Hindustan Unilever Ltd (HINDUNILVR) Q4 2022 Earnings Concall Transcript

Hindustan Unilever Ltd  (NSE: HINDUNILVR) Q4 2022 earnings concall dated Apr. 27, 2022

Corporate Participants:

A Ravishankar — Group Finance Controller and Head of Investor Relations

Sanjiv Mehta — Chief Executive Officer and Managing Director

Ritesh Tiwari — Chief Finance Officer and Executive Director, Finance and IT

Analysts:

Abneesh Roy — Edelweiss Securities Limited — Analyst

Chirag Shah — CLSA — Analyst

Latika Chopra — JP Morgan — Analyst

Percy Panthaki — IIFL — Analyst

Kunal Vora — BNP Paribas — Analyst

Harit Kapoor — Investec India — Analyst

Shirish Pardeshi — Centrum Capital — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to Hindustan Unilever Limited Conference Call for the results for the March quarter and financial year ended 2022. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. A. Ravishanker, Group Controller and Head of Investor Relations. Thank you, and over to you, sir.

A Ravishankar — Group Finance Controller and Head of Investor Relations

Thank you, Stanford. Good evening, ladies and gentlemen, welcome to the conference call of Hindustan Unilever Limited. We will be covering this evening the results for March quarter and financial year ended 31st March 2022. On the call with me from HUL is Mr Sanjiv Mehta, CEO and Managing Director; and Mr Ritesh Tiwari, Chief Financial Officer, HUL. We hope that you’re staying safe and healthy. We will start the presentation Sanjiv talking about our performance in this financial year and the progress we’ve made on our strategic priorities. Then Ritesh will share deeper insight into our in-quarter performance and share our future outlook as well.

Before we get started with the presentation, I would like to draw your attention to the safe harbor statement included in the presentation for good order sake. With that, over to you, Sanjiv.

Sanjiv Mehta — Chief Executive Officer and Managing Director

Thank you, Ravi, and good evening, everyone. Always a pleasure to interact with you all. Let’s first look at the full-year ’22 performance and what a year it has been. To begin with. I’m absolutely delighted to report that we have crossed the INR50,000 crore turnover mark in this fiscal. Our growth at 11% was significantly ahead of the market. We consistently grew our consumer franchise and gain both value and volume market shares in large part of our business on LTM as well as on MAT basis.

Our EBITDA margins for the year were at healthy 24.8% and almost flat versus last year and extremely commendable performance of balancing growth and profitability. Profit after tax, and earnings per share grew 11%. In such a challenging context, our robust performance is reflective of our strategic clarity, the strength of our brands, execution progress and our agility and adaptability. I believe that sustainable and purposeful business drives superior performance. It’s clearly reflected in the strong performance that we’ve delivered while also making significant progress on our sustainability agenda.

In calendar year ’21, we have become plastic neutral. That is we have collected and safely disposed more plastic waste than what we used in packaging up finished products. We are building a strong business. Even in such a difficult year, we have made good progress on our strategic thrust area. This has not only helped us deliver a solid India performance, but have also made us a much stronger business, which is much better prepared to win in this fast-changing world. In the next few slides, I’m going to talk to you about each of the thrusts.

The first is of course vending with the portfolio. You have a wide and resilient portfolio more than 50 purposeful brands spanning 15 FMCG categories. In 80% — in more ore than 80% of our business, we are strong market leaders. In such difficult times, consumers tend to stick to large and trusted brands that offer better price value equation. Another distinguishing strength of our portfolio that our brands handle the price benefit pyramid offering consumers the choice at relevant price points. This ensures that we are able to cater to the needs of consumers looking to upgrade to production and higher order benefits and also to consumers who are trying to manage their household budget in times of inflation.

While we already have a wide portfolio, we are tapping into new demand spaces. A strong marketing and R&D capabilities enable us to quickly pick up consumer trend and address them. Our ability to do market development at scale positions us well to build these categories of the future. In the last couple of years through sharp focus on portfolio choices, we expanded our play in premium beauty and healthcare, functional nutrition, foods, detergent capsules and dish wash products. These are great products from trusted brand and are already finding good traction with consumers. We have 16 brands with turnover of more than INR1,000 crores and together these brands make up more than 75% of our topline.

Surf Excel and Brooke Bond lead the pack with each contributing more than INR5,000 crores. Surf Excel has also become the largest fabric solution brand in India. Three of our brands, Vim, Rin, and Dove join the INR2000 crore club this year. Further ice cream brand Kwality Walls crossed the INR1000 crore turnover mark. Overall, we added a very sizable INR5,000 crore to our top line this fiscal year. Importantly, INR900 crore came through innovations clearly showing our agility in responding to the evolving consumer trends.

Consumers continue to be increasingly discerning looking for highly effective products. To meet the growing consumer needs, we are creating more superior products, bringing the best of our marketing insights and R&D together. We now have 2X more superior products when compared versus 2019. It does not mean that the rest of our products are inferior. It just means that others are at par with competition on functionality. Bringing alive the magical marketing, we created impactful campaigns would not only help strengthen brand salience, but also won many external accolades. Dove topped the beauty tests, one of Silver Line at the Cannes Festival of Creativity.

We were the most awarded advertiser at Emvies, winning a total of 31 awards for various media campaigns. We’re also recognized as the best media client of the year. Three campaigns to make sure we’re part of the walk [Phonetic] 2022 World’s most awarded campaigns and we won 7 awards at the festival of media. Clearly, we are winning with the brands as a force for good powered by purpose and innovation.

Let me now talk about execution. With 29 factories, 35 depos and with 3500 distributors, we sell our products to 9 million stores. Our operation has spread across the length and breadth of the country. It is important that despite the massive size of operations, we remain agile, adaptable and resilient. We are debottlenecking our capacities and increasing the number of formats, manufactured first site. Through shorter production runs and smooth changeover, we were able to manufacture 80% of SKUs every 3 days. Almost the entire production happened locally in India providing supply certainty and cost effectiveness.

