Godrej Consumer Products Limited (GODREJCP) Q3 FY23 Earnings Concall Transcript

Godrej Consumer Products Limited (NSE: GODREJCP) Q3 FY23 Earnings Concall dated Jan. 31, 2023

Corporate Participants:

Gaurav Jogani — Moderator

Sudhir Sitapati — Managing Director and Chief Executive Officer

Sameer Shah — Chief Financial Officer

Analysts:

Abneesh Roy — Nuvama Institutional Equities — Analyst

Avi Mehta — Macquarie — Analyst

Latika Chopra — J.P. Morgan — Analyst

Vivek Maheshwari — Jefferies — Analyst

Arnab Mitra — Goldman Sachs — Analyst

Harit Kapoor — Investec Capital Services — Analyst

Akshay Thakkar — Fidelity — Analyst

Kunal Vora — BNP Paribas — Analyst

Sheila Rathi — Morgan Stanley — Analyst

Alok Shah — Ambit Capital — Analyst

Prolin Nandu — GMO — Analyst

Jaykumar Doshi — Kotak Securities — Analyst

Shirish Pardeshi — Centrum Broking — Analyst

Swati Jhunjhunwala — VT Capital Market — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the Godrej Consumer Products Limited Q3 FY 2023 Earnings Conference Call, hosted by Axis Capital Limited. [Operator Instructions]

I now hand the conference over to Mr. Gaurav Jogani of Axis Capital. Thank you and over to you, sir.

Gaurav Jogani — Moderator

Thank you, Inba. Hello, everyone. On behalf of Axis Capital, it’s our pleasure to welcome you all to GCPL’s Q3 FY 2023 Earnings Conference Call. From the management we have with us today Ms. Nisaba

Godrej; Mr. Sudhir Sitapati; Mr. Sameer Shah. I would now like to hand over the call to Mr. Tapan Joshi from the Investor Relations team. Thank you and over to you.Thank you, Gaurav. Good evening everyone and thanks for joining us today. Like Gaurav mentioned, we have with us Nisa Godrej, who is the Executive Chairperson; Sudhir Sitapati, MD and CEO and Sameer Shah, the CFO. We’ll start with Sudhir sharing his thoughts on our performance and then we can open up for the Q&A. Over to you, sir.

Sudhir Sitapati — Managing Director and Chief Executive Officer

Thanks, Tapan. Good evening, everyone. I hope you and your families are doing well. Thank you so much for joining us on the call today. I quickly start with an update of our quarterly performance. We delivered an all-round performance which was in-line with our expectations for the quarter, our consolidated sales grew close to double-digits and 15% in constant-currency terms, with a sharp sequential uplift in underlying volume growth. Our overall quality of profit has been quite healthy with a meaningful recovery in profitability. Gross margin saw sharp sequential improvements of 330 bps and expanded 50 bps year-on year. We have continued to invest behind our brands and increased working media investments by 28% year-on year.

Overall, our EBITDA grew by 10% and PAT without exceptional items and one-offs grew by 13%. Working capital continues to reduce, driven by simplification initiatives that’s releasing cash. For the first nine months of FY 2023, our cash from operations has increased by INR300 crores. Despite macro headwinds, our India business has performed well. We delivered robust double-digit sales growth of 11%, with sharp sequential improvements in underlying volume growth of 3% versus decline seen in the previous quarters. We drove significant improvement in profitability with gross margin expansion of 590 bps quarter-on-quarter and 250 bps year-on year.

We were able to drive this gross margin expansion due to better sales mix, agility in pricing decision and cooling off of input cost pressures. Our EBITDA grew by a healthy 20% year-on year and margins expanded 210 bps year-on year. This strong growth in EBITDA in India was delivered along with the 28% year-on year increase in working media investments.

From a category perspective, we delivered broad-based double-digit growth in both home care and personal care. GAUM continues to consistently deliver double-digit sales growth and this is the 11th consecutive quarter of double-digit sales growth. On the profitability front, we were at tad below our own expectations, while EBITDA margins declined 160 bps year-on year, our EBITDA with working media margins declined 40 bps year-on year.

Our ETR investments in GAUM grew by 64% and as a consequence of these, our EBITDA growth was marginally positive at plus 1%. However, severe depreciation in currencies have meant that our forex and interest costs were up. Our Indonesia business is witnessing gradual recovery, sales declined by 3%, however, good news is that ex sanitor growth was positive at 2%. We saw healthy gross margin expansion, but upfront higher marketing investments and scaled new leverage resulted in EBITDA decline. We expect to see positive growth in Indonesia in the coming quarters.

So overall I think we have seen sharp uplift in our volume-led growth performance and also on the quality of profits. This alongside green shoots in various parts of our business augurs well for the coming quarter. Our strategy is threefold to drive category development of our core portfolio, simplify our business and to put people and planet alongside profit.

On the category development front, I’m pleased to announce two disruptive innovations that we hope will democratize the household insecticide category. First is the Good Knight mini liquid vaporizer targeted consumers who want to affordable, yet powerful all night solutions. The product simplifies the chip design of the liquid vaporizer and uses much less plastic. We are able to sell the mini combo at INR50 versus the regular INR95 and the refill at INR35 versus the regular INR76.

Our second launch in the mini hit spray also priced at INR50 using inspiration from no gas sprays in allied categories. This product is not only accessible, but on a per MG basis of active, one fifth the price of a regular spray and in striking distance of illegal incense sticks, so the best of our knowledge both these are the first of their kind in the world.

On the simplification front two initiatives are worth calling out. We have had a company-wide initiative to reduce our inventory and receivables. This has yielded rich results with our AR plus inventory coming down from 97 days at the beginning of the year to 79 days on December 31st. In particular, we have made great progress in Africa. In Kenya, for example, our inventory plus AR had fallen from 78 days in FY 2022 and 36 days in nine months ended December 2022.

In Indonesia, about 25% of our value was coming through branch operations. Company salesmen were selling in 60,000 stores from whom we were collecting cash and having credit. We have moved this in the last three months in an exceptionally swift operation to a distributor model with very little disruption to sales. Finally on the people and planet front, our attrition rate after a few quarters of turbulence has come back to pre COVID results and some of our best employees who had left the company are coming back. The mini as we’ve already spoken about is a great example of sustainability where the plastic per mg of Active is down 25%. We are overall reasonably confident of our business performance in the next few quarters, especially the macro environment in India turns around and our innovations revive the category. Thank you very much.

Operator

Sir, may we open the line for questions now?

Sudhir Sitapati — Managing Director and Chief Executive Officer

Yes.

Questions and Answers:

Operator

Thank you. [Operator Instructions] The first question is from the line of Abneesh Roy from Nuvama Institutional Equities. Please go ahead.

Abneesh Roy — Nuvama Institutional Equities — Analyst

Yeah, thanks and congrats on good set of numbers. My first question is on the disruptive innovation in HI, so three sub parts to that, in this category, we have seen very quickly copycat also emerge, so if in terms of patent or design or is to copy, if you could elaborate in this scenario how do you see copycats emerging? Second is, you discussed the huge difference in pricing versus your mainline product,, but I also see the competition offering very-high discounts consistently. So if I take that into account, does it make sense for the customer to shift? And third is, how does this compare to the mainland product though why will the customer not shift only to this, so what are the differences for the customer?

Sudhir Sitapati — Managing Director and Chief Executive Officer

Thanks, Abneesh. Let me answer the question, see our job in household insecticide is to develop the categories of sprays and liquid vaporizer. So we’re focused on that. There are like every other category, there are some things that are not that easy to copy, I don’t know actually what will happen, but we are really focused on whether people will move from burning format which is coils and incense stick to these. We have very, very high share in the sprays FIK which has got upwards of 80 share and we have got very high share even in liquid vaporizer.

So you will certainly get a higher than fair share and our game is really is an upgradation game. There are some differences, I mean for example that FIK formulation that we’re using in the small FIK is certainly not the same as we’re using in the large one in fact we have more concentrated better one, it’s a different formulation, because it’s a low gas spray which kind of answers I think you’re second question, which is that the LV is the same LV as we’re using in the — it’s the same liquid. In the FIK or the or the spray, it is a concentrated spray which is far more efficacious or the cost per ml if mgs are lower and so it’s great.

I think in terms of pricing book, these really bring access to the category. They also may be cheaper on a price for MG, but that’s not the intention of these products. The intention of the product is that there is no product entering the liquid vaporizer segment at INR35 and there is no spray in the household insecticide market at INR50. So it is the accessibility, which opens doors for millions of households that is more interesting. One of the things, we feel more confident in a market like India that the upside of upgradation is far greater than the kind of little bit of down gradation that we may or may not see, in general these upsides are much higher and we’ve seen it in several categories ourselves. So for us we will be really happy if more people use this. We feel reasonably bullish on both of these innovations.

Operator

Thank you. We’ll take the next question from the line of Avi Mehta from Macquarie. Please go ahead.

Avi Mehta — Macquarie — Analyst

Hi Sudhir, thanks a lot, clearly an interesting and exciting innovation. I was just wondering, built on the last point that you said that you believe that the down gradation in Active at all of an existing user would be much lesser from what you see. Is that down gradation only in terms of adoption or do you see any margin hit as well from a gross perspective that can occur because of this?

Sudhir Sitapati — Managing Director and Chief Executive Officer

You know on totality, these are all categories which are highly-accretive to GCP as overall margin portfolio and what we have seen both in categories outside GCPL but most recently even in our hair-care entry which has done very well for us in the quarter is that overall gross profit growth for the category and overall margins growth for the company as a consequence of these innovation. So it is probably not appropriate to look at per see down gradation is a lot less than we think it is far less than upgradation and overall, it is the category GP grows faster than what it’s grown in the past and because these are generally high-margin brands and generally even though the lower-priced SKUs have higher margins than our average GCPL margins is generally good for margins.

Avi Mehta — Macquarie — Analyst

So the expert hair-care is a good example, I get what you’re kind of thinking.

Sudhir Sitapati — Managing Director and Chief Executive Officer

Yeah, yeah.

