which are visible in the current overall numbers being slow, everything gets marked. So if you could talk about your rural growth in all the three subcategories, how does that compare to urban and in terms of van operations, if you could talk about? And in terms of soap, again, is the rural India doing better in the soaps business versus urban for you?
Sudhir Sitapati
So, listen, on the van operation, you see the first-half of this year, we grew volumes close to 7% and vans contributed a substantial part of this. Even in this quarter, if you leave — now soaps and HI are two-thirds of our business. But if you leave soaps in HI, which have had pretty sharp volume drops in this quarter, for the overall business to be zero, you can imagine what the rest of the portfolio has to grow, right? And again, VAN has contributed quite a lot there. So I would certainly say that if you look at the full-year of this year, because first-half we grew roughly 7%, 7.5% volume. Q2, Q3, we’ve grown zero, Q4, I expect some kind of volume revival.
The overall full-year volume will still be very good for GCPL in the context of the market. And VAN has definitely been a significant contributor. Our rural growth are significantly ahead of our urban growth and VAN has been a big driver of that.
Abneesh Roy
Thanks. That’s all from my side. Thanks.
Operator
Thank you. The next question is from the line of Vivek M from Jefferies. Please go ahead.
Vivek Maheshwari
Hi, good evening, Sudhir and Aasif. First question is on HI now that reasonable time has passed. Can you just give some feedback from, let’s say, the consumer or the customer feedback on RNF? And you know, is there a noticeable or perceptible understanding that this product is, let’s say, significantly superior compared to competition and what your earlier product was?
Sudhir Sitapati
So I think the general progress on RNF is quite satisfying. Firstly, if you take incense, our share now is in the high-single-digits of the overall market and our share of handlers is close to 50%, which means that our distribution is still only in the late teens, but in those outlets where we are present, we get half the market there. So that’s firstly good news for us that albeit comes not in great margins, but nonetheless, it’s good news.
In the other categories, which is largely liquid vaporizers, we launched in July, August. Even as late as November, December, only 40% to 50% of the offtakes have been RNF. But here also, we have gained significant market-share in our machines in November and December, because typically when you do a launch like this, what sells first are LMD or your machine. So we have got significant share gains in Q3 and that market has as a combination of a bad HI season, but also as a combination of general urban pressure on premium, the entire market has not done well in Q3. But within that, we have done well. So we hope that in Q1, I — by the end of Q1, when the next season comes in March, we should see — we should be more clear on how well it’s working. But so-far, we are quite enthused by it.
Even in coils where we launched RNF six, seven months ago, markets where we launched RNF, we are seeing market-share gains. So I would say generally in a difficult situation in terms of consumption and seasonality, we are quite happy with R&M.
Vivek Maheshwari
Okay. And couple of follow-ups, Sudhir. So one, when you say that you have high single-digit market shares in incense stake, that includes an estimate of illegal incense sticks as well, right?
Sudhir Sitapati
That includes, yes, I mean, all incense sticks are illegal. So everything is illegal. That is — I mean, so whatever Nielsen picks up is what I’m talking about now. I mean that’s roughly accurate or not, I don’t know, but everything except us is illegal.
Vivek Maheshwari
Got it. Got it. And by end of March, do you think the RNF on the electrical side will be all there in the market and I’m guessing you are not manufacturing the earlier format or are you?
Sudhir Sitapati
See, in certain modern trade chains in e-commerce, we are still manufacturing the old product because the licenses even in distribution take time. But all of that by March should have got over. We are just as we speak, launching a superior formulation on aerosols. So it is a somewhat of a long game. Even in incense sticks, we launched it in February of last year, but it’s only in Q3 of this year that we can decisively say it’s working. So it’s taken us close to eight, nine months for us to get a clear sense. And here, I would say on incense sticks, I’m confident that we have got it right. So the others are taking time. As I think I told you guys also that it will only be till March that we really get a sense of this.
Vivek Maheshwari
Okay. And last follow-up is on — so once it is done in March, do you think that will be the time where the marketing bit will pick-up quite a bit or do you think that you’re already doing whatever it takes to push the product and make consumers aware?
Sudhir Sitapati
So I think we are spending a lot of money and there’s a lot of investment going behind it. I think the only caveat here is that across categories, we’re seeing a little bit of a softness at premium ends of portfolio, urban, modern trade. So that’s the only slight — I mean, I hope that recovers, that’s the only slight issue that we have.