We are manufacturing closer to where the demand is. As a result, the distance traveled by our products is down 8% on a YoY basis. We’ve expanded our distribution and assortment taking it to 1.15 times of pre-COVID level. With the increase in footfalls, modern trade stores are bouncing back and we’re partnering with them for a joint marketing plan and providing consumers the best shopping experience.

Now this chart summarizes the challenge that we have been facing in terms of material cost inflation and how we navigate this with the agility to grow our consumer franchise and at the same time, perfect our business model. These are the 2 most important imperative and distinct. Till now, our practice has been to quote market inflation numbers with external numbers before any cost savings that we made. However, with the dramatic inflation, we thought it will be useful to give you a sense of material cost increase that we see in the business through the lens of NMI or net material inflation. NMI’s net absolute inflation, after adjusting for the benefit of a buying efficiencies, hedging product design or redesign to value and other savings. NMI that we have seen in March quarter ’22 was 4.5 times of the NMI in June quarter ’20. In fact, the NMI in full-year ’22 has been higher than the cumulative NMI we have seen in the last 5 years.

Despite this unprecedented level of inflation, we’ve been able to keep our margins almost flat versus last year and have grown significantly ahead of the market. In fact, the market share gain this year is the highest YoY market share gain we have seen in more than a decade. Through dynamic financial management, we grew our consumer franchise and predicted our business model. We reduced costs by driving savings harder at — which stood at 7% of our turnover. Using a win-win strategy, we captured opportunities to premiumize resulting in 2x growth for the premium portfolio versus rest of the portfolio.

The strength of our brands enabled us to take calibrated price increase. We also ensured our brands are well supported by investing competitive levels of ANP and ensuring that the share of voice remain ahead of share of market. Reimagine actual as all of you know, has been a key pillar of our growth strategy, we have spoken about in detail in our earlier conversations and today, just want to give an overview of the key actions that we have taken in this space.

Let’s talk first about the consumer ecosystem. As part of a digital first journey on Lakme, we are leading brand building online, whether it be through influencer marketing at scale of pioneering new initiatives like influence the common. We’re already India’s Number 1 beauty brand on Instagram with 2.3 million followers. Lakme is also leading the charge on making beauty shopping easier online through beauty tech solutions like a virtual trial, foundation finder or skin analyzer. All of these technologies use artificial intelligence to help consumers find the right products and even try it on virtually replicating an offline experience. We had more than 2 million unique trials of a beauty taken the last year and the conversion and average order value for these consumers is 2X of average.

We are scaling up e-commerce capabilities, our B2C website already have 25 million annual websites and website visits and together with the e-commerce platform, our annual — our online sales today contribute 30% of our Lakme business. From a customer ecosystem lens, we are leveraging technology and digital solutions across channels and customers. You’ve heard from us about our e-B2B app Shikhar and the work we’re doing to digitize general trade. As of March ’22, we have crossed more than 800,000 stores, adding thousands stores every day in this fiscal. Our e-commerce business continues to grow ahead of rest of the channels. Design for channel is the key strategic priority for us as we increasingly designed our portfolio to meet the requirements of different channels.

We are also reaching out to consumers directly through our B2C platforms providing them with a unique shopping experience. It is good to see that our digital initiatives of scaling up fast in March quarter ’22 digitized demand capture across our future ready platform was more than 20%. This also gives us the unique ability to reign our demand generation activities in a disruptive way.

Talking about digital operations, our homecare factory in Dapada has joined the World Economic Forum prestigious Lighthouse Network. It is the first FMCG manufacturing site in India to have received the status. The network includes sites that have implemented end-to-end digitization across the value chain, pushing boundaries of technological advancement. This recognition is testament to our sustained focus on making our supply chain future fit as part of our remodel atrial agenda.

Our nano-factories helped us to produce niche and on-trend products in smaller bag sizes. We now have 3 nano factories, which can produce around 100 SKUs. These provide us with greater speed and agility, somewhat hard, at once fulfillment center is a classic example of how we are rethinking about each node in operation system to find efficiencies and optimize the process by integrating data and technology somehow allows us to reduce our end-to-end fulfillment of [Indecipherable] time. These are some examples of the significant progress we are making in our reimagine HUL journey.

Let me cover a bit more on the progress of our sustainability agenda. We are decarbonizing operation by using alternative sources of energy such as wind, biomass, solar and have completely eliminated the use of coal across all our manufacturing operations. Further, we are deploying energy efficient technology, leveraging our Load More Travel Less strategy to reduce distance traveled by our products. These actions have helped us achieve a 94% reduction in CO2 emissions across operations when compared to our 2008 baseline.

We all know that India is a water scarce country. Through the Hindustan Unilever foundation, we are supporting and amplifying scalable solutions to help address India’s water challenges. Till date, the foundation that delivered a cumulative and collective water potential of over 1.9 trillion liters across thousands of village. To underscore the importance of the water potential created by, it is more than the drinking water needs of India’s entire population for the year.

Promoting good health and well-being is another focus area for us. During the year, we launched 3 more Suvidha Centres and we now have 7 such community health and sanitation centers in Mumbai. The recently launched center in Dharavi is one of the largest community toilets in India catering to the needs of 50,000 people. These centers provide a life of dignity to our slum dwellers. We have further expanded our Shakti initiative and now support over 160,000 rural women entrepreneurs. We are creating a larger social impact by training them on nutrition awareness with recycling, women empowerment, etc. We are helping them to become a beacon of social change at the village level. These are only a few examples of the extensive work that we’re doing in the area of sustainability. We will shortly be sharing a full suite of ESE [Phonetic] commitments across the 3 compass pillars of improving the health of the planet, improving people’s health confidence as wellbeing and contributing to a fairer and more socially inclusive work.