Avi Mehta — Macquarie — Analyst

The second because on Indonesia, I mean just wanted to better understand the margin normalization trajectory here that you said that positive growth is what would happen in the coming quarters. Could you give us a sense on when do we see margins going normalizing to probably that 24%, 26% or is it a distant range that we should build in as we go-forward?

Sameer Shah — Chief Financial Officer

Hey, Avi, this is Sameer here. So I think we have stated in the past that the immediate task on hand in Indonesia is to see a gradual recovery which we do believe is around the corner and we should start seeing the eventual overall kind of much-improved sales performance, driven the lot of initiatives which we have taken over last two-three quarters. I think the margins uptake will be gradual in nature, I’m not sure I mean the margins will go to those mid 20s or even late-20s, but definitely we will see sustainable margins improvement over next three-four years in Indonesia and also with a good-quality of profits, right? So gross margin expansion and working media investments and lower controllable cost.

Avi Mehta — Macquarie — Analyst

Perfect. And would it be fair to assume a similar trajectory in Africa for the mid-teens that we had initially indicated clearly the focus now is on growth and hence the working capital working the end density that have kind of risen, but would love to hear your thoughts on that as well?

Sudhir Sitapati — Managing Director and Chief Executive Officer

Yeah, I think you know we had a medium-term plan for Africa, which this quarter doesn’t give us any reason to change our thoughts on that plan.

Sameer Shah — Chief Financial Officer

Yeah and just to add to that, we — I think Africa, we will see at least in medium-term meaningful margin expansion, right and we had stated earlier that maybe over next two years thereabout we would want to see Africa margins around mid-teens. Again, we very much believe we are in that journey. So in Africa, at least, over next couple of years, we will see a meaningful expansion.

Avi Mehta — Macquarie — Analyst

Okay, this is despite being investment needed in the FMCG side?

Sameer Shah — Chief Financial Officer

That’s right.

Avi Mehta — Macquarie — Analyst

Perfect, that’s all from my side. Thank you very much.

Operator

Thank you. Our next question is from the line of Abneesh Roy from Nuvama Institutional Equities. Please go ahead.

Abneesh Roy — Nuvama Institutional Equities — Analyst

Yeah, thanks and few follow-up questions. So, first is of course you managed your gross margins very strongly, sequentially, so that’s a very good performance versus the number-one soap player, which is very diversified, so I’m not comparing like-for-likes, in their case, of course, detergent saw very high inflation, but wanted to understand in soap versus rest of the players, have you managed to get the commodity a bit more right this quarter or you manage the promotion a bit less versus a competition because we see this expansion is very good. And in raw-material deflation scenario always regional players come back, so in coming quarters how much is that from local and regional soap players?

Sudhir Sitapati — Managing Director and Chief Executive Officer

Yeah, no, I think Abneesh on that question, I don’t know versus others but certainly versus ourselves, we have held ourselves accountable to a few things. I think we have got generally good capability in farm buying across the group, I think in volatile circumstances that often comes to a rate. We have been very disciplined about pricing and we’ve been having regular pricing meetings, keeping in mind replacement margins, keeping in mind RPI and so on and so forth. So I think that we have, I don’t know what others have done, but we have played a disciplined games in soaps prices, see after all soap, oil prices have been fallen for the last three, four months. So lot of this has to do with who has what price, what stock, how much holding etc, etc. So while I can’t comment on others, I can say that we have — we feel now that this crisis has past us in soaps or at least this round seems to be that we have been done right by consumers and we have basically been prudent in terms of buying, pricing, etc.

So our market share continue to be good in soaps and we’re gaining market share, so I would say that the overall soap strategy which involved very, very heavy margin in the preceding few quarters and on-top of that not cutting investments in the rest of our portfolio, I think will yield reasonably good results have yielded good results this quarter and should for the next few quarters.

Abneesh Roy — Nuvama Institutional Equities — Analyst

So thanks, on my previous question on the disruptive HI the certified LV versus your mainline LV for the customer in terms of life of that one SKU, how does it compare in terms of length of the duration of usage and in terms of efficacy, will it be different and if it is not different, why will cannibalization not happen?

Sudhir Sitapati — Managing Director and Chief Executive Officer

See, firstly the price, yeah I mean the number of days and all depends on how people use it, but the price is INR35 for 25 ml for the small one and the big one is INR76 for 45 ml. So not only is the small one a lower unit price, it is also a lower per ml price. Our own learnings in categories is that, poorer consumers are very responsive to slight changes in price per ml, richer consumers don’t downgrade unless the gap is very large. So there is a kind of a Goldilocks condition of some kind of discount to products which are aimed at the mass market, beyond which you may have big down gradation, but every single category, Abneesh, in FMCG, the LUP on a price per ml basis will be a) cheaper than the model pack or the monthly buying pack. And categories that stick to a certain discount, let’s say, 15%, 20% and no more don’t see big down gradation but see big upgradation.

So in most of these categories in HI premium was an exception, the LUPs become in terms of user base 75%, 80% in terms of value 40%, 45%. If that happens to us in premium HI and LV and aerosol, I think we’ll certainly have a good run in the coming few years is our bet. The discount that we have on HI is no different from what other categories, whether it is soaps or tooth paste or shampoo or hair colors more recently have. So it’s a kind of formula that seems to work.

Abneesh Roy — Nuvama Institutional Equities — Analyst

Yeah, thanks. That’s very helpful. I will come back in the queue. Thanks.

Operator

Our next question is from the line of Latika Chopra from J.P. Morgan. Please go ahead.

Latika Chopra — J.P. Morgan — Analyst

Hi, thanks for the opportunity. My first question was, what’s your [Indecipherable] portfolio it’s fairly low, but incrementally what’s your read on Google demand as you progress through the December quarter and even in the January month?

Sudhir Sitapati — Managing Director and Chief Executive Officer

I think it is, like I think like lots of people have been sharing, it is the general demand situation has been tough in poorer income consumers. We have a soaps business which is rural in north India, but which has been a tough demand and I’m hoping we’ll see some green shoot soon. I think that is reasonably creditable because of market development which our focus has been on-air care and hair-care, which have really been the recipient for the first round of market development. Market development is a big macroeconomic proof because you are really playing with a large group of consumers who have known the category and macroeconomics is not the reason they don’t adopt the category. So that’s one kind of way beating slowdown blues which I feel without having — we’ve done reasonably well on the back of these two categories in this quarter.

But the situation is tough, I don’t think I’m in agreement that it is both discretionary demand in urban and rural demand is continues to be soft.

Latika Chopra — J.P. Morgan — Analyst

Sure. Second thing was around the hair color base that you talked about, clearly improving accessibility few, but could you give us some flavor of the INR15 pack, what could be the broad film in the overall hair color mix for you, is it high-single-digit, low double-digit and has that — are you being able to tapping to more distribution or new distribution outlets retail outlets because of this price pack or you are able to drive vector of say from some existing reach what I’m just trying to understand is because we are doing a similar kind of democratization in HI now, it allows you to have a higher reach to newer outlets, is that a bigger part or it’s more of the strong existing outlet? And the last base, I know distributed two questions, but the last but is just a check or anything incremental or based one of your peers did talk about it in their Q3 call, but I just wanted to get anything to incrementally keep in mind from an intense competition is it coming back on anything of that, sir. Thank you so much.

Sudhir Sitapati — Managing Director and Chief Executive Officer

Yeah, thanks, Latika, see on hair color I don’t think it’s proper for me to share the salience of the small pack etc, I think the principle is that many of these low unit packs serve distinct consumer needs and I think it serves distinct consumer needs among existing consumers for example not everybody has long hair or wants to color the entire part of their hair, so lot of people do touch up and there is an added dimension of affordability.

So certainly small pack across not just in hair color but in every single category, small packs open up the total addressable market opens up with small pack and I think hair color is one among a long example of categories that have done it. And so for that precise and outlet expansion will happen and has happened, but that’s a consequence of more consumer demanding, that’s not the underlying reason, the underlying reason is the tam opens up significantly when you democratize the pack. And I think the HI innovation should do what hair color and many other categories soaps in example in our own portfolio sachet and so many other parts of the portfolio have done. So I think that that’s probably how we expect the HI innovations to work. That’s answer question number one.

On incense stick, look illegal incense sticks continue to grow in India, they are illegal and we are trying all legal means to — their growth is not as fast as it was a few years ago, but their relative salient post COVID has gone up a little bit. Our approach on incense stick is structural, we see a lot of so for example, if you take the small LV or the small hair spray and one of the reasons I said is, if you can get into a price for NG which is the closer and closer you get to incense sticks, you don’t have to exactly match incense stick. The answer to incense stick may not be another incense stick, the answer to incense sticks maybe to make premium format which have many advantages to incense sticks for example they don’t burn-in the household, they can last longer, bring it closer and closer in terms of price per mg of active two incense sticks. So that’s a more strategic solution to dealing with incense stick whether it’s deal work so are not only time will tell, but that’s our approach to while we fight the legal battle on incense sticks that’s our most structured approach to incense stick.

Latika Chopra — J.P. Morgan — Analyst

Thank you so much, Sudhir.

Operator

Thank you. We’ll take our next question from the line of Vivek M from Jefferies. Please go ahead.

Vivek Maheshwari — Jefferies — Analyst

Hi, good evening everyone. Sudhir, first question is on home care. So there was a shift in-season, so third quarter number, let’s say, 10% versus, let’s say, the earlier quarter at about 2%. So if I take the average of the two, that number comes to about 6%. So where do you think is the reality is 10% more of a representative number and that is what one can look at going ahead or it’s more closer to 6% because of the season shift?

Sudhir Sitapati — Managing Director and Chief Executive Officer

Vivek, these are not per se HI numbers, these are home care numbers and we stopped as a policy and we now stopped revealing HI number. So it’s not fair for me to reveal exact numbers in some way or the other, but I think it’s fair to say in HI two things. A) it is fair to say that this is not a category that can be looked at on an in-quarter basis. So you have to average out several quarters because that’s the nature of the seasonality here. So your assumption may not be incorrect given the weightage of HI and given what we declare on home care the assumptions you made may not be vastly incorrect. B) I would not hesitate to say that our Asia journey in terms of category development and growing the category versus historically has still not met the success that we wanted to. We hope that these two innovations there is a break there, so I think that’s how I can best answer your question that, yeah without specifically answering it.