Vivek Maheshwari
Okay. Got it. And lastly, the second question is on the deos portfolio. Can you just give an update on that?
Sudhir Sitapati
Yeah. So I think I’ll give you an overall update on PAKS. I think nothing more to update since the last update, which is that we are very happy with our performance in condoms. Dios has been a mixed bag in modern trade, we’re gaining share. In general trade, we are losing share. I think we made a mistake in merging the two distribution systems and we’ve now separated it.
In terms of — therefore, in terms of profitability, we are behind, but significantly ahead of what we inherited from — behind our business case and behind what I committed to you guys, but significantly ahead of what we inherited in terms of EBITDA from RCCL. I think in May, we will probably share the numbers comprehensively to you guys on total things. So I would say broadly good, some learnings from it, but certainly value-creating so-far in terms of assumptions of cost removals and we’ve kind of significantly improved our EBITDA margins despite much high increases in advertising. But we’ve still got a GT issue to solve in degradants.
Vivek Maheshwari
Got it. Got it. And with your permission, Sudhir, one more last question, sorry, on the macro because you mentioned about in your earlier response. So you are one of the few companies who are a bit more, let’s say, biased towards urban. What is it that you are seeing on the urban side? So rural, of course, your own distribution and overall tailwinds from the market. But on the urban side, can you just talk about the trends and are you seeing any downtrading or anything in the market or in your — for you in your category of product basket?
Sudhir Sitapati
Yeah. I think as a lot of commentary I’ve been seeing and lot of articles, I’ve been reading and also some commentaries of companies that there is definitely an urban slowdown. We’re seeing it in modern trade, we’re seeing it in premium brands. We’re seeing some amount of downgrading in most many of our core categories are certainly not the kind of upgrading that one should see.
And contrary to that, rural is doing generally well and for us because of the VAM program extremely well. So in the context, if one utilizes for HI and soap seasonality, I would definitely see that a worrying sign of the last two quarters and last quarter in particular has been an urban…
Operator
Ladies and gentlemen, the line for the management seems to have disconnected. Please stay with us while we reconnect with the management.
Ladies and gentlemen we thank you for your patience. We have now reconnected with the management. Over to you, sir. Thank you.
Sudhir Sitapati
Yeah. Vivek, we want to last question.
Vivek Maheshwari
No, you got cut I think in the middle. So if you can just repeat on the urban bit again.
Sudhir Sitapati
Urban, what are we seeing is that we are definitely seeing an urban slowdown. Urban GT was anyway under pressure. Urban modern trade is a little slower than it used to be. We are seeing premium products not grow as fast as they were growing a few quarters ago. We are probably seeing some signs of downtrading in categories like household insecticide. So I would say that we have to be — we have to watch the space carefully in terms of urban consumption and respond to it as it goes along. But it is certainly a cause of concern.
Vivek Maheshwari
Oh, okay. So that means March quarter at least from a macro perspective is something that we need to watch out for or you need to be cautious or you are basically cautious about that and we’ll have to see how the rest of the year calendar progresses, right?
Sudhir Sitapati
Yeah. I mean, look, you see, this is — one can say it could be an odd quarter. So we look at March quarter, if March quarter turns out a not-so-good in urban, we had to change our plans a little bit for next year. But look, the good thing about GCPL is while what you’re saying is true, which is bulk of our portfolio is urban, it also gives the bulk of our growth and opportunities for growth is rural. So it is on-balance for GCPL, better to have faster rural growth than faster urban growth because in urban markets, we tend to largely be non-discretionary.
In rural markets we are discretionary categories. So if we had to choose as a company, good rural growth is good for us because it expands our categories.
Vivek Maheshwari
Got it. Got it. Wishing you all the very best. Thank you.
Operator
Thank you. We have the next question from the line of Bhaivab Garg [Phonetic] from Investec. Please go ahead.
Harit Kapoor
Yeah, hi, good evening. This is Harit from Investec. So just wanted to understand your sequential improvement in volume growth comment in the context of a weak-ish urban environment. Is it largely stemming from the fact that this primary destocking in soaps will be lower and the season in HI will be a little better. Those are the two, I think, data points that you believe will get better, which will aid…
Sudhir Sitapati
Yeah. I think so. That’s — I think that’s correct, Harit. I don’t therefore think that Q4 will go back to H1 levels of volume growth. But it will be somewhere in-between zero and where Q3 has been, I hope and maybe closer, I hope to H1. So somewhere in-between is where we will end-up because two of these reasons are transitory, but one or two of them are slightly more permanent or slightly — I don’t know where it will head, but my suspicion is that we will see volume recovery over two quarters is what I hope. I don’t think Q4 will go back to H1 levels. I hope that Q1 of next year, we do that.