Now before handing over to Ritesh to take you through our financials in more detail, I would like to say that this has been a remarkable year. Despite a very challenging external environment, we have delivered strong all-round performance, crossed the INR50,000 crore turnover mark, I’m sure that is one of the many milestones that we will continue to cross in that journey. I am equally happy to report the excellent progress we have made on a strategic thrust areas to build a purpose-led and future-fit organization. This suits us very well for long-term value creation, for all our stake holders. With this, over to you, Mr. Tiwari.

Ritesh Tiwari — Chief Finance Officer and Executive Director, Finance and IT

Thank you, Sanjiv, and good evening, everyone. I will now walk you through our in-quarter performance and our future outlook. We had a strong close to the year with a good all-round delivery in March quarter. Turnover grew 10% with flat underlying volume growth. Growth was competitive with more than 75% of our business gaining value and volume share across both MAT and last 3-month basis.

Talking about underlying volume growth, let me reiterate the impact of price point pack which we had spoken during our December quarter results. Almost 30 percentage of our business comes from pack that operated margin price points at INR1, INR5, or INR10. In these packs, our preferred mode of taking price increase by reducing grammage. As a result, even the same number of units sold leads to volume decline. This had a 2% to 3% impact on our UVG.

Moving to our bottom line performance, sequentially inflation has worsened in the quarter as we had anticipated and called out earlier in 3Q results. This has resulted in a 290 bps sequentially and 330 bps year-on-year increase in our cost of goods sold. In the backdrop of this unprecedented input cost inflation, I am pleased that we have dynamically managed our business to deliver a healthy EBITDA margin of 24.6%, a marginal decline of 20 bps year-on-year. Our laser sharp focus on driving savings across all lines of P&L coupled with competitive [Phonetic] pricing while investing behind our brand competitively has been driver of the strong performance. Profit after tax, but before exceptional items, was up 9%. Our net profit at INR2,327 crore increased 9% versus MQ-21.

Now let me give you a breakdown of the growth across the 3 divisions. Homecare sustained its very strong double-digit growth momentum, growing at 24%. Beauty and Personal Care grew ahead of the market at 4% led by skin cleansing. Foods and Refreshment delivered a strong performance growing at 5% on back of an exceptionally high base. We will get down to talk about performance within each of the division in subsequent slides.

Now let me talk about some of the innovations we landed in the quarter. Lifebuoy has launched powder hand wash at the price point of INR10, which makes 200-ml of liquid hand wash. It is of the country’s most affordable liquid hand wash. Dove’s new heads therapy help prevent hair breakage and is made without sulfates that gives gentle nourishing care. Sunsilk has added onion and jojoba oil shampoo to its franchise while Lakme Absolute has launched new eye makeup range that includes long lasting explored pencil, range of 10 pencils with mat and metal finishes. Ahead of summer, Kwality Walls has launched exciting new ice cream flavors like Trixy Blueberry Cheesecake, Royal Kulfi, Black Forest Feast and Cassata Cake.

Talking about a few marketing campaign, this year in IPL, Boost is celebrating newcomers and emerging superstar of the game for the great determination and relentless perseverance. Dove activated its new campaign on body wash and comfort activated campaigns in South India. Surf Excel came up with its new wholly campaign and connect to launch a delight fulfillment making the first move featuring Alia Bhatt. Homecare had another strong quarter of double-digit growth enabled by robust performance in both Fabric Wash and Household Care. Both categories grew in strong double digits with all part of portfolio performing well. Homecare grew volumes in mid single-digit reflecting the strength of our brands to price up in inflationary conditions.

Liquids and fabric conditioners continued its exceptional momentum and grew handsomely. Further Surf Excel has become the largest fabric solutions brand in India in this physical. With more input cost inflation, we have continued with our calibrated pricing approach in both Fabric Wash and Household Care.

Beauty and Personal Care grew competitively at 4 percentage, slowdown in market growth due to impact of high inflation on discretionary consumption. Skin cleansing delivered double-digit growth, driven by pricing and led by strong performance in Lux, Dove and Pears. Haircare continued its strong competitive performance in the quarter with all brands gaining shares. In skincare, premium portfolio grew in double digits. Glow & Lovely, talc and Color Cosmetics had soft quarter due to COVID wave 3 and market slowdowns.

Let me now turn to Foods and Refreshment. F&R grew 5% on a very high base of 36% in MQ-21. Tea continued its robust performance and grew competitively on an exceptionally high prior year comparator. We expanded our value and volume market share in the quarter. Coffee grew in double digits. In Health Food Drinks, we continued our focus market development actions to build category relevance and penetration. During the quarter, we did more than 10 million home-to-home connects. We also launched new persuasive communication in both Horlicks and Boost.

In the context of moderating market growth for the category due to its discretionary in nature, these actions have helped us continue gaining market shares and penetration. Foods delivered a high double-digit growth with all parts of the business doing well. Our recent foods innovation, peanut butter and mayonnaise continue to gain traction and the consumers. Ice creams had a very strong quarter with high double-digit growth. I have spoken earlier about exciting range of innovation we launched for this year.

In summary, our performance has been strong, both on top line and bottom line. While I covered most lines, let me give you a quick highlights on few other items. We continue to invest competitively in A&P. Sequentially, we stepped up A&P by INR100 crore or about 60 bps. Our market has been to ensure that our share of voice is ahead of our share of market and our brands are well supported. Both employee cost and other expenses see the benefit of turnover leverage flowing in apart from benefits of be the ceilings programs.

Exceptional items include gain from sale of an old factory land offset by normative restructuring expenditures. Our ETR for the quarter was 25% which stakes our full-year ETR to 24.9%. Sanjiv has already spoken in detail about our full year delivery. Let me quickly recap the numbers. Topline grew 11% in financial year ’22. Our turnover crossed INR50,000 crore and we added more than INR5,000 crore during the year. Underlying volume growth for the year was 3%.