Vivek Maheshwari — Jefferies — Analyst

Got it, got it. And second, you have spoken about Indonesia, but over the next few quarters where we’ll be your focus going to be and if I look at Indonesia for the last four years or so, the business has literally stagnated. How do you think about FY 2024 when you when you think about all the measure that you have taken in the last few quarters and what you are going to do in terms of launches or distribution. So how do we think about let’s say FY 2024?

Sudhir Sitapati — Managing Director and Chief Executive Officer

See on FY 2024, firstly, forget FY 2024 even now actually we’re quite bullish on the Indonesian macros. We think the Indonesian macros have turned around and we have our own leading indicator such as our sales growth let us say in retail in general trade retail which is a good measure of consumer offtake, because every other channel has lots of issues, we are quite happy with the growth that we’re seeing in GT retail and GT retail is only a matter of time before that reflects the entire business. We have three sets of issues in Indonesia, number-one is a base of sanitary which has actually come off in this quarter. So to be fair that’s no longer a big issue.

Number two is, we have had very-high stocks in modern trade and number three is that there were a lot of rate, there were lot of inter channel conflicts in Indonesia that we are trying to link. So we are taking a little slower in terms of recovery in Indonesia the problem and you know maybe kind of taking a bit more slow, but now that we’re correcting it, we’re correcting it to levels which are well ahead of what it was even pre COVID where a lot of things went wrong, so we’re saying let’s take this opportunity.

So I think the fundamental macros in Indonesia are good, I mean again it’s not proper for me to give exact numbers on what we will grow, but I think we will do well in Indonesia in FY 2024 because I know the kind of cleanup and I know the various green shoots that are going on that I don’t think there is any issue. We’ve got two categories where we’re market leaders with terrific brands and the Indonesian economy has now started growing. So these categories still grow faster than GDP, so I’m reasonably bullish on Indonesia in FY 2024.

Vivek Maheshwari — Jefferies — Analyst

Got it. And Sudhir, I know quarter-to-quarter numbers always can create distortions, but if I look at second-quarter ex of sanitary your growth was about 8% in Indonesia, this quarter it’s about 2%. So is there anything specific to call out?

Sudhir Sitapati — Managing Director and Chief Executive Officer

Yes, there is something specific to call out, which is we have taken further corrections in Q3, both in terms of, for example, reasonably large number of write-offs in our inventory, but also holding back on heavy promotions and discounting that we were doing in the past. We have decided to go a little easy on those, so I think that you read it well. I am reasonably certain, I’m no reasonably certain, I’m sure that that is not to do with offtakes because our measure of offtake is GT retail is only sequentially moving up in Indonesia, but our depth of promotions that we were running in the past, we have reduced that in Q3 and that is the journey we’re probably going to go on further.

So that may cause a little bit of speed bumps on the way, but we are sure that that’s the right way to run this business without having very differential promotion for different channels or different traders versus the others. So that’s the correction that we took in Q3, which we haven’t taken in Q2, Q2 we simply took some other set of correction like stock, this was another set of correction we’re taking on promotions.

Vivek Maheshwari — Jefferies — Analyst

Got it. And last question if I may, you know one of your comment concerning me a bit which is around the rural bit, so most of the comp — your peers are talking about at least little bottoming out with some even things have started to pick-up. Is that not something which we are seeing on-the-ground?

Sudhir Sitapati — Managing Director and Chief Executive Officer

Yeah, I mean it’s hard I mean this now gets into January month and February month and things like that. I think it’s fair to say two things away. One is that post COVID, poorer consumers have had pressure on consumption, it may recover, I’m hoping it recovers either this quarter or the next quarter, it’s really early for me to see, it’s very hard to read the signs with that kind of position. Two ways, we did see overall some discretionary pressure even in urban in post-Diwali. We feel in the context of these two pressures, we had a reasonably good Q3. Now how is Q4 going to be, how is the demand situation going to be? I mean it’s hard for me to say specifically whether there are green shoots or not, Vivek, probably whether the green shoots may there are for us, but I’ve just not observed that with, I mean I know definitely that lots of people in the market we’re talking about post-Diwali when you enter shopkeepers, they would say that things have not lifted up post-Diwali, I have not been to market in the last two weeks, so maybe next time I go, I’ll let you know how it is.

Vivek Maheshwari — Jefferies — Analyst

All right sir, thank you very much and wish you all the best.

Operator

Thank you. We’ll take our next question from the line of Arnab Mitra from Goldman Sachs. Please go ahead.

Arnab Mitra — Goldman Sachs — Analyst

Yeah, hi. Sudhir, my first question was on this innovation on LV. So, on aerosol, it’s obviously the penetration is so low that any democratization will have a net positive effect. On LV the price gap on the machine itself seems to be quite large in terms of the 97 versus 50, so just wanted to understand machine a very large part of the increment of the sale of the category or is it more towards refills and therefore we can get a little bit about the potential risk of the downgrade the machine itself and which would then lead to the downgrade in the refill on whole?

Sudhir Sitapati — Managing Director and Chief Executive Officer

Arnab, the machine the principle of the machine to see retail, so it is not a large contributor to value or value-creation because the principle of the machine is seeding in and not to make money on the combi pack which is the first pack that we want to go into the household. So really the gain both in terms of sales salience but more than sales salience in terms of profit salience is very much in the liquid part of the business. So in other words, it doesn’t matter too much if someone moves from a INR95 machine, it doesn’t — I mean even if there is down gradation, as I told you I don’t think there will be because our INR95 machine has superior features, it’s got a, it’s in a twin mode and it’s better for higher income consumers, it’s better when you have relatively low mosquito infestation.

When you have higher mosquito infestation, the mini machines are better machine because it remains at a higher-level through the night, this one switches on and switches off, so no sophisticated chip, it’s a better machine for our income. So it’s — but the machine by the way is not just it’s not quite the same as LV where is just the same LV at lower price, it’s a different machine or different functionality, but I don’t think movement one way or the other is going to hit our profit pool significantly.

Arnab Mitra — Goldman Sachs — Analyst

Got it, understood. My second question was on the gross margin side. So between India, as well as Indonesia, Africa, has most of the benefit of the commodity reduction already been netted in the 3Q or there is more upside on the commodity side in all the three geographies if you could separately talk about then?

Sameer Shah — Chief Financial Officer

Yeah, this is Sameer here, so India has definitely seen sequential as well as year-over-year margin expansion. I think Indonesia and Africa will see going ahead kind of margin expansion both sequentially as well as on a Y-o-Y basis, in markets like Africa there is still this currency inflation which is sort of impacting the margin. And in Indonesia also there is little bit of commodity inflation, which is still kind of prevalent. But the way the trends are as well as expectation is that there should be kind of commodity prices cool-off and that should result in margin expansion. So I think India is ahead of curve, but Indonesia and Africa will see it maybe in this quarter as well as in the quarters going ahead.

Arnab Mitra — Goldman Sachs — Analyst

Got it, and my last question was on Africa. So we have seen, as I said 11 quarters of good growth, but there is obviously lot of price-led growth here and is moving in with currency changes and all that. So how do you judge the volume traction in the business, what would be a good growth for that kind of a environment if you were to look at a three year stack in that business now?

Sudhir Sitapati — Managing Director and Chief Executive Officer

I think Sameer, I think look the way I look at the Africa business is slightly different, Arnab. The key metrics for us are volume growth in FMCG and overall growth in FMCG in Africa, that’s really important long-term driver of value-creation and overall EBITDA growth in Africa. So on front number-one, which is volume growth in FMCG, it has been exceptional and the dry hair business is a little bit more complex because there are some businesses where we feel we need to probably extract more value etc, etc. So that’s probably the right way to look at the Africa business, in terms of EBITDA, I think we’ve had a rough round of cards, the card have been dealt to us in the last 24 months have been pretty tough in terms of forex which peaked out in the last quarter, in terms of shipping cost, in terms of fiber cost which is related to petrol cost. All these cost seem to be cooling off as we speak. So I’m hoping that and many fundamental improvements have happened, so what has happened in Africa EBITDA is that gross margin dilution is marking a lot of fundamental work in BTL reduction overhead reduction, etc.

So I’m hoping that when the water recedes, the benefits of these costs will come into the Africa business, so that’s our hope, which we hope in the next few quarters will play out.

Sameer Shah — Chief Financial Officer

Just to add to that, Arnab, I think as a data point, I mean in last quarter, I think the overall volumes rose only in Africa, which is ex-US, they are close to mid single-digits and overall constant-currency growth where affords a 20%. I think the other big focus also in Africa is more on profitability, right? So there will be pricing led growth. There will be no upfront investment in FMCG categories as Sudhir was sharing earlier, but there also will be a very clear focus in terms of driving profitability. So it’s better to get the balance right in terms of what’s the minimum scale leverage alongside investment in FMCG, but kind of cost reductions or margin improvement in dry hair to reach to the overall ambition of that mid-teens EBITDA margins ex New year.

Sudhir Sitapati — Managing Director and Chief Executive Officer

Arnab, I think just to conclude the Africa point is, I think there are two really good things that may happen, come our way. One is FMCG salience is going upside, Sameer wants to share the volume growths in FMCG or but it’s good, I mean even if we don’t share the exact numbers. If our overall is mid single-digit, FMCG is far ahead of overall, the double-digit kind of and that’s really good. And the second one is the structural cost of our business has come down in Africa, if the gross margins we can get it back to close to normal levels, we should have pretty good EBITDA growth going-forward.

Arnab Mitra — Goldman Sachs — Analyst

Got it, thanks. Thanks for that. That’s it from my side. All the best.

Operator

Thank you. We’ll take our next question from the line of Harit Kapoor from Investec. Please go ahead.

Harit Kapoor — Investec Capital Services — Analyst

Sir my first question is on the rollout of [Indecipherable]. So could you just give a sense of what’s the rollout plans are which market, how much time you’re going to basically in numbers?