Harit Kapoor
Got it. Got it. And on the pricing side, given that you’ve seen the crude palm oil come off, but the derivative hasn’t yet and you’ve also taken-up pricing clearly in your portfolio looks like a mid-single-digit kind of a number. Is there a requirement for further pricing now or you believe that the F-80 also should come down and hence you know the pricing is largely done with? And just to say…
Sudhir Sitapati
No. I think there is — I think there is requirement for another round of pricing in soaps in particular. Of course, these are driven by looking at-the-market construct, but we are not done with the pricing because at the end-of-the day, if you had to get back to our normative margins, I’d be happy. This quarter, for example, our India business had 22.5% margin, which is not bad per se, but frankly, this business should be anywhere between 24% and 26%. So we certainly feel that there is scope for one or two more rounds of pricing in soaps.
Harit Kapoor
Right, right. And in the — on the soap side, this the pricing that the — that it looks like in Q3, which is mid-single digit, does it reflect the full action that you’ve taken already or there is some — it’s — since it’s a weighted-average, it doesn’t reflect the full impact of the pricing yet?
Sudhir Sitapati
So I think it’s the latter. It doesn’t impact — it doesn’t reflect the full impact of the pricing. And therefore, we expect the pricing growth in Q4 to be higher than the pricing growth in Q3.
Harit Kapoor
Got it. Got it. And lastly, I think on Africa, I think you’re probably ahead of margin expectations in terms of how you achieve those numbers are close to 15% now on the Guam side specifically. So you know, how do you — how do you look at the — that market from a next, say, 12, 24-month context, is it — is it now largely going to be revenue growth driven once obviously, as you mentioned from Q4, the divestment comes in the base and margins now are reasonably healthy or at least at your levels. How do we think about it from here?
Sudhir Sitapati
Yeah, I think so. I think we’re at about 15% EBITDA margins there. Maybe there’s scope for another 100 bps to 100 bps of margin increase there. But certainly now that we’ve got to mid single teens and we were quite brutal about getting to this mid-teens kind of margins and even if it came at the cost of business, we said doesn’t matter. Having now got to this kind of margin structure, I guess we’ve got to start growing now.
Harit Kapoor
Got it. Got it. And one last quick one is, apart from the PFAD issue, any other pockets of inflation that you’re seeing in the in the portfolio, whether India or global?
Sudhir Sitapati
No.
Harit Kapoor
Got it.
Sudhir Sitapati
Nothing significant except palm oil.
Harit Kapoor
Great. Wish you all the best. Thanks.
Operator
Thank you. We have the next question from the line of Avi from Macquarie. Please go ahead.
Avi Mehta
Yeah, hi. Sir, I just wanted to pick-up from the last participant. What exactly is driving this divergent trend in palm and palm derivatives, and does this typically normalize?
Sudhir Sitapati
I mean, your question is, yes. So look, I mean PFAD depends quite a lot on — has a lot of interaction with biodiesels. It should over a period of time normalize. It varies in the short-term and you must remember that these palm oil prices from a peak of 5,200 MYR have now fallen to 4,200. PFAD has — that is almost a 20% drop from its peak. PSAD has only dropped 7%, 8% from its peak. So I mean, at some point of time, these have to normalize and there are some complications here because of the India import duty and stuff like that. So there are various dynamics. But broadly speaking, in the long-run, these do tend to normalize.
Avi Mehta
So it would be fair to say that if has corrected X, PFED should logically correct the same percentage, but it’s just because of some one-off factors, that is the reason why it’s not coming through. Is that the right way to read what you said?
Sudhir Sitapati
That’s the right way to read it. The only thing is whether palms correction is a — is a full — is a proper correction or is it temporary, I don’t know yet, because typically the palm season in Malaysia, Indonesia is July to September. So this is a lean season for palm. So I mean, I don’t know whether this is a temporary blip. There’s this B40 implementation in Indonesia, which is not so clear to us. So — but if palm remains low, then at some point PFAD has to fall.