Moving to bottom line performance. Despite unprecedented levels of inflation through the year, we have dynamically managed the business and delivered a healthy EBITDA of 24.8% declining marginally by 20 bps year-on-year. We delivered a net profit of INR8,818 crores, translating to a strong double-digit EPS growth. Our track record of strong cash generation continued. We delivered about INR11,700 crores of cash from operations. This chart gives you a snapshot of our segmental performance on a full year basis. As you can see growth has been broad based and overall segmental margins also continue to be healthy across the 3 divisions.

Considering our strong performance, the Board of Directors have proposed a final dividend of rupees INR19 per share. Along with interim dividend of INR15 per share, the total dividend for this year is INR34 per share. The total dividend amount for the year is INR7,989 crores.

Now before moving to external context on our outlook, let me summarize what we’ve covered till now. It was a solid all around performance in the year. We became a INR50,000 crore turnover company, grew topline at 11 percentage, significantly ahead of the market. Our dynamic financial management helped us strive the right balance of competitive top line growth and managing healthy margin in the face of unprecedented input cost inflation. We deliverd double-digit EPS growth.

We continue to strengthen our market leadership with highest market share gains that you’ve had in more than a decade. It was comprehensive market beating performance with share gains in all 3 divisions across private segments, across region, both in urban and rural. We have made excellent progress on ESG and on our digital transformation agenda.

Now, moving onto external environment and our outlook. Operating environment remains challenging. Commodity inflation continues to be a significant headwind for the industry. The recent developments have added further volatility to commodity markets pushing prices for biggest commodities, including Brent crude, vegetable oils, agri commodities even higher. CPI inflation has also been increasing, has now breached our waste threshold for last 3 months in a row. The latest inflation survey by RBI cleanly indicates that households are feeling the pressure of inflation with 71% of respondents expecting more inflation in the coming months. This is also influencing consumer behavior as they try to manage their household budgets. Consumers are looking for better value across their purchase basket and food and kitchen items are being prioritized over discretionary categories. The R titrating volumes and preferring the [Indecipherable].

Due to unprecedented inflation, FMCG market value growth had significantly slowed down and volumes are declining in high single digits. The impact is more pronounced in rural that even value growth has started declining. Consumers are taking volumes and essentials are being prioritized over discretionary categories.

Let me spend some time without talking about the impact of inflation on our material cost. We use a measure called net material efficient, which is net absolute inflation after factoring in all savings and efficiencies. Our NMIs in March quarter 2022 was 4.5 times of June quarter ’20. This does not take into account the recent surge. If things remain same, we expect sequentially more inflation in next 2 to 3 quarters. We will continue to dynamically manage the situation in a similar way we have done in the past several quarters.

As you know, we have a very robust savings program. Let me give you a few examples of what we’re doing to bring it a life for you. We are generating buying efficiencies by leveraging our global scale and strategic partnership with suppliers. Our media deployment is sharply focused on attributing every spend to driving more growth. We are debottlenecking capacities in our supply chain to drive manifesting efficiencies with better planning and producing closer to the market, we are reducing our distribution costs. The light-weighting our bottles which not only reduces packaging cost, but will also be good for the planet.

Using of a principle of net revenue management, we will continue to take calibrated pricing actions while ensuring we remain competitive and provide the right price value equation to the consumers. We are revisiting of offerings at certain price points and are adding bridge packs to provide better value to our consumers, while ensuring affordability. Our win-win strategy helps us find opportunities for driving faster growth in premium portfolio.

Looking ahead in near-term, operating environment will remain challenging. We expect to see more sequential inflation. Growth will be predominantly price led. We will continue to drive savings harder and take calibrated pricing actions, whilst ensuring we protect and grow our consumer franchisees. Our margins decline in short-term as price versus cost gap increases. Tells of a brand, a wide portfolio, starting the price benefit pyramid and a robust business model will hold us in good stead. We remain confident of a. outpacing FMCG market growth and b. recovering our margins in a phased manner.

Moving to bit to long-term perspective, Indian FMCG sector continues to be very attractive. Favorable macros like large young working population and rising affluence coupled with low FMCG penetration and per capita consumption continued to provide huge runway for growth. For issuance, the drivers of value creation remain the same. We will grow our top line ahead of the market by growing core competitively, premiumizing our portfolio and doing market development at scale. We will deliver modest margin expansion and continue with attractive cost for strong capital discipline.

At the same time, we will continue to build a purpose led future fit HUL by delivering on our ESE commitments and leading digital transformation. We are focused to deliver 4G growth, growth that is consistent, competitive, profitable and responsible. With this, let me hand over to Ravi to begin the Q&A session.

A Ravishankar — Group Finance Controller and Head of Investor Relations

Thank you, Sanjiv, thank you, Ritesh. With this, we’ll now move on to the Q&A section. We request you to kindly restrict the number of questions to a maximum of 2 at a time. In case you have further questions, please rejoin the queue again. in addition to the audio as always our participants have an option to post the question through the web and we will take these questions just before we end. With that, I’ll hand over the call back to Stanford. Stanford, go ahead please.

Questions and Answers:

 

Operator

Thank you, sir. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] The first question is from Abneesh Roy from Edelweiss. Please go ahead.

Abneesh Roy — Edelweiss Securities Limited — Analyst

Yeah, congratulations on good numbers in the current context. My first question is on palm oil. Yesterday, Indonesian Minister has allow CPO. Today, it seems that there is a flip-flop, the Chief Economic Advisor of Indonesia has said that CPO also is likely to be banned. My question is if the ban is there for say a few weeks, in the extreme situation of that ban, what happens to your soap business? It’s a sizable business. You are the number one player and secondly on the smaller players, what could be the impact — smaller soap players, if you could elaborate on these points?