Sudhir Sitapati — Managing Director and Chief Executive Officer

No, I mean, we have I mean obviously we don’t share rollout plan before we roll them out, but broadly speaking, we are rolling out as we speak and the intention is to go national. It is not an intention to be a single-state launch anything. So as we speak, we are rolling this out across the country, there is a season in household insecticides that starts in mid February in large parts of the country. So we’re hoping to be able to catch that.

Harit Kapoor — Investec Capital Services — Analyst

And the second question is on the urban…

Operator

Sorry to interrupt, Mr Kapoor, if you can just use your handset and speak your audio is not clearly audible, sir.

Harit Kapoor — Investec Capital Services — Analyst

Yeah, is it better?

Sudhir Sitapati — Managing Director and Chief Executive Officer

Yeah.

Harit Kapoor — Investec Capital Services — Analyst

So second question was on the urban discretionary in fact you called out on, in terms of the categories where are you seeing this, is it more on the air fresheners side or is it on the premium hair color side?

Sudhir Sitapati — Managing Director and Chief Executive Officer

No, we’re not seeing it, I mean that’s what I said earlier is, we’re hearing this and generally when we speak to retailers and consumers, we see this, but I think the beauty when you get market development right it trumps macroeconomics simply because the space to grow let’s say air care, right, in-principle, it’s a discretionary category, but the penetration is so small that if you get your relevance and access and everything right, regardless of stress it, it does really well. So I think that is the — what we’re reasonably happy with Q3 is while we hear a lot and we see it and we see it for example in soaps and on our premium parts of our portfolio, we can see this kind of slight drag in urban, both these categories have beaten different ends of the spectrum I mean hair color at one end and hair at the other end. And for different reasons, we feel that they’ve beaten the Q3 kind of slowdown.

Harit Kapoor — Investec Capital Services — Analyst

And my last question was on the cost structure simplification, so while I understand it’s an ongoing process, but if you look at FY 2024, is there a target geography that you know some of these initiatives will be higher in versus others?

Sudhir Sitapati — Managing Director and Chief Executive Officer

Yeah, Harit, this is an ongoing process, right, I mean strategically, we had shared.

Harit Kapoor — Investec Capital Services — Analyst

I’ll come back-in the queue. Thanks.

Operator

Thank you. Our next question is from the line of Latika Chopra from J.P. Morgan. Please go-ahead.

Latika Chopra — J.P. Morgan — Analyst

Hi, thanks for the opportunity. My first question was, you know, what’s your Google [Indecipherable] portfolio is fairly low, but incrementally what’s your read on Google demand as you progress through the December quarter and even in the January month.

Sudhir Sitapati — Managing Director and Chief Executive Officer

I think like lots of people have been sharing it. The general demand situation has been tough in poorer income consumers. We have a soap business which is rural North India, but it has been a tough demand, and I’m hoping we see some green shoots soon. I think that is reasonably creditable because of market development with our focus has been on air care and hair care, which has really been the recipe into the first round of market development. Market development is a big macroeconomic truth because you are really paying with a large group of consumers who don’t adopt a category, and macroeconomics is not the reason they don’t adopt the categories. So that’s one kind of way of beating slowdown blues which I feel without having, we’ve done reasonably well on the back of these two categories in this quarter.

But the situation is tough. I am in agreement that it is both discretionary demand in urban and rural demand continues to be soft.

Latika Chopra — J.P. Morgan — Analyst

Sure. But anything around the hair color bit that you talked about, clearly on improving accessibility at [Indecipherable], but could you [Indecipherable] of the INR15 pad. What could be the broad feelings in the overall hair color mix for you. Is it high-single digit, low double-digit, and has that been able to tap into more distribution or new distribution outlets, retail outlets, because of this size pack or are we able to drive sector of some existing reach. What I’m just trying to understand is, because we are doing a similar kind of democratization in China, it allows you to have a higher wings to newer outlets. Is that a bigger part or it’s more of the strong existing outlets. And the last bit, I know we are restricted with the questions, but the last bit is just a check or anything incremental or incentive-based, one of your peers did talk about it in their Q3 call, but I just wanted to get any anything to incrementally keep in mind for may influence the competition is coming back on anything of that, sir. Thank you so much.

Sudhir Sitapati — Managing Director and Chief Executive Officer

Yeah, thanks Latika. Hair color, I don’t think it is proper for me to share the salience of the small parts, etc. I think the principle is that many of these low unit packs serve distinct consumer needs and I think it’s distinct consumer needs among existing consumers, for example, not everybody has long hair or wants to color the entire part of their heads, so lot of people do touch up and there is an added dimension of affordability. So certainly it’s [Indecipherable] across not just in hair color but in every single category, small packs open up the total addressable market opens up, with small pack, and I think is one among along example of categories that have done it, and so that — and outlet expansion will happen and has happened, but that’s a consequence of more consumer demanding it, that’s not the underlying reason. The underlying reason is the TAM opens up significantly when you democratize a pack, and I think the HR innovations should do what hair color and many other categories, soaps in example in our own portfolio, [Indecipherable] so many other parts of the portfolio have done, so I think that that’s probably now we expect the HR innovations to work. That’s the answer question number one. On incense stick, look illegal incense sticks continue to grow in India, they are illegal, and you know we are trying all legal means to.

The growth is not as fast as it was a few years ago, but the relative salient post COVID have gone up a little bit. Our approach on incense sticks is structural, you see a lot of, so for example, if you take the small LV or the small hair spray, and one of the reasons I said is if you can get into a price for NG, which is the closer and closer you get to incense sticks, you don’t have to exactly match incentives. The answer to incense sticks may not be another incense sticks, the answer to incense sticks maybe to make premium format which has many advantages to incense sticks. For example, they don’t burn-in the household, they can last longer, bringing it closer and closer in terms of price per mb of active incense sticks, so that’s a more strategic solution to dealing with incense whether it’s deal work so are not, only time will tell, but that’s our approach to while we fight the legal battle on incense sticks that’s most captured approach to incense sticks.

Operator

Thank you. We’ll take our next question from the line of Vivek M from Jefferies. Please go ahead.

Vivek Maheshwari — Jefferies — Analyst

Hi, good evening, everyone. So the first question is on home care. So there was a shift in-season. So third quarter numbers let’s say 10% versus let’s say the earlier quarter at about 2%, so if I take the average of the of the two quarter, that number comes to about 6%, so where do you think is the reality? Is 10% more of a representative number and that is what one can look at going ahead or it’s more closer to 6% because of the seasonal shift.

Sudhir Sitapati — Managing Director and Chief Executive Officer

Vivek, these are not per the HI numbers, these are home care numbers in which it is not a policy. And now we start revealing HI number, so it’s not fair for me to reveal HI numbers in some way or the other, but I think it’s fair to say in HI [Indecipherable]. It is fair to say that this is not category that can be looked at on an in-quarter basis. So you have to average out several quarters because that’s the nature of the seasonality here. So your assumption may not be incorrect given the weightage of HI and given what we declared on home care. The assumptions you’ve made may not be vastly incorrect. I would not hesitate to say that our HI journey in terms of category development and growing the category versus historically has still not met the success that we wanted to. We hope that these two innovations are a break there. So I think that’s all I can best answer your question that, yeah, without specifically answering it.

Vivek Maheshwari — Jefferies — Analyst

Got it, got it. And second, you have spoken about Indonesia but over the next few quarters where will be your focus going to be, and if I look at Indonesia for the last four years or so, the business has literally stagnated. How do you think about FY ’24 when you think about all the measures that you have taken in the last few quarters, and what you are going to do in terms of launches or distribution. So how do we think about, let’s say FY ’24?

Sudhir Sitapati — Managing Director and Chief Executive Officer

FY ’24 per se — forget FY ’24, even now actually we quite bullish on the Indonesian macros. We think the Indonesian macros have turned around, and we have our own leading indicators such as our sales growth, let us say in retail, in general trade retail, which is a good measure of consumer offtake, because every other channel has lots of issues. We are quite happy with the growth that we’re seeing in GT retail, and GT retail is only a matter of time before that reflects the entire business. We have three sets of issues in Indonesia. Number-one is a base of sanitary which has actually come off in this quarter. So, to be fair, that’s no longer a big issue. Number two is we have had very-high stocks in modern trade, and number three is that there were a lot of inter channel conflicts in Indonesia that we were trying to link. So we are taking a little slower in terms of recovery in Indonesia, the problem, and you know maybe they have been kind of taking a bit more slow, but now that we’re correcting it, we are correcting it to levels which are well ahead of what it was even pre COVID, where a lot of things went wrong, so we’re saying let’s take this opportunity, so I think the fundamental macros in Indonesia are good. I mean, again, it’s not proper for me to give exact numbers on what we will grow, but I think we will do well in Indonesia and FY ’24, because I know the kind of cleanup, I know with the various green shoots that are going on that. I don’t think there is any issue. We’ve got two categories where the market leaders with Telsey brands, and the Indonesian economy has now started growing. So these are these categories still grow faster than GDP, so I’m reasonably bullish on Indonesia in FY’24.

Vivek Maheshwari — Jefferies — Analyst

Got it, and Sudhir, I know quarter-to-quarter numbers always can create distortions, but if I look at second-quarter of [Indecipherable] sanitary your growth was about 8% in Indonesia, whereas this quarter it’s about 2%, so is there anything specific to call out?

Sudhir Sitapati — Managing Director and Chief Executive Officer

Yes, there is something specific to call out, which is we have taken further corrections in Q3, both in terms of, for example, reasonably large number of write-offs in our inventory, but also holding back on heavy promotions and discounting that we’re doing in the past, we have decided to go a little easy on those. So, I think that you read it well. I am not reasonably certain, I’m sure that that is not to do with offtakes because our measure of offtake with GT retail is only sequentially moving up in Indonesia, but our depth of promotions that we were running in the past, we have reduced that in Q3, and that is the journey we’re probably going to go on for that. So that may cause a little bit of speed bumps on the way, but we are sure that that’s the right way to run this business without having very differential promotions for different channels or different traders versus the others. So that’s the collection that we took in Q3, Vivek. We hadn’t taken into Q2, we simply took some other types of corrections like stock. This is another set of correction we’re taking on promotions.