Avi Mehta
Got it, sir. Very clear, very clear. And sir, just, Sudhir, one more thing on just an understanding, how should we look at 4Q in this context? Is 3Q the level from an India margin perspective? And second, when you said normalization, what level do you mean by that? Is it that ’23, ’24, is it ’26 would be useful, if you could give us some understanding on those two aspects, please?
Sudhir Sitapati
Look, I think the margins in Q4 may be more of the same because all said and done, PFAD is still high and we are still consuming oil that is bought in Q3. So that may not materially change. In fact, you’ve taken some prices up, but in Q3, we consume Q2 oil also in Q4, we’re entirely consuming Q3 oil. So margins may be more of the same plus, minus a little bit here there.
Avi Mehta
Okay. And…
Sudhir Sitapati
I think volumes and volumes will definitely improve and pricing also should go up.
Avi Mehta
Got it. And sir, when you see normal…
Sudhir Sitapati
I think, in terms of the normal margins, we’re 24% to 26 is the kind of I feel normal range that our business right now should aim for. So let’s say, 150 bps higher than where we are today. I don’t know whether we’ll go — when we’ll go to it and so on, that’s hard for me to say. But that’s the kind of number that we need to get to. I mean, firstly, we got to get to at least look for an FMCG business, 24% margin is a very healthy margin. So we got to get to that — I hope we get to that in the next six, eight months.
Avi Mehta
No, fairly clear. Sir. And last if I may, just on this premium end weakness that you were seeing across the core categories, is hair colors also witnessing this or is this largely in HI that you were referring to?
Sudhir Sitapati
No, we don’t have a — we don’t operate at the premium end of hair color. We operate on the marked end of hair color. So hair color is not seeing it, but certainly household insecticide is seeing it, certainly some parts of deodorants are seeing it. Even in air care, we are growing quite fast or even there, I mean, we are seeing a little bit of stress. I mean, we’re able to manage by democratizing the category, et-cetera. But in general, we are seeing or the kind of ease with which premium was growing last quarter doesn’t seem to be the case.
Avi Mehta
Got it, sir. That’s fairly clear. Thanks a lot, sir. Thank you very much for this. Thank you.
Operator
Thank you. We have the next question from the line of Karthik Chellappa from Indus Capital Advisors Hong-Kong Limited. Please go ahead.
Karthik Chellappa
Yeah. Thank you very much for the opportunity. So just two questions from my side. Firstly, if I were to look at our presentation both in the first and the second-quarter in the personal wash category, we had explicitly called out market-share gains. But this time in — I did not see a similar comment in personal wash, anything to read into that? And how did our market-share trend in that category for this quarter?
Sudhir Sitapati
No, I mean, we don’t usually see over a longer — we don’t usually give market-share numbers, but it is true that in this particular quarter, our market shares have roughly been flat. Though I must say that our growth of near flat from what we hear from the market seems to be higher. So our growth seems to be market-beating. Nielsen reported market-share was — was not negative, but it was flattish in this quarter.
Of course, for the full-year and so on and so forth, it is gaining still. So you’ll have to read into this in two aspects. One is what is an externally reported share and two is, you’ll have to look at our internal growth versus the growth of others, many of whom are reported, some of who are not.
Karthik Chellappa
Okay. Got it. And when we spoke about the slowdown in urban consumption, you specifically called out modern trade. Now apart from the general slowdown, are there any other trends that you’re observing which caused a slowdown in modern trade? I mean, the context in which I asked this question is, we are seeing quick commerce grow almost exponentially. So is there more salience towards those formats which is at the margin impacting modern trade?
Sudhir Sitapati
I think, look, it is affect — maybe affecting modern trade at the margin, but one has to remember that the total e-commerce sales are growing at the same 30% to 40% range. So a lot of big-commerce has come at the expense of other e-commerce. It may affect modern trade at the margin, but I think there is more to — if you take the totality of urban, which is urban GT, which is doing badly, modern trade, which is less than before and e-commerce, which is roughly where it was and quick commerce within that is doing extremely well. One can only conclude that the overall urban picture is a little weaker than it’s been in the past.
Karthik Chellappa
Got it. One last question from me. Is there anything to read into household insecticides in Indonesia growth-wise, any softness or slowdown that you’re observing?