Ritesh Tiwari — Chief Finance Officer and Executive Director, Finance and IT

Abneesh, thank you so much. On palm oil, the situation has been volatile and I mean you know that the conversation, which happened first on restriction of sales, which was later on called out only to remain and — remain localized to the cooking oil component, which is palmolein, part of that and CPO supplies to continue. Overall, if I just as a context if Indonesia produces 100 kg of palm oil, the country only consumes one-third of it. Two-third of the volume ends up exporting and this is one of the largest source of revenue for the country. So overall, if I see, there might be impacting short term, but looking at the amount of excess production compared to the local needs that Indonesia producers, I do believe that these sales of palm oil ex-Indonesia will continue, number one.

Number 2, as you know what we consume and the largest component of our input ingredient is PFAD and PFAD gets manufactured the moment you refine CPO to produce ultimately palmolein or palm shading and the PFAD which gets consumed, there are few sources only where PFAD gets utilized. One of the large source of that is soap industry. And hence, we do believe that PFAD supplies would continue for us to get. That’s number 2.

Overall vegetable oil market is tight in terms of pricing. And as you’ve seen the amount of significant inflation, this basket has seen over the last couple of years. So, I do expect the price will likely to continue as the situation gets completely bottomed out. Last but not least, as you know of course in long-term, India has linked in in terms of giving more amount of support to what we need to do as a country to achieve intensive compounds of palm sufficiency and investments have gone into in this area. Actually what we are doing is to also look at BNS [Phonetic] as the revenues. There are more than one way [Indecipherable] making soaps. So looking at alternatives, looking at our own efficiencies and the mix that we end up using in terms of producing soap.

So in summary, I don’t expect this to be a long-term issue, given the amount of excess palm that Indonesia produces. Given continuity of supplies from other palm-producing nations and given the flexibility that we do have any of our formulations and our alternate methods of producing, in my mind, they should continue, but what is given in my mind Abneesh at this point in time is price volatility, which will continue. We are also in this season as we speak of palm and palm production, as you know, start speaking from April onwards. So let’s see as to where the season comes out and what kind of volumes are getting produced. That will also a good determinant of overall demand-supply situation and the price tables of this commodity.

Abneesh Roy — Edelweiss Securities Limited — Analyst

Sure. That’s helpful. My second and last question is on the recent developments in the good ad campaign, which will not to target children under 16 in ad campaign. How much relevant this is to India. I understand the Unilever global relevance. In terms of India relevance, what is — how much it is relevant and what’s the impact on food and ice cream and doesn’t your ad campaigns become a bit competitively disadvantaged given your competition doesn’t face this issue. So how do you overcome that disadvantage?

Ritesh Tiwari — Chief Finance Officer and Executive Director, Finance and IT

No. I think Abneesh, this is all about responsible marketing and it is not that we are going to stop advertising. Our focus would be on mothers and fathers, the parents and we don’t see in any way getting listed one time.

Abneesh Roy — Edelweiss Securities Limited — Analyst

Okay, that’s all from my side. I have more questions, but I’ll come back. Thank you.

Ritesh Tiwari — Chief Finance Officer and Executive Director, Finance and IT

Thanks, Abneesh.

Operator

Thank you. The next question is from Chirag Shah from CLSA. Please go ahead.

Chirag Shah — CLSA — Analyst

Yeah, good evening guys. At the outset, congratulations on navigating through a such a tough backdrop so very well. My question is on the BPC segment. Can you just touch upon the progress on the digital-first business segments that we have and staying on BPC, if you can just also touch upon the other 2 levers, which is basically growing the core and premiumization and market development please.

Ritesh Tiwari — Chief Finance Officer and Executive Director, Finance and IT

So thanks Chirag for the question. Starting with digital first brands, overall, we have spoken in the last few quarters that on digital first brands, we have launched our own B2C brands, be it simple, be it loved within planet or EBITDA. And as I called out earlier, there are 2 very clear objectives out here. A. of portfolio which is digital first brand and B. set of capabilities, which help us to drive digital first brand, be it performance marketing, video analytics, which go behind generating online revenue and all of that is very clearly installed with us. Along with that, let me say talk on digital first brand. Let me also then go back to talk about our own digital sales footprint between e-commerce, e-B2C, e-B2B, d4T [Phonetic] website and Shikhar where we do that. We sell online to many of our retailers. All this put together to give a digital demand capture it has now in this quarter gone beyond 20 percentage. So more than 20% of Hindustan Unilever sales gets digitally captured. When — in times like this when lower channel transformation happens, in my mind one of the most significant way to look at are we making progress, is to look at how much amount of sales are getting captured digitally. This also provides a platform to do demand generation and demand fulfillment in a very different manner. So that’s on the digital first brands.

Now coming to the portfolio of both core, premium and market development, our growth algorithm is very clear. First, clear focus is to grow the core and go into core comes from various fundamentals of growth that we called out many times. We design our portfolio for channel, making innovations in the portfolio, also that matter driving distribution and reach for the products that we have, number one.

Number 2 for us is very clear focus on making our portfolio more premium and in this financial year, our premium portfolio has grown at twice the pace as the rest of the portfolio. So that’s the second clear component of our growth algorithm and the third component of growth algorithm exactly to your point is market development. The categories that we operate in, many of them still have low penetration and low per capita consumption and hence there is a huge runway for us for growth going forward, which is why we do focus and scale to do market development across our portfolio. I hope that gives you a sense about the kind of approach we have on driving growth and profitability in the business.

Chirag Shah — CLSA — Analyst

Yeah, that’s very helpful. Thank you. And the second question is on the nutrition part of the business. Now that the integration largely seems to be behind, what is the direct coverage target that we have for the Nutrition business? And also, is it now a good time to start looking at getting into the adjacencies?

Ritesh Tiwari — Chief Finance Officer and Executive Director, Finance and IT

Yes, so on nutrition, we have now completed the entire transitions and — from all elements, from people, from factories, from capabilities for manufacturing and also go to market operations. Across all elements, we have completed our integration where we are today with our direct distribution is twice the number of outlets now, we reach directly as compared to pre-integration. So that objective is also very clearly met.