Vivek Maheshwari — Jefferies — Analyst

Got it, and last question if I may, one of your comments concerning me a bit, which is around the rural bit, so most of the your peers are talking about at least rural bottoming out with some even saying things have started to pick up. Is that not something which we are seeing on the ground?

Sudhir Sitapati — Managing Director and Chief Executive Officer

Yeah, I mean it’s hard, I mean this now gets into new January month and February month and things like that. I think it’s fair to say two things, Vivek. One is that post COVID poor consumers have had pressure on consumption, it may recover. I’m hoping it recovers either this quarter or the next quarter, it’s really early for me to see, it’s very hard to read the signs with that kind of position. We did see overall some discretionary pressure even in urban in post Diwali. We feel in the context of these two pressures, we had a reasonably good Q3. Now how is Q4 going to be, how the demand situation is going to be, it is hard for me to say specifically, whether there are green shoots are not. So probably the other green shoots may be there are product, but I have just not observed that. I mean I know definitely that lots of people in the market we’re talking about post-Diwali, when you went to shopkeepers, they would say that things have not lifted up post-Diwali. I have not been to market in the last few weeks, so maybe next time I go, I will let you know how it is.

Vivek Maheshwari — Jefferies — Analyst

All right sir, thank you very much and wish you all the best.

Operator

Thank you. We’ll take our next question from the line of Arnab Mitra from Goldman Sachs. Please go-ahead.

Arnab Mitra — Goldman Sachs — Analyst

Yes, hi Sudhir. My first question was on this innovation on LV. So, on aerosol, it’s obviously the penetration is so low that any democratization will have a net positive effect. On LV the price gap on the machine itself seems to be quite large. In terms of the 97 versus 50, so just wanted to understand if the machine are a very large part of the sale of the category or is it more towards refill, and therefore we can get a little bit about the potential risk of the downgrade in the machine itself, which would then lead to the downgrade and the resell on its own.

Sudhir Sitapati — Managing Director and Chief Executive Officer

The machine — you know, the principle of the machine is to see retail, so it is not a large contributor to value or value-creation because the principle of the machine is feeding in, and not to make money on the combi packages. The first pack that we want to go into the household. So really the gain both in terms of sales salience, but more than sales salience, in terms of profit salience is very much in the liquid part of the business. So in other words, it doesn’t matter too much if someone moves from a INR95 machine, it doesn’t — even if they have done with [Indecipherable], I told you I don’t think there will be because our INR95 machine has superior features, it’s got a [Indecipherable] mode and it’s better for higher income consumers, better when you have relatively low mosquito infestation. When you have higher mosquito infestation, the mini machines are better machine because it remains at a higher-level through the night, this one switches on and switches off. It is a most sophisticated chip, it is a better machine for higher income. The machine, by the way, is not the same LV at a lower-price. It’s a different machine with different functionality, but I don’t think movement one way or the other, there is going to hit a profit pool significantly.

Arnab Mitra — Goldman Sachs — Analyst

Got it, understood. My second question was on the gross margin side. So between India as well as Indonesia and Africa, has the most of the benefit of the commodity reduction already been netted in the 3Q or there is more upside on the commodity side in all the three geography which you can separately talk about them.

Sudhir Sitapati — Managing Director and Chief Executive Officer

Yeah, [Indecipherable] definitely see sequential as well as year-over-year margin expansion. I think Indonesia and Africa will see going ahead the end of margin expansion, both sequentially as well as on a year-over-year basis. In markets like Africa, there is still this currency inflation, which is sort of impacting the margin. And in Indonesia, also there is bit of commodity inflation, which is still kind of prevalent. But the way the trends are as well as expectation is that there should be kind of commodity prices cool-off, and that should result in margin expansion. So the India is ahead of, but Indonesia and Africa will see it in this quarter as well as in the quarters going ahead.

Arnab Mitra — Goldman Sachs — Analyst

Got it, and my last question was on Africa. So we have seen, as I said, 11 quarters of good growth, but there is obviously lot of price-led growth here and is moving in the currency changes and all that, so how do you judge the volume traction in the business? What would be a good growth for that center for environment, if you were to look at year stack in that business now.

Sudhir Sitapati — Managing Director and Chief Executive Officer

No. I think, look, the way I look at the Africa business is slightly different. The key metrics for us are volume growth in FMCG and overall growth in FMCG in Africa. That’s really important long-term driver of value-creation, and overall EBITDA growth in Africa. So on front number one, which is volume growth in FMCG, it has been exceptional. And the Drager business is a little bit more complex because there are some businesses where we feel we need to probably extract more value, etc., etc., so that’s probably the right way to look at the Africa business. In terms of EBITDA, I think we’ve had a rough round of cards, the cards that have been dealt to us in last 24 months have been pretty tough in terms of forex which peaked out in the last quarter in terms of shipping cost, in terms of fiber cost which is related to petrol cost, all these costs seem to be cooling off as we speak. So I’m hoping that, and many fundamental improvements have happened. So what has happened in Africa EBITDA is that gross margin dilution is masking a lot of fundamental work-in BTL reduction, overhead reduction, etc. So I’m hoping that when the water recedes, we’ll see the benefits of these costs to come into the Africa business. So that’s our hope, which we hope in the next few quarters will play out, I know.

Sameer Shah — Chief Financial Officer

Yeah, to add to that Arnab, I think as a data point I mean, in last quarter I think overall volumes rose only in Africa, which is ex-U.S. close to mid-single-digits, and overall constant-currency growth is upwards of 20%. I think the other big focus also in Africa is more on profitability, right. So there will be pricing led growth. There will be no upfront investment in FMCG categories as Sudhir was sharing earlier, but there also will be a very clear focus in terms of driving profitability. So it’s better to get the balance right in terms of what the minimum scale leverage alongside investment in FMCG, but kind of cost reductions or margin improvement in dry hair to reach to overall ambition of that mid-teens EBITDA margins [Indecipherable]

Sudhir Sitapati — Managing Director and Chief Executive Officer

But Arnab, I think just to conclude the Africa point is, I think there are two really good things that may happen and come our way. One is that FMCG salience is going upside, and if somebody wants to share the volume growths in FMCG, but it’s good. I mean, even if we don’t have the exact numbers. If our overall is mid single-digits, FMCG is far ahead of overall volume, it is double-digits. It is the double digit kind of, and that’s really good. And the second one is the structural cost of our business has come down in Africa. If the gross margins we can get it back to close to normal levels, we should have pretty good EBITDA growth going forward.

Arnab Mitra — Goldman Sachs — Analyst

Got it. Thanks. Thanks for that. That’s it from my side. All the best.

Operator

Thank you. We’ll take our next question from the line of Harit Kapoor From Investec. Please go-ahead.

Harit Kapoor — Investec Capital Services — Analyst

So, my first question is on the rollout of CHI innovation. So could you just give a sense of what the rollout plans are, which market and how much time you are going to take to even go national numbers.

Sudhir Sitapati — Managing Director and Chief Executive Officer

Well I mean, obviously we don’t share rollout plan before we roll them out, but broadly speaking, we are rolling out as we speak and the intention is to go national. It is not an intention to be a single-state launch anything. So as we speak, we are rolling this out across the country. There is a season in insecticides that starts in mid February in large parts of the country. So we’re hoping to be able to catch that.

Harit Kapoor — Investec Capital Services — Analyst

And the second question is on the urban…

Operator

I’m sorry to interrupt, Mr. Kapoor, if you can just use your handset and speak. Your audio is not clearly audible, sir.

Harit Kapoor — Investec Capital Services — Analyst

Yeah, is it better?

Sudhir Sitapati — Managing Director and Chief Executive Officer

Yeah.

Harit Kapoor — Investec Capital Services — Analyst

So, second question was on the urban discretionary impact called out on. In terms of the categories, where are you seeing this? Is it more on the air fresheners side or is it on the premium hair color side?

Sudhir Sitapati — Managing Director and Chief Executive Officer

No, we’re not seeing it. I mean, that’s what I said earlier, we’re hearing this and generally when you speak to retailers and consumers, we see this. But I think the beauty is that when you get market development right, it trumps macroeconomics simply because the space to grow, let’s say air care, right, in-principle, it’s a discretionary category, but the penetration is so small that it you get your relevance and access and everything right, regardless of stress, it does really well, so I think that we are reasonably happy with Q3. While we hear a lot and we see it and we see for example in soaps and on our premium part of our portfolio, we can see this kind of slight drag in urban, both these categories have beaten a different ends of the spectrum, I mean, hair color at one end and air at the other end. And for different reasons, we feel that they’ve beaten the Q3 kind of slowdown.

Harit Kapoor — Investec Capital Services — Analyst

And my last question was on the cost structure simplification, so while I understand it’s an ongoing process, but if you look at FY ’24, is there a target geography that you know some of these initiatives will be higher versus others.

Sudhir Sitapati — Managing Director and Chief Executive Officer

Yeah, this is an ongoing process, right. Strategically, we shared that we would want to know more on controllable costs which is basket of supply-chain variable, manufacturing costs, the fixed storage, the nonworking part of the ETL spend, as well as yeah, I mean, those costs. Basically, the basket will continue to go down. I mean, you can see it, I mean, last quarter, but last nine months. Even in FY ’24, we do see there are meaningful kind of opportunities in terms of bringing it down so no targets as such, but yeah, I mean it’s going to be very integral in terms of creating that pool, which goes either for investments or goes towards bottom line.

Operator

Thank you. Our next question is from the line of Akshay Thakkar from Fidelity. Please go-ahead.

Akshay Thakkar — Fidelity — Analyst

Yeah, hi guys congratulations on a good set of numbers. Two questions, one slightly long-term and one slightly near-term. On a long-term, you know the new products that you have developed clears out if you were to call them success, how large do you think they can be. I’m just trying to handicap what the size of the price over here. And the second more on sort of FY ’24. I’m just looking at Personal Care category where pricing could come off, you’ll see a decline etc., over there. So they generally from your experience, what kind of acceleration do you see in volume? I’m just trying to again handicap that you’ve obviously come off with a very strong growth in that business. Next year, should we be thinking of that business as single-digit growth with good profitability growth, or do you think the volume accelerates enough to offset whatever pricing headwind you might have, and that business would to see double-digit growth. Yes, those two questions from my side. Thank you guys.