Sudhir Sitapati
A little bit, but I got to also say that Q3 when we look at two-year CAGRs, they’re very, very healthy. So I think last year, what happened in Indonesia and these are all benefit of hindsight is in Q3 because El Nino, they had a bumper season. So we are not particularly worried about our Indonesia business, our Indonesia business now is getting driven primarily by electrics. That’s what’s driving growth. That growth continues. A little bit of optical softness in this quarter on HI, but nothing structural in a two-year CAGR and market shares, everything seems okay there in terms of HI. So nothing to read there.
Karthik Chellappa
Okay. Excellent. Thank you very much and wish you all the very best. That’s all from my side.
Operator
Thank you. The next question is from the line of Arnab Mitra from Goldman Sachs. Please go ahead.
Arnab Mitra
Hi, Sudhir. My first question was on incents where you mentioned 50% share amongst handler and high-single-digit overall market-share. So how do you increase your market-share from here on in the sense that my understanding was that there is a pushback from trade due to the lower trade margins. Do you look to increase trade margins or do you look to…
Sudhir Sitapati
No, I think we have to be at the game, Arnab. I think you to get to wholesale, build awareness. These things take a little bit of time once demand builds up, we’ll have to. So it won’t happen overnight. Hello?
Arnab Mitra
Yeah.
Sudhir Sitapati
Yeah, sorry. So I think we may not increase trade margins and all that because not we don’t make too much money. I think we just have to be patient. I mean, gradually direct distribution will go up, wholesale demand goes up, every couple of months we’ll do a wholesale activation and temporarily reduce prices in wholesale to get it through. So we have a — we have a toolkit on how to do it. Because what we’ve noticed in the past is that once you cross 20% distribution, the game becomes wholesale. The first 20% value-added distribution you can get through retail. After that you have to go to wholesale in these kind of categories.
Arnab Mitra
Understood, understood. My second question was on fabs. So while you’re obviously very happy with the growth there, we’ve seen a lot of players, including the other brands like RIN lower prices and enter this category. So any challenge you see there in terms of your home markets like Tamil Nadu and all where you had first launched, but now others may be catching-up or do you think the category growth itself is such that there is — you would keep expanding here? And also wanted to understand in terms of distribution, where are you in the fab journey?
Sudhir Sitapati
Yeah. No, I mean, fab is just — the category is growing fast, we are growing share, we’re growing distribution in Tamil Nadu, we are bigger than South, Southware, bigger than the whole of the country. So everything is going quite well for us in farm. And I think we’ve done reasonably well actually this quarter even on easy kind of tells you that with all the investments in fab are paying-off in overall liquids as well. So I think there’s just more of the same in fab. We just have to persist with this model and it will continue to grow at exponential rates and our laundry liquids will continue to grow very fast.
Arnab Mitra
And one last question on the soap category. So there was — at the beginning, I think the price hikes had taken were higher than that of the market-leader. Now are you seeing pricing hikes equally happening from all the leading players or there is still a gap and price competitiveness may have slightly gone down in that category for you?
Sudhir Sitapati
Well, I mean, in Q3, maybe our price comparator was a little lower, but we’ve now seen other players take-up prices as well in the category. So I mean, definitely the first few months, first-six months of the year, we were leading prices, but now I think everyone in the category has been taking up prices.
Arnab Mitra
Okay. Thanks so much. That’s it from my side. All the best.
Sudhir Sitapati
Thank you.
Operator
Thank you. We have the next question from the line of Percy from IIFL. Please go-ahead.
Percy Panthaki
Hi, Sudhir. Just my question is on continuation with what you discussed with Vivek. When you told him that currently about 40% to 50% rollout has happened for the new molecule formulation in the LV. What exactly did you mean by that? Are you talking about the end-consumer buying half of the new product, half of the gold product approximately or are you talking about your shipments? Or how do I read this statement?
Sudhir Sitapati
No, we’re talking about the end-consumer, Percy.
Percy Panthaki
Okay. But see, generally trade pipelines are what about two to three months, it’s been six months. So how is it that the trade pipeline is still not sort of dried up and still the old product…
Sudhir Sitapati
Percy, because it will be launched in end July and we launched it sequentially. Even now modern trade, which is about 20% to 25% continues to carry the old stock because licenses haven’t come. And you know, there is a — there is a distributor pipeline, there is a secondary pipeline. So it’s a long-tail. Every month, this is going up by 10%, but I’m just stating the fact and I don’t know if Nielsen is right or wrong. Our only source of use is Nielsen on this. But this is the number that they give us in terms of what proportion of our offtakes are RMF and what proportion of it is TFT. It is 50-50 as things stand. And pipelines in this kind of category, it’s a seasonal category, Percy. So you can carry quite a lot of inventory. It’s not — it doesn’t move at the same pace every month.