The single biggest source of growth and value creation, Chirag, for us is to do market development at scale. We had called out that. It’s a very attractive category, but low penetration to start with and which is why one of the fundamental driver of growth will be market development and we are doing market development at scale sans [Phonetic] couple of quarters where we had very peak of COVID wave one and COVID wave two, we have continued our job of market development. Even in this quarter, March quarter ’22, we have done more than 10 million consumer connect.

Now talking about agencies, what we have done is entire plus portfolio, which has been activated on high science, be it Protein Plus or be it Diabetes Plus that is one clear portfolio that we’ve activated and ensured that that starts to do the job of more broadening the offering that we have under Horlicks. Equally both Horlicks and Boost, we have launched our media campaigns, very clearly focused on food equivalents and trying the point of how both Horlicks and Boost ends up doing the job of fulfilling the gaps in micronutrients and consumers. So that job for us absolutely continues. So the growth strategy for Horlicks is encompassing all 3 elements; activity in the core that we have, number one; number 2 market development and then keep growing portfolio around it, including the plus range.

Chirag Shah — CLSA — Analyst

Got it. If I can just slip one small question. On the LUP side, you mentioned that a reducing grammage as the first option for any pricing action. Now obviously, we have a very large LUP portfolio and given the inflationary pressures, I’m just wondering how much more leverage do we have in terms of taking pricing actions through reducing grammages?

Ritesh Tiwari — Chief Finance Officer and Executive Director, Finance and IT

Yes. So overall, when it comes to pricing before I come to LUP, as Sanjiv called out earlier that the first port of call that we have is always to drive savings hard. Drive saving hard across all the lines of the P&L, so that the net cost that we need to deal with is a smaller number and which is what they may end up taking calibrated price increases.

Now coming into a price point portfolio, we have roughly 13 percentage of our portfolio which is price locked. There, we have done action, we had spoken about it earlier as well that to an extent we can titrate volumes, we have done that. The second job that you started to do now is to start developing bridge facts and activity in that portfolio. Let me give an example of Lifebuoy. We have a Lifebuoy soap at INR10. The next price points in Lifebuoy, let’s say INR35 to INR36, the soap bar and what we have now done is we launched a price point in between digital price point, both in volume, in terms of grammage and in terms of price. What this does? The unit economics of this bridge pack gives a. a better value to consumers and hence the consumer is still able to source good brands at an affordable price point and for us, it gives us scale and also the unit economics gives us better value as well as manufacture, and producer incentives.

So bridge pack is what we’re trying to do across all the commodity impacted categories.

Chirag Shah — CLSA — Analyst

Sure. Thank you so much. I have more questions, but I’ll join the queue. Thank you.

Ritesh Tiwari — Chief Finance Officer and Executive Director, Finance and IT

Thank you, Chirag.

Operator

Thank you. The next question is from Latika Chopra from JPMorgan. Please go ahead.

Latika Chopra — JP Morgan — Analyst

Yeah, hi, thanks for the opportunity. Sanjiv, I just wanted to check your thoughts on the visible growth trajectory. We saw that the March quarter on an aggregate basis was lower than the previous quarter, but are you seeing any green shoots sequentially in the agri economy as you exited the quarter? Any thoughts.

Sanjiv Mehta — Chief Executive Officer and Managing Director

Thank you. Thank you, Latika for that question. If you were to look at the hard number, we are clearly seeing that the last 3 months, both the value growth and volume growth in urban and rural has been lower than the mac growth. While there is — one has to understand that there is a base period impact, but on the total basis, we are seeing the decline happening and if you were to recall in the first year of the pandemic, rural growth was going ahead, growing much ahead of urban and because urban movement was curtailed and tea was more or less closed.

And then in the second period — second year, we saw rural — urban picking up when they came back as things started to open up. Now. Your question on rural, are we seeing green shoots. I believe that there are a few factors, which could contribute to rural recovery. First is a good harvest. We are seeing that the Rabi harvest should be good from all accounts. Secondly as the indicators are that the rain fall should be decent. The third is with the agri prices moving up, there would be benefit to the farmers. What we need to assess whether that will get neutralized by input price increase or there will be a net benefit to the farmers. If it is a net benefit to the farmer, it would be fabulous because we are seeing that the government procurement has been much lower because farmers are selling it in the open market.

And then last but not the least is government spending of INR7.5 lakh crores on capex. And if that is front ended, which I believe it should be, then we should start seeing a recovery happening and if the geopolitical crisis settles down, then we will definitely see a tapering of the commodity price increase, which all together could result in the revival of demand and revival of growth. So I am hopeful, but very difficult to put our finger on when this will happen.

Latika Chopra — JP Morgan — Analyst

Sure. That’s helpful. My second question was, you definitely talked about market share improvements across 75% of your portfolio. But could you tell us how our market shares across the 3 segments behaving for you on the e-commerce front? I remember earlier you spoke about e-commerce market shares are more than modern trade, more than general trade, but how is the trend now there, particularly on the e-commerce transfer your key segments?

Sanjiv Mehta — Chief Executive Officer and Managing Director

Yeah. No, thanks for that question. First is we are growing market share from a Nielsen perspective in urban and rural and value and volume. We are increasing market shares across the 3 divisions; Beauty and Personal Care, Foods and Refreshments and Homecare. We are increasing our market shares in large packs, mid packs, and small packs and we are increasing our market shares across geographies. And when you look at it from a lens of premium, mid-tier and BOB [Phonetic]. So it is a market share gain across segments both from a win perspective and from a debt perspective, it’s been a great story.

Now as far as e-commerce is concerned is, whatever we measured, we get information. We are very pleased with the progress that we are doing as far as e-commerce is concerned.