Sudhir Sitapati — Managing Director and Chief Executive Officer

Yeah, at times, it’s probably not appropriate for me to give a number, but I think, looked at the principle here is that many categories operate at these democratic price points for example hair color went from 90 to 30, and pretty much the entire market moved. I mean 85% of the market in India is 35 or 30 or less in cream. So that’s a good case study of the kinds of things that happen. If you take shampoo, detergents, there were large range that operates at this low unit price. So anywhere in the range, even the bottom of the range would frankly as quite happy because a large part of that comes incrementally to us. And there is no particular reason that shouldn’t happen. So we do think this is a value driver, and this happened in so many categories. HI should be no exception to this, so that’s the range that we are kind of looking at. The second question on FY ’24, I think, in May, we will do an Analyst Meet with all of you and sort of share how our thinking for FY ’24 is, but while we’ve not had a great year this year in terms of volume growth, like I said last year and that has not changed frankly is that this is a business that must aim for double-digit volume growth, that is the, I feel the destiny of this business. And we did have first six months which was negative volume growth because of the hyperinflation that we had. We’ve had some volume growth, especially in our core market of India and we hope that this volume growth improves. What we’re interested in is, how do we take what is essentially a 4%, 5% volume growth business closer and closer to double digit. I feel that next year will be a good step-up in that journey.

Akshay Thakkar — Fidelity — Analyst

Thank you guys. All the best.

Operator

Thank you. We’ll take the next question that’s from the line of Kunal Vora from BNP Paribas. Please go ahead.

Kunal Vora — BNP Paribas — Analyst

Yeah, thanks for the opportunity. My first question was on [Indecipherable]. Where are you in terms of pricing and do you see a need to take price cuts and by when would the entire benefit of the raw-material costs decline which you see will start reflecting in the margins and yeah, I mean that’s assuming the raw-material cost stabilizes here. That’s my question number one.

Sudhir Sitapati — Managing Director and Chief Executive Officer

Well, I mean, look, in terms of pricing, you have some principles on pricing again. I don’t want to specifically share, it is not correct to me specifically share the principles of pricing, but, I think the time of heavy volatility in soaps for the time-being seems over there. Will always be some slight correction here and there. If oil goes up oil goes down, passing it on, sometimes we pass it on, though various we pass it on. We are now in in some sense in oil prices in peacetime. As far as the margins go, I mean on soaps, may be Sameer is in a better position to answer.

Sameer Shah — Chief Financial Officer

Yeah I think it is only going to be very dynamic in terms of pricing, as well as margins. I mean, we have seen with commodity cool off, benefits also getting passed on to-end consumers. But there is margin uptick as we then see some gross margin expansion also. I think we’ll first need to kind of kind of estimate in terms of what price [Indecipherable] willingness stable as it has been very choppy and it went up as well as choppy in the way it is coming down. So let’s see, but point is that we will remain extremely competitive in terms of pricing. And in terms of our strategy and that is seen in our results. I mean, over last three years, four years, I think we continue to view 80%, 90% of profit share, so we are pretty happy with the strategic choices which we have taken in this category and are equally hopeful that will continue to gain market share as well as expand margins if commodity environment remains as it was at this point in time.

Kunal Vora — BNP Paribas — Analyst

So I was just trying to understand like given that raw-material cost remained stable now, did the bulk of the benefit of margins already captured or is there [Speech Overlap]

Sudhir Sitapati — Managing Director and Chief Executive Officer

Yeah, I think there will be some incremental kind of margin benefit which will you know sort of kick-in. But as I said, I mean, the intend is also to you eventually some of the room for investment for growth. Yeah, directionally, we will see a movement of gross margin expansion, yeah.

Kunal Vora — BNP Paribas — Analyst

Second is on the HI innovation. How long does it take to come up with this product? Is it a new product which was conceptualized after Sudhir joined or it is something which is work in progress. And if you can provide any initial response, any test marketing any distributor feedback which you received on this.

Sudhir Sitapati — Managing Director and Chief Executive Officer

Well I mean, I can’t provide the test marketing results. Suffice it to say that we don’t launch products without rigorous testing, and you know, we’ve been working on — I think there is both these, it was not built in a day. So if you take for example the FIK formulation, which is the no gas formulation, it has done very well for us in Nigeria, which is originally based on India idea, so it has been in the pipeline for some time that we have now made it fit-for-purpose in Nigeria at we launched as an MLP, it was launched as general formulation and it has done really well. One of the drivers of FMCG growth in Nigeria, so this is a good example the FIK one has been around the our system for a long-time, it went from an idea with respect to market in India, I didn’t do so well, to Nigeria did really well, has come back to India and because we define the problem which we did last year, saying we need to, you know market develop premium household insecticide, one of the tools for market development is access. How do we make sprays accessible? Here we have a solution in Nigeria, can we get that of purpose. So that’s the story of this innovation. The liquid vaporizer innovation which is the machine innovation is actually simplifying the chip in our large machine and using a lot less plastic that we’ve been working on for maybe around about the time maybe a year or so. And you know that again we’ve had various machines. A lot of these innovations in the in the toolkit. I think what has changed to be fair is the sharpness of lobbying definition that we have to get something at INR35 or INR50 for the market. Then you know it’s taken us some time, but there been a whole body of work for many years that helped us in solving a problem that we define.

Avi Mehta — Macquarie — Analyst

This is clarity of the market development and product following yeah.

Sudhir Sitapati — Managing Director and Chief Executive Officer

But I do think both of these by the way are pretty smart innovation. We’re quite proud of them, because to bring no gas into HI is a second time in the world. The first time in the world, we only did it, and to build a small machine of this price is also probably the first time in the world. So, we’re quite pleased with the speed with which we did it. And I hope the sharpness of to define the problem with this will solve.

Kunal Vora — BNP Paribas — Analyst

That’s very helpful. Just like one typical question, which you can provide the capex number for FY ’23, what should we look out for, and tax guidance for the FY ’24.

Sudhir Sitapati — Managing Director and Chief Executive Officer

Well, I think the capex for FY ’24would be in-line with largely FY ’23, maybe I mean, there could be an odd INR15 odd million higher spend, more towards digitization, automation, which in-turn should result in lower controllable costs and a bit towards supply-chain initiatives which we have.

Sameer Shah — Chief Financial Officer

But I think the larger principle without getting into the numbers is we have one of the reasons for reducing our working capital and focusing on cash is to focus on technology and digital investments, which in turn further reduce our costs, which can give us the fuel for growth. So that’s the general model that we are trying to follow. Certainly one part of it in terms of working capital reduction is a pick in terms of setting up capability for digitization is also probably a tick, that now needs to deliver so that cost come down further.

Kunal Vora — BNP Paribas — Analyst

Understood, that’s very helpful. Just on tax guidance [Indecipherable]

Sudhir Sitapati — Managing Director and Chief Executive Officer

So, in terms of tax to begin with, next year what will happen is we will actually move out of lot of tax exempted manufacturing location in India. So the overall reported tax rates will go up, but we have to please remember that this is a non-cash tax expenses. I think five or six years back, we took a significant INR600 crore of MET credit in the P&L. So some part of it I mean will be basically from that INR600 crore credit, otherwise the cash tax remains at 17.5 percentage, 18 percentage, thereabouts, but the reported tax-rate will go up. And then maybe two year down the line we will converge to 25 percent-ish tax rate in India, which would be the reported as well as the cash tax.

Kunal Vora — BNP Paribas — Analyst

Okay, FY ’25 you get to 25% tax rate.

Sudhir Sitapati — Managing Director and Chief Executive Officer

Correct, correct. Next year increase is only i mean, non-cash tax-rate increase. The cash tax remains more of the same is going beyond.

Kunal Vora — BNP Paribas — Analyst

Understood, thanks. That’s it from my side.

Operator

Thank you. Our next question is from the line of Sheila Rathi from Morgan Stanley. Please go-ahead.

Sheila Rathi — Morgan Stanley — Analyst

Thank you for the opportunity. I have three questions. The first one was on the innovation. I think it’s a very interesting innovation, just one question there. Is what I understood is that this product is more effective than the existing product we have, so is either you need to replace the existing product over-time. How are we going to be positioning this product. Yes, the idea is to do category development but it seems to be like that this is a replacement to the existing product, so I just wanted a clarification.

Sudhir Sitapati — Managing Director and Chief Executive Officer

No, it is not a replacement. Let me clarify. The answer is a little bit more nuanced than that. See, in the case of the electric liquid vaporizer, it is exactly the same liquid, the delivery system is different. The delivery system in urban and higher income households has a automatic switch which goes up in the beginning and releases a lot of active in the beginning and then releases a little less active for the next three hours and then again up-doses active. So that is based on the inside largely that in urban households, the lot of people keep the windows closed, they need a burst as they sleep and then they don’t need that kind of active. This has been designed keeping in mind, rural and low-income households where windows are often open, mosquito problem is through the night. So, this is end-up through the night. So the delivery systems are different. There are two different needs of consumers and we don’t think that there is going to be, I mean, there will be basically two different segments, but the liquid is exactly the same, it is just a smaller, this is 35 ml, the bigger one is 45 ml. In the case of the spray, it is a fundamentally different structure, which is a no gas spray which is very similar in other categories you guys receiving in the deodorant category etc. This has the advantage of being able to concentrate more active, and therefore great value and new spray, but obviously doesn’t have the kind of ease of spray that has aerosol has because it sprays all over the room. So again, this is more suitable for smaller rooms where there is not much, you don’t want massive dispersion, but you want a concentrated amount to come out in a small space. So in the case of the aerosol spray, it is different product designed differently for different consumer, and I think what is reasonably smart about both these products is that they are designed for a use-case, which is slightly different from what the bigger ones have been designed for, which is typically higher income urban households. This is more of a smaller rooms for quarter consumer, rural consumers etc., so that it’s not a replacement.

Sheila Rathi — Morgan Stanley — Analyst

Just a follow-up, what would be our market-share in somebody in rural and urban India, what is the penetration.