Percy Panthaki
Yeah. But what is the reason that you have been from your end rolling it out sequentially and not at one-go?
Sudhir Sitapati
There have been — see on modern trade there are issues of licenses. Then there is also in an issue of season. So for example, the season in South and West India starts in July, the season in North India starts in August, September. So we wanted to roll this out with season in North India as well. So combination of wanting to roll-out in — with season. And the third thing is, of course, we are closing stock of the old product. So I think by September, we had started selling everywhere except modern trade.
Percy Panthaki
Okay. And when do you expect the modern trade licenses to come through?
Sudhir Sitapati
As we speak, they’re coming through. They typically take a six-month period after we launch. So in most HI launches, after you launch it, it takes six months-to get — because they have to apply for the license.
Percy Panthaki
Understood. And secondly, on communication for this product and correct me if I’m wrong, but I would hazard a guess that a lot of consumers are actually not aware that this is a new formulation. Is that true?
Sudhir Sitapati
I don’t think so, Percy. We do a dipstick and we just did one to check the awareness of the product and it is very-high. See, the awareness of the product is high. November and December — November market shares were good December were even better. So I feel we’ll just have to give this a few more months-to call this.
Percy Panthaki
No, as in, I understand the product recall or the product rating might be high. But what I’m saying is, are consumers aware that versus a few months ago, what is there in the market is a new formulation which is more effective and it’s clearly a sort of new chemical or whatever, they might not know the name of the molecule or whatever. But is there an awareness that this is a new sort of chemical which is more efficacious than the old one which was available just a few months ago?
Sudhir Sitapati
Yeah. See, we’ve been selling this proposition under the proposition of work even if the electricity goes off for two months. And we have seen the recall of the ad, the investments in the ad, the recall of the message, all these are higher than our benchmarks. So…
Percy Panthaki
Yeah, so my fear is that people might just be treating this as a new communication rather than as a new product.
Sudhir Sitapati
The machine design also has changed by the way. So it’s not just the packaging that has changed the machine design, design if you buy it versus the old one has changed as well. So often consumers may or may not understand that the liquid has changed, but they buy the machine for the first time and the machine looks different and advertised differently.
Percy Panthaki
But there would be a lot more of consumers who would just be buying refills versus a machine consumer, right?
Sudhir Sitapati
But new consumers when they come in, if a job to be done is to win market-share or is to grow from incense sticks and coils, new consumers will have to come and via machines only.
Percy Panthaki
Sure.
Sudhir Sitapati
Sure. And new consumers who are buying it will anyway see the product and see the efficacy of the product. So I mean, our personal view is that the advertising is working.
Percy Panthaki
Got it, got it. Secondly on margins, so for the India margins, ’24 to ’26 is a decent band, which you mentioned. But given where input prices are today, would you say that a fair assumption would be that for the full-year FY ’26, which is starting from April, for us analysts, we should be going with the lower-end of that margin for the full-year?
Sudhir Sitapati
I think probably unless something dramatically changes in terms of oil prices.
Percy Panthaki
Yeah. So where the prices are today, the lower-end of the band for FY ’26 is a reasonable assumption to go with right now, correct?
Sudhir Sitapati
I think that’s probably right.
Percy Panthaki
Okay. Okay. That’s all from me. Thank you very much.
Operator
Thank you. The next question is from the line of Jitendra Arora from ICICI Prudential Life Insurance Company Limited. Please go-ahead.
Jitendra Arora
Yeah. Hi, thanks, Sudhir. Just a quick question. Given that the e-commerce and quick commerce has been growing at a pretty healthy pace versus rest of — versus, let’s say, GT, how is it affecting our distribution per se or are we looking to perhaps change the distribution taking into account this pace of growth?
Sudhir Sitapati
I mean, look, our GT distribution and our GT business, overall we still wanted to grow. Urban GT is a problem it’s something we’ll have to grapple with. Overall, GT is still growing because rural is growing. So urban GT, especially metros in order to improve the return on investment of GT distributors, we will have to consolidate, reduce inventory, basically work with them in order to get their ROIs up. It is certainly an issue a big city urban GT.