Latika Chopra — JP Morgan — Analyst

Sure. That’s good to know, Sanjiv. Thank you so much.

Sanjiv Mehta — Chief Executive Officer and Managing Director

Thanks, Latika.

Operator

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

Percy Panthaki — IIFL — Analyst

Hi team, good evening. My first question is generally when there is a lot of pressure on the consumer wallet in the past, we have seen some amount of downtrading as in not just the back side but the customer goes for sort of slightly more affordable brand in the same product category. So have you seen that happening because you have brands across price points? So within your portfolio, have you seen people moving from a brand to a lower brand within your portfolio or outside your portfolio?

Ritesh Tiwari — Chief Finance Officer and Executive Director, Finance and IT

Thanks, Percy for the question. India is as you know, not a homogeneous country and we are seeing more than one shopper behavior and consumer behavior at this point in time. The overall trend of down-trading where consumers are seeking value that is very clearly established. With inflation where it is now extremely significant and consumer wallet size getting compromised. They are clearly bringing — putting more priority to essentials and against over discretionary.

But when I look at our own sales at Hindustan Unilever, our premium portfolio in this year of 2021-2022 across quarters has grown at twice the pace as the rest of the portfolio, which means that there are still consumers who are able to buy and who are spending to buy our products, which offer higher order benefits and as we called out in the past, our premium products are in price point at 120 plus index. So we have seen traction in that space as well.

Now the advantage of running extremely good heavy machinery meaning in many India’s machinery, we are able to surgically find pockets of opportunities across the country, across channels and across price segments where we can drive growth disproportionately and this is what has really helped us in times like this to grow not only in premium, but also in mass and also in popular. So growth has been broad based where we have gone a little differently on different pockets of growth opportunities. But the overall trend does remain at this point in time, the consumers are seeking value. If the small price points are seeking value, they are going there. The large packs are giving more value, they’re going there. So we’re seeing value seeking behavior across categories.

Sanjiv Mehta — Chief Executive Officer and Managing Director

Just to, Percy, it is absolutely the right question you posed to us, but increasingly what we have done, we have also made a premium pack excessively. So in the laundry, one of our fastest growing brand remains Surf Excel.

Percy Panthaki — IIFL — Analyst

Right, got it. My second question is a continuation of what Latika asked in terms of market share within sort of the B2C brands. So some work I’ve done on this and rough understanding I have from media articles except that if we take the top 7 to 10 B2C brands in India, they’re clocking a turnover of somewhere in the region of about INR2,500 crore plus. This works out to approximately close to 15% off your B2C ex-oral care sales and these brands were close to 0, 5, 6 years ago. So I mean there is obviously some amount of opportunity in the market, which is being taken by these brands and they are no longer small in the aggregate. So what are your thoughts in terms of how you sort of plan to increase market share in this space. Do you want to — like you’ve launched simple and Beauty Planet. Will it be through brand proliferation or will it be through launching subcategories within the existing brands, etc. How do you approach this entire sort of space, which is really exploding and you need to get your fair share of growth there.

Sanjiv Mehta — Chief Executive Officer and Managing Director

First I think firstly, people often forget, but it’s worth reminding that we have added INR5,000 crores of turnover this year and when we talk about digital landscape, all the growth that you see in digital is not always incremental. Yeah. Many of them are the channel shift that happened.

Percy Panthaki — IIFL — Analyst

Sure.

Sanjiv Mehta — Chief Executive Officer and Managing Director

And our ploy today is not just the digital first brands only because I think, one must remember that we have great made our brands and you have seen how we have progressed to INR5,000 crores, INR2000 crore, INR4,000 crore, INR1,000 crore. And our first port of call will be to to have the consumers access these brands, and what we are doing is for us design for channel is a very important initiative. How do we design our products are even existing brand, not just simple and Love Beauty Planet of the world, but our existing brand, so that the needs, the needs of the digital consumer. So that’s the first port of call.

The second, the way we look at it is brand extensions of existing brand where we are catering to the needs that we are able to capture and with speed of many of the digital first consumers for instance. And then we are looking at the digital only brands. So our is the multi-specific strategy that we are going to play. And just like many of the digital brands after a while, they look at moving to offline. Yeah, because after that, the footprint gets reduced if they just remain to digital. So for us, the play going to be multi-channel and the important bit is on an aggregate and in the channels, which are growing fast, we would want to have not only our fair share, but improve our share and I think that strategy for us is working pretty well.

Percy Panthaki — IIFL — Analyst

Got you, sir. That’s all from me. Thanks, and all the best.

Operator

Thank you. The next question is from Kunal Vora from BNP. Please go ahead.

Kunal Vora — BNP Paribas — Analyst

Yeah, thanks for the opportunity and congrats for the good quarter, sir. My first question is on the digital demand capture, which you mentioned. From 20% now, where do you see yourself getting to in next 2, 3 years and can you talk about the benefits as these numbers move up? Would it mean lower employee requirement at distributor level and are there any other cost benefit? And how are you ensuring that Shikhar continues to remain referred over e-B2B competition which is coming in?

Sanjiv Mehta — Chief Executive Officer and Managing Director

Yeah, First, that’s a good question. Thank you for that question. I have always maintained that good competitors keep us on toes. We are now into our 4th version of Shikher and when we did the benchmarking study on Shikhar used by retailers and ease of use, then the functionality, it came in right on top. So we are very pleased with the way Shikhar has progressed, and by far, it would be the biggest app adopted by the retailers and now our thrust is how do we customize the assortment for each store. So that for a store, it makes it much easier to navigate. And we can give them the offering, which we feel rightfully should be sold through those outlets.