Sudhir Sitapati — Managing Director and Chief Executive Officer

We don’t give out market-share with our products. I think it’s suffice it to say that the spray category is very, very under-penetrated in India. The liquid vaporizer category is reasonably well penetrated in urban India, but very poorly penetrated in rural India.

Sheila Rathi — Morgan Stanley — Analyst

Understood. My second question to be [Indecipherable] more upbeat on Africa performance, especially led by FMCG growth. What is driving? My first question would be that what is the share of FMCG versus non-FMCG now, and what is driving this is more than double-digit growth. Is it that we are gaining market share? is it that the starting point is low, or we are expanding our distribution in a different manner with what we were doing earlier.

Sudhir Sitapati — Managing Director and Chief Executive Officer

Yeah, FMCG is now roughly a third of our Africa business and growing much faster than the rest of our business, so thats roughly the salience of FMCG. FMCG has done really well I would say predominantly because of the route-to-market work that [Indecipherable] team have done in Nigeria first and now Kenya increasingly where, both our wet hair products that we acquired would be Africa with the U.S. acquisition, which is in both relaxers and in hair treatments. The physical distribution of it, and now increasingly media have gone up and now in Nigeria, we are quite happy with the progress on household insecticide, so these have been the drivers of FMCG. And we are certainly hoping that, I mean, our long-term strategy in Africa was to be a big profitable FMCG. So that makes not really bullish because the bigger FMCG gets, the more stable it is, the more you know likely to be a more value-creating business Africa is for us. Was there another question I and perhaps I missed that. Was there another sub-question?

Sheila Rathi — Morgan Stanley — Analyst

[Technical Issues]

Sudhir Sitapati — Managing Director and Chief Executive Officer

We feel talent kind of business and this is much more modern trade GT kind of business, so I think the Africa team has done a really good job in the last few years of building the road for retail distribution.

Sheila Rathi — Morgan Stanley — Analyst

Now my final question is on FY ’23 guidance. Do we still maintain the low-digit volume growth double digit revenue growth guidance because you sounded less upbeat on rural demand in this quarter and urban [Indecipherable]

Sameer Shah — Chief Financial Officer

This is Sameer here. I think it’s too early to look at guidance of FY’24 and as Sudhir said, we will be having a new Analyst Meet where I’m sure will be sharing more light in terms of what are our building blocks and drivers, but surely I mean, we do expect I mean much better overall business performance as compared to what we have seen at least in first half of the year, part because of better macro was expected at FY ’24 in-part also because lot of our category development initiatives either working or expected to kind of work over a period of time. So, no guidance. I think the other thing is strategically we had shared that we would want to be kind of as a [Indecipherable] close to a double-digit volume growth over a period of three to four years, as well as the 100 to 150 bps of EBITDA margin expansion. I think we are very much on-track, at least to begin with on volume growth in their journey. Next year directionally, again we will see a much-improved volume performance as compared to what we have seen it FY ’23 and margins also for sure will see margin expansion. But the quantum is something too difficult to call out at this point in time.

Sheila Rathi — Morgan Stanley — Analyst

But on FY ’23, how should we think of the number.

Sudhir Sitapati — Managing Director and Chief Executive Officer

FY’23 is almost over, it is Q4 that is left. I mean, look, Q3 was reasonably good, I think Q4 [Speech Overlap]. I think you are asking for guidance more than anything else. Directionally I can share is going to be even better as compared to at least what we have seen in the first half of the year, hopefully also quarter three.

Sheila Rathi — Morgan Stanley — Analyst

All right. Thank you. Thank you very much.

Operator

Thank you. Our next question is from the line of Aalok Shah from Ambit Capital. Please go ahead.

Alok Shah — Ambit Capital — Analyst

Yeah. Hi, thanks for the opportunity and good to see new launches in HI. Firstly, a clarificatory one, and sorry if you already answered, but did you mention anything on the technological changes in this mini LV pack? So essentially the hit time could be lesser resulting into difference in efficacy. And would the current active or the GK flash refuel split into it? Or that would not be possible?

Sudhir Sitapati — Managing Director and Chief Executive Officer

Yes. I mean the answer to both questions is, I mean I answered this one before, but I’ll say it again, which is the spray is definitely different and it’s definitely got a strong product moat around it. The machine designs in the liquid vaporizer is certainly designed for purpose. I don’t know how competitors what mostly have there. But it’s certainly designed for purpose and some clever designing on plastics and on the chip required. What was your second question? I’m sorry.

Alok Shah — Ambit Capital — Analyst

Second was whether the current active or the GK flash…

Sudhir Sitapati — Managing Director and Chief Executive Officer

So these are all replaceable. All GK machines will fit into all GK active. So consumers can use the smaller LV on their existing gold class. They’re larger actives on the small machines. So our family fits everything.

Alok Shah — Ambit Capital — Analyst

Okay. So that’s fungibility there. Got it. The second was on the strategy to communicate the hits proposition to the consumer, and I’m referring to the INR50 price point one. Will that be more about educating the consumers about the lower price point or because it is no gas, so we will not spray through the room. And hence, it is about addressing problems in small areas. So how do you plan to communicate this — about this product to the consumers for the recruitment?

Sudhir Sitapati — Managing Director and Chief Executive Officer

We don’t usually speak about what we communicate until we put it on air. So if we’re going to put it on air quite soon, so you’ll see them. It’s not again, not proper even if it’s only a few weeks away to say what we’re going to do before we actually do it.

Alok Shah — Ambit Capital — Analyst

Okay. Sure. Look forward to seeing that. My last question, Sudhir, was in one of the previous calls, you had mentioned about global category teams and leading to global disruptive innovation. This seems to be one of the start point to that end. Can we expect these products to be now cross-pollinated also. So of course, in one of the previous reply, you did mention about this product being in one of the African markets. But can we see both these products now getting soon launched in Guam, Indonesia also? How do we think on that line?

Sudhir Sitapati — Managing Director and Chief Executive Officer

I mean one of the principles that the global category team has kind of one of the products that has done well for us this year is this product called Air Matic, which basically a big brand for us in Indonesia, and we brought it to India. It’s been there for a few years. But this we really focused on it and has grown fast. So one of the advantages of having a global category team with global categories is if something else in one country, we will move it fast to another country to work. But to be fair, it has to prove itself in one place before it moves elsewhere.

Alok Shah — Ambit Capital — Analyst

Got it. Got it. But if you give a result of the cannibalization happening, not happening, it takes about 6 months to 12 months. So maybe if at all, any cross-pollination happens, it could be at least 8 to 12 months away? Then would that be right in?

Sudhir Sitapati — Managing Director and Chief Executive Officer

Yes. I mean I don’t want to give exact time. But yes, we think it’s better to be patient and prudent to learn your way through in the home market. And then to take how long it takes. I mean I don’t know specifically how much time it will take. But there’s no – I don’t think there’s a tearing hurry, also the size of our India business is so large, and this is such an India-specific issue that if we can look it here, it’s worth a lot more. And in this particular case, in any case than potentially exports. But yes, I mean I don’t think we’ll be tearing hurry till we learn our way in India.

Alok Shah — Ambit Capital — Analyst

Got it. Thank you very much. That’s all. Wish you best of luck.

Operator

Thank you. Our next question is from the line of Prolin Nandu from GMO. Please go ahead.

Prolin Nandu — GMO — Analyst

Yeah, hi team, thank you for taking my question. Sudhir, my question to you is on HI. And you have been quite upfront in mentioning that you are still not there in terms of the HI development. And now you have launched new products, which will take care of the notarization issue and premiumization is taking its own time and happening. But I want to talk about this whole advertising company that you started six months back. And because we mentioned a lot about working media and marketing spend, when I look at that advertising, it’s more focusing on a sound sleep at night rather than focusing on mosquitoes. So how do you measure the ROI on that? I mean, have you been able to change the behavior pattern of the usage for the targeted customer by that advertising? If you can just share something on that.

Sudhir Sitapati — Managing Director and Chief Executive Officer

Yeah. I mean, look, we generally put a lot of advertising increase our advertising on some brands. It’s clearly paid off. And once HI, the jury is still out on the advertising front. But that’s also because different categories have different points or points of inflection. And I suspect on HI, the bigger issue is accessibility. Now, something like it will take some time to build. It is not easy. Our reading of the situation was Goodknight was built on sleep. It has met sapne or good night both. And over a period of time, we moved away from it. Over a period of time, people perhaps said that with newborn babies, there’s a bit of a safety concern, et cetera, et cetera.

So this kind of thing takes multiyear investments to grow. It’s not easy — we still remain convinced as we do more and more consumer work, that there are two fundamental positions in household insecticides. One is the fear of disease and to kill mosquitoes and then the desire to sleep, which is then a combination of safety and efficacy are kind of two different positions. We have two different brands. Nothing in the strategy has told us that, that is incorrect. But it is not fair to expect a repositioning like that to give you explosive growth. Now, what I noticed in the past is when you do repositioning like this, and then you have a mix element change like bringing a mini LV, it usually responds really well. So, I would say that one of the ways in which we will test our repositioning, whether it works or not is how successful the small LV is.

Prolin Nandu — GMO — Analyst

Great. Very clear on that. Again the [Indecipherable] part on this HI in terms of this innovation and new products, and you mentioned that in terms of you want to get as close to incense stake in terms of pricing on a per MG or per unit kind of level I just want to pick your brain, that does the customer think on those lines, when he buys any product in terms of pricing? Or does we look at it overall what is his out of pocket kind of in expenses rather than looking at the per unit thing? I mean has it worked in any other category in your experience? If you can just comment on that.

Sudhir Sitapati — Managing Director and Chief Executive Officer

See, no consumer articulates for MG and all that. Unit price and access. So both are important access, price is important on an individual basis. Consumers respond to it. On an individual basis, consumers don’t respond to price for energy. But what we’ve seen in takeoff in many categories is that there is on an aggregate basis, and you’re talking about millions and millions of people price for MG is a simple way to understand underlying value. Consumers have different ways of understanding underlying value. So they’ll say last longer, last class, et cetera, once more. So they have — they will hardly — nobody will articulate price to MG, but price for MG just forms a good analytical framework. So in many categories, we have taken seen that when the price of format A falls to less than 1.5 extra format B, then a lot of upgradation happens from format B to format A. So it’s more an analytical tool than a consumer language, but it is a powerful analytical tool. It works on aggregate.

Prolin Nandu — GMO — Analyst

Sure. And one last question on Indonesia would be, again, this 2% growth, ex sanitizer last quarter, it was 8%. Are we done in terms of whatever the onetime correction that we were supposed to do and now Q4 onwards, there wouldn’t be any correction that would be required? And obviously, the base will also be a lot more favorable to us. Is that a fair comment to make?

Sudhir Sitapati — Managing Director and Chief Executive Officer

No, I don’t — I mean, I don’t know if it’s done because as I said earlier on, there are three separate issues in Indonesia. Issue number one with sanitizer base, which is more or less done. Issue number two is down-stocking, which is more or less done. Issue number three was very high differential promotions between channels, which is unfortunately not fully done yet. But it is fair to say that Q4 will be better than Q3. Now I mean — but that is something we are determined to — now that we’re taking two collections in Indonesia, we’ll take the third one also. And I’m not sure that the third one is fully done yet.

Prolin Nandu — GMO — Analyst

Thanks, Sudhir. That’s it from my side. Thank you and all the best.

Operator

Thank you. [Operator Instructions] We’ll take our next question from the line of Jaykumar Doshi from Kotak Securities. Please go ahead.

Jaykumar Doshi — Kotak Securities — Analyst

Yeah, thanks for the opportunity. Sudhir, a couple of quarters back, you had articulated your views on palm oil prices, and it has played out pretty much on time. How do you see the outlook going into next financial year? And what does it mean? What’s the headroom for gross margins from current levels? Essentially, you were operating at 59%, 60% gross margin. Do you see that full recovery or did it set at somewhere midpoint between that we have today and…

Sudhir Sitapati — Managing Director and Chief Executive Officer

[Indecipherable] But look on soaps, there are a couple of things there, right? The macro situation on palm oil prices, I mean it’s a bit of a Black Swan event. It’s not likely to repeat in the near future again. in general peace time, it is difficult to make margins of palm oil, prices in soaps and so on and so forth. So there is a normative margin which we can return to in soaps. But I think the broader point on gross margins is an important one, which is our approach is a consumer-first approach. Along with increased media, we are also democratizing all these SKUs. So we are more relaxed about — we’ve not talked about getting back to historic margins because we also see a lot of cost savings that are possible for us to be able to fund innovations like the small HI.

I mean on soaps, we probably will. But on small HI or on hair color, we may have a weighted average gross margin, which may be different from what it was in the past. But I think suffice it to say that we will push more and more in coolable cost or cost to serve within us to try and mitigate whatever because the idea is to pass more value to consumer, either through the product or through advertising. So that journey we should be on. So we may or may not go back to where we were.

Sameer Shah — Chief Financial Officer

Yeah. I think a couple of things to add to this, Jay. One is very difficult to hazard a guess in terms of what would be the level of palm oil prices during next year because it has been extremely choppy over the last two years. So let’s see how that shapes. Directionally, | mean, even passing on this benefit to consumers, whether it be palm or crude [Phonetic] through this democratization strategy. My sense is our gross margin still will expand in FY ’24 at overall global level on base of FY ’23.

Jaykumar Doshi — Kotak Securities — Analyst

Understood. One more question, if I may. Could you just give us an update on how your earlier innovations, one is powder to liquid body wash is tracking, and perhaps some color on powder to liquid hand wash which is long pack. Just want to understand what is the extent of penetration that — those innovations…

Sudhir Sitapati — Managing Director and Chief Executive Officer

See our liquid hand wash is doing extremely well and a large part of that market is now moving. There are several players in that category now are moving to that. I think on powder to liquid body wash it’s taking time, these kind of innovations take time, out of the liquid hand wash itself took a good 18 months before it caught on. I think this one is taking a little bit of time, the body wash.

Jaykumar Doshi — Kotak Securities — Analyst

Understood. Thank you so much.

Operator

Thank you. We’ll take a next question from the line of Shirish Pardeshi from Centrum Broking. Please go ahead.

Shirish Pardeshi — Centrum Broking — Analyst

Hi, good evening. Thanks for the opportunity. Just one question for Sudhir and one for Sameer. So I’ll start with Sameer, I’m referring Slide 12. And we have seen that the India ad spend has gone up almost INR188 crores we have spent. To my best understanding, | think quarter three is normally a winter season, people back less or even not [Indecipherable] season. So where this money qualitatively was spent? Was it more front-ended towards the support of new product and the launches? Or was it spread across?

Sameer Shah — Chief Financial Officer

Hey, Shirish. So I think it’s pretty broad-based. I mean, we continue to back the HI repositioning, especially in Goodknight, there’s also meaningful investments in air category and the results are seen in terms of overall home care category growth being quite a meaningful one. And of course there were investments in larger personal wash as well as hair care, new kind of space. I would say it’s pretty broad-based. And I think the percentage to sales keep still moving up on a Y-o-Y basis what we can see even in quarter three compared to the the previous quarter in India.

Shirish Pardeshi — Centrum Broking — Analyst

So one follow-up, Sameer, here. If we benchmark this and now we’re entering into the season, so will the ad spend will remain elevated level? Or there is some margin improvement where the ad spend will come down?

Sameer Shah — Chief Financial Officer

Yeah. I think we did this in the past. Again, there is no kind of band because every category has its own kind of a specific kind of spend threshold. And of course, for us, it’s not just continuous spend, it is also quality of spend. But we’ve mentioned in the past that for HPC typically, I mean, the categories in which we are in or alive maybe the threshold is anywhere between 10% to 12%. So we are not too far off either I mean last quarter, we were at like 9.5% to 10%. There seems to be some opportunity in terms of scaling up the working media investments incrementally. But I think that will more than get funded from other controllable cost savings or even gross margin expansion.

Shirish Pardeshi — Centrum Broking — Analyst

Okay. My last question is for Sudhir. On 28th December, 2021, we had the first interaction with you. And I did ask this question what are the things you would like to change. So maybe after one year, if I can ask what are the hits and misses. So maybe if you can say that, what are the things which is there. And this more on the people processes and culture, if you can speak about.

Sudhir Sitapati — Managing Director and Chief Executive Officer

I mean, the — let me think a little bit about what the question and also — I think we definitely the hits have been as a company that the clarity of strategy that we have enunciated in December ’21 hasn’t really changed now a year and two months later. And we have only been executing it. So, for example, even this household insecticide, the LUPs is were an idea, we can obviously share it then. We had at that time that because we knew that we had to make the strategy more accessible, it’s taken us a year in order to get there. So I would say, number one is not just the clarity of strategy, but we shared belief in the strategy or the shared knowledge of the company and the strategy is high because we have not really changed strategy. So, I would say that is the number one thing that worked for us.

I think the number two thing that worked for us was in terms of — is I think there’s been a lot of focus on talent, and that’s been a pro and con, by the way. I think in the first few months after I joined for a variety of reasons, including the great resignation, a lot of changes. We had a lot of attrition. I think that attrition has reduced, we have managed to bring back some of our top talent back into the company. And see, we have managed to get some really good talent from outside to join the company. So I would say both hit and a missed, because certainly, we had a higher than what we wanted attrition in the first six to eight months. But I think hit because I feel a lot more confident of the internal talent being promoted, talent that’s come back and so on. So I would say strategic clarity and talent have been big hits.

In terms of misses, I think the depth of the issue in Indonesia, I think the depth of the issue in household insecticide I think it was quite clear to us. It takes time to solve it, and if depth is clear, means answer is clear. I think in Indonesia, I think there has been a bit of a miss in terms of the depth of the issue that we should probably have seen earlier, there were a lot of signals that also reacted and so on. So I would say that we could have probably read the macro situation — the company situation is better in Indonesia faster. I guess that would be a big miss. I would say, I don’t know if it’s a miss, I mean it has been a period of unprecedented volatility, apart from the end of COVID and then Ukraine, the palm oil, inflation. So probably our cost focus in Africa should have been better than it was. I think our top line focus was very good. But probably, if you are better focused on costs in Africa, maybe you would have dealt with the volatility better. But look, this is a Black Swan event. So I’m not 100% sure about that. But certainly, Indonesia, we should have read better.

Shirish Pardeshi — Centrum Broking — Analyst

Got it. Thank you. Thank you and all the best.

Operator

Thank you. Our last question is from the line of Swati Jhunjhunwala from VT Capital. Please go ahead.

Swati Jhunjhunwala — VT Capital Market — Analyst

Yes. Thank you for taking my question. And congratulations on a good set of numbers. So just two questions. First is what are the price hikes that you’ve taken in the nine months of FY ’23 versus Q4 FY ’22? And second on the volume growth. So just not to harp on it much, but you said that volume growth will improve going forward. And we’ve seen that price growth has been leading the top line in the last few quarters. So going forward, do we expect a better mix of price growth versus volume growth to maybe 50/50 levels or any guidance that you can give on the price growth side for the next…

Sudhir Sitapati — Managing Director and Chief Executive Officer

Price growth on SKUs are all available in the public domain. So, it’s relatively easy for you to find what the price growth is I mean going forward, I think it is fair to say that we are in a hyperinflationary scenario in the commodities that we operated in first half. We were also sitting on household insecticide in a very high COVID base in the preceding year because that category did indeed grow consumption during COVID. Both those kind of moderated in the first half of FY ’23. And going forward, we expect them to improve. So the balance between price and volume, we expect will reverse from where it is right now.

I think one last point I want to answer to the last question on probably what we did well in this year is despite the extreme volatility that we faced on many fronts, there’s been COVID, there’s been Ukraine, there’s been a big management change here, et cetera. Two things we did well. One is we continued investing behind our brands, even when profits were under pressure, even though things like we prioritized cash in a year like this, which is probably the right thing to do in a volatile year, and we’ll probably end the year with record cash growth. I think that is probably a good lesson to learn from a highly volatile year, because ultimately, many of these are financial metrics, and cash is reality in a tough year like this, it’s probably something that has been a good year for us.

Swati Jhunjhunwala — VT Capital Market — Analyst

All right. Thank you very much.

Operator

[Operator Closing Remarks]