Jitendra Arora
Okay. And if quick commerce continues to take share away from urban GT, which is I think what is also expected by a certain section of the market, then how do we propose to handle this situation?
Sudhir Sitapati
I mean, I’m saying that each individual distributor has to make a good return on investment. So if you have, let’s say, 30 distributors in Bombay and the business shrinks, you may have to bring it down to 2022 or you may have to kind of get them onto zero inventory, we’ve got to work-out the overall thing. Ultimately, we got to get 20% to 30% return on investment for the distributor. That’s the important thing, right, for them to be interested in the business. So you’ll have to use technology, you’ll have to use scale to really make sure that urban GT distributor ROIs remain.
Jitendra Arora
Okay. Thank you.
Operator
Thank you. The next question is from the line of Akshen from Fidelity. Please go ahead.
Akshen Thakkar
Yeah, hi. Couple of questions. If we just disaggregate the India portfolio, are there what’s the aggregate portion of the portfolio where you feel comfortable that irrespective of the market, the growth is good. So you called out fab, air fresheners, hair color, etc., in the past together, how large is this business where you feel very comfortable on the growth currently?
Sudhir Sitapati
I think our business is actually quite neatly structured roughly as one-third, one-third, one-third. One-third soaps, one-third household insecticide and one-third or others.
Akshen Thakkar
The last one-third you’d say you have better visibility on growth right now?
Sudhir Sitapati
The last is where — even this quarter has done actually very well for us, though we’ve had bad luck on both soaps and HI. And this one-third, the salience has significantly gone up over the last two, three years of these others.
Akshen Thakkar
Okay. And secondly, sorry to belabor at this point, but on more, you know last quarter we saw a lot of…
Operator
Sorry to interrupt, Akshen, but you were not very clear, sir.
Akshen Thakkar
Sorry. Am I audible now?
Operator
This is much better. Please go ahead.
Akshen Thakkar
Am I audible now? Yeah, sorry. Sorry to belabor on this point again, but on the last quarter, we had a lot of claims and counter claims around so on what happens with TFM, etc. Now that the competitor product has been in the market for a fairly long-time, how have you seen difference in terms of market-share, if at all?
Sudhir Sitapati
So I think our philosophy continues to remain what it is, which is we’ve got to design for best consumer value and nothing really changes in terms of philosophy. I mean, I have a suspicion we are growing faster than the market even in this quarter. So there’s nothing that has happened which makes us want to change our views on the subject.
Akshen Thakkar
All right. Thank you. I’ll fall back in the queue.
Operator
Thank you. The next question is from the line of Kunal Vora from BNP Paribas. Please go-ahead.
Kunal Vora
Yeah. Thanks for the opportunity. In the business, how has been the margin journey after the acquisition? When you acquired, the margins were in mid single-digits. Where are you now?
Sudhir Sitapati
They have moved EBITDA margins have moved to the mid-teens. They’ve still got some work to do.
Kunal Vora
But your aspiration was about 25% if I’m not mistaken. So we are halfway there, right?
Sudhir Sitapati
In the fullness of time, but we’ll first have to get to 20 odd. We are sometime — a little bit time away from that. We’ve made, I mean, significant progress on EBITDA margins, but more needs to be done here.
Kunal Vora
Understood. Okay. Thanks. And how should we look at Africa revenue from here, you’ve seen five quarters of decline. You did mention it will start going up. It will happen now or it might take some more time?
Sudhir Sitapati
I think we should start seeing a better picture of margins of growth from this quarter and certainly next quarter in Africa.
Kunal Vora
Understood. And lastly, you mentioned that you’ve seen share gains in LV and calls after the RNF launch. What’s the kind of market-share gains? And are you banking mostly on-market share gains through RNF or do you see it also boosting the category growth in any way?
Sudhir Sitapati
We don’t usually give out our market shares and numbers, but we expect both market-share gains and hopefully to grow the market.
Kunal Vora
Understood. Okay. That’s it from me. Thank you.
Operator
Thank you. The next question is from the line of Aditya Soman from CLSA. Please go ahead.
Aditya Soman
Hi, good evening. Just one question from me. So when you’re comparing all this market-share, is this all from Nielsen? And the reason I ask is because I think if I look at the data from Nielsen last quarter, I haven’t seen the 3Q numbers, but in 2Q, there was a clear difference in sort of urban metro and non-metro where metro seems to be desolating. And the reason I ask is because I suspect that a lot of the urban metro desolation is basically just not capturing the quick commerce data accurately. So, is there more light you can throw on this?