The other important bit which I want to harness about, for us, it is not just about demand capture. We want to be very clearly the most intelligent consumer goods enterprise. So the way we are harnessing the 3 ecosystems of consumers, customers and operations. And the entire idea is that across the value chain, we need to use data technology. And today, whether it is decision making, whether it is S&OP planning, whether it is factories, whether it is demand capture, whether it is a fulfillment centers which are highly automated. Across the value chain, we are bringing in technology and even the decisions that we make on pricing, on promotions, on investment, increasingly we are using intelligence so that…

Operator

This is the operator. Sir, we can’t hear you, your voice is breaking.

Sanjiv Mehta — Chief Executive Officer and Managing Director

Yeah, it became suddenly mute from here.

Operator

Okay. We can hear you. All right. So increasingly, we want to ensure that across the value chain, we are able to use technology and on every area, we are bringing in the principle of attribution to growth. So we are — as far as technology and all is concerned, we are highly focused and this hour, what we are creating would be the new moat around that.

Kunal Vora — BNP Paribas — Analyst

Sure. Sir, the second and last question. On the LUP, you mentioned that you’re introducing some bridge pack, but will you also be vacating some of the price points and how do you see the net impact of the introduction of bridge packs versus vacation of certain LUP price point?

Sanjiv Mehta — Chief Executive Officer and Managing Director

Yeah, this is a very good question again, because first is — let us be very clear, we are not going to lose consumers and we are going to do it in a manner, where the consumers get incentivized to move to a great spark. Yeah, that’s what we would do. So moving to a bridge pack for the consumer would be creating value.

Kunal Vora — BNP Paribas — Analyst

Yeah. Okay, that’s it from my side. Thank you, sir.

Sanjiv Mehta — Chief Executive Officer and Managing Director

Thank you.

Ritesh Tiwari — Chief Finance Officer and Executive Director, Finance and IT

Thank you.

Operator

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

Harit Kapoor — Investec India — Analyst

Yeah, hi, good evening. So my first question is on the margin side, just trying to kind of crystal ball into the next 12 months. On one hand, you have a challenge of weaker demand environment. And do you still have to keep passing on price increases, albeit calibrated. On the other hand, you also have a challenge where some of the discretionary categories are a bit weaker as compared to the base category, which again implies a slightly weaker mix, it’s something that we saw in fiscal year ’21 also during COVID. I just wanted to understand how do you then kind of take pricing decisions in such context? Is that kind of a margin brand that you look at — you will look at to kind of maintain based on which will take a pricing call. I just wanted to get your sense on how you will navigate this environment from a product perspective, because over the last 3 years, you’ve seen the 24%-25% margin in the past which has been even lower. So is there a broad margin brand that if you look at all, its going to be very market-related and you have to keep taking a call every every month or 2 depending on how things are planning out from a demand perspective?

Ritesh Tiwari — Chief Finance Officer and Executive Director, Finance and IT

Hi, Harit, thanks for the question. Absolutely, a very pertinent question in the times that we are in at this point in time. So our strategy has 2 components. Number one is to protect our business model and number 2 is to grow our consumer franchise. If these are 2 objectives achieved, we will know that all the work that we’ve done has been successful and this has been done in the last several quarters, as we have been in a very challenging atmosphere, be it COVID, be it the latest geopolitical crisis or be it inflation that we’ve seen unprecedented and the number which I quoted earlier from GK20 of 100 base to 4.5 times in into ’22. In all these period, what we did was the first port of call is to keep driving savings hard across the length and breadth of the P&L. At Hindustan Unilever, we have a very strong savings culture with savings generated and done by everybody in the organization, be it colleagues in supply chain, be it colleagues in marketing or colleagues in sales. So all lines of the P&L, we tried to bring maximum efficiencies and I quoted sudden examples certainly to you of supply chain, even on product where we design to value if there is more amount of weight to a bottle, can we manufacture a bottle with a little lesser lightweight, it’ll help environment, it will also help the cost. Media attribution to growth and hence the kind of ROI, we want to generate. So that’s the first port of call and after that, as you rightly called out, we do and we have taken calibrated price increases.

Now the kind of inflation, we have seen in commodity, as you’ve seen the very fast we’ve been able to negate a good portion of that and hence we have been able to maintain the margin in healthy range and do price increase of the scale of 10 percentage, which as you can see is much lower compared to the amount of commodity, which has increased. So that’s number one. Number 2, this is also where portfolio comes into play where we have portfolio across price points from Mass, from premium, from mid and I called out earlier and even in these times, there is a segment of population on — in premium, where we are able to sell higher price — higher order benefit products and the growth of that portfolio has been twice the growth of the rest of the portfolio. So that is something, which has also helped us in times that we’re in today.

So, strategy is mix of that pricing and of course driving in terms of cost and of course holding our consumer franchise. But what we’re not drinking in times like this is to invest behind our products, invest behind of our brands. One of the example I quoted earlier that our product superiority today is twice as much as it was in the base of 2019. So two times we have more superior products compared to 2019. Media, we spent INR100 crore more in this quarter to ensure that our salience and our media reach is not getting compromised and if continue to remain our share of spend ahead of our share of market so that gets very squarely done.

Now in short term as I called out, we will see stretching margins and margins will decline in short-term and while it will happen because the price versus cost gap, when you have certain huge amount of inflation in input costs. It takes certain time for us to then mitigate that through cost synergies and pass on the incremental impact to calibrated price increases and which is why what we mentioned that there will be short-term impact on margin as price versus cost gap increases, but we are very confident that we’ll build it back in a phased manner back in the P&L, but what — we are very clear what will not be compromised is our own bill to ensure that we’re able to grow our business ahead of FMCG market growth. So that’s the overall strategy of the business.

Sanjiv Mehta — Chief Executive Officer and Managing Director

I’ll just add a bit more flesh to the bone to the comprehensive answer that Ritesh has given. We also measure the elasticity. Yeah. How much is the volume impact that we would have, but we must remember that there is nothing like a perfect elasticity or perfect inelasticity. The second important basis that when your brands are superior whether from a mental reach perspective or brand power or from a product superiority. When your capacity to take price increase, it’s much more because the consumers