Sudhir Sitapati
No, I think that is accurate. The — certainly, as I said, the urban growth are slower and Nielsen may not capture the quick commerce is also correct. But as I told you, even after accounting for quick commerce and so on, urban metros are a bit slower last quarter than they were before that.
Aditya Soman
All right, very clear. Thank you.
Operator
Thank you. The next question is from the line of Lokesh Gusain from BOB Capital Markets. Please go ahead.
Lokesh Gusain
All right. Just one question from me. So how much in advance do you buy a palm oil? Like how many months or months in advance do you buy palm oil?
Sudhir Sitapati
I mean, this is — we may not want to answer this kind of question is a bit specific terms of the inventory that we hold, etc., in balm oil.
Lokesh Gusain
So you mentioned you’re still using the third-quarter inventory. So I assume three months is a good timeframe.
Operator
Ladies and gentlemen, please stay with us. The line for the management seems to have disconnected. Ladies and gentlemen, we thank you for your patience. We have reconnected with the management. Lokesh, may I request you to please ask your question again?
Lokesh Gusain
Yeah. No, that’s fine. So I just want to clarify one more thing regarding your market-share. So when you mentioned your market-share is flat and so for the third-quarter. Do you mention, did you volume market-share or value market-share?
Sudhir Sitapati
Both, I mean we are run both. I mean they are roughly flat, yeah, both.
Lokesh Gusain
How would you say your pricing was ahead of the market. So, I mean…
Sudhir Sitapati
And we capture some of these things with that kind of accuracy to be honest. So you have to look at our volumes and our pricing, the Nielsen pickup on all these things is not it’s but it’s hard to read on this.
Lokesh Gusain
All right. Understood. Thank you.
Operator
Thank you. The next question is from the line of Sheela Rathi from Morgan Stanley. Please go-ahead.
Sheela Rathi
Thanks for taking my questions. Just one follow-up to one of the participants’ question on-market share with respect to Nielsen data. So what I understand, you mentioned that Nielsen doesn’t capture the e-commerce market-share. And I believe for all companies, the e-commerce growth has been the fastest in the last many quarters. Is there a means to start capturing the e-commerce market-share also over-time? I mean, how is the — how is the company thinking about it on this aspect?
Sudhir Sitapati
We’ll have to find — we right now have internal ways of doing it, but this is something that we are — we’ll have to find a way of doing it properly because it is now becoming quite big commerce in particular, so we’ll have to find a way to do it.
Sheela Rathi
So are we already doing some something?
Sudhir Sitapati
We do internal, but these are all like our own measures calling through some data and this and that, not something which is as formal as Nielsen.
Sheela Rathi
Okay. And just to be clear, is the MTs trends captured in the Nielsen data or is it just the GD trend?
Sudhir Sitapati
MT is also captured in Nielsen.
Sheela Rathi
Okay. And just a second question. So how are you thinking about in-sourcing of palm oil? I mean, is this an opportunity to localize palm oil sourcing over a period of time or you think it’s just too early to think about it?
Sudhir Sitapati
What do you mean Sheela by local insourcing of palm oil? What does that mean?
Sheela Rathi
I mean, so recently one of the competition has acquired a palm oil manufacturing company. And so they are thinking of over a period of time because it takes long to grow the seeds and the crop. But is there an opportunity for us for us to also think about, you know, getting into this space where we can distribute our sourcing of palm oil between international and locally? I mean the government is promoting palm oil production in India.
Sudhir Sitapati
I mean, the largest palm oil company in India is, it’s about a third of the market-share of palm oil locally, but that’s still a fraction of the total palm oil requirement of the country and as a consequence, the PFAD that is produced from local plantations is very, very small for soaps. And it’s a long way off. But I mean as a group, we are very much in this ecosystem.
Sheela Rathi
Okay. Understood. Thank you, Sudhir.
Operator
Thank you. Ladies and gentlemen, we have no further questions. I would now like to hand the conference over to the management for closing comments. Over to you, sir.
Vishal Kedia
Thank you everyone for attending the call. We hope we have been able to answer all queries. Please reach-out to us on our Investor Relations contact details for any further queries you have. Thank you and good evening.
Operator
Thank you. On behalf of Godrej Consumer Products Limited, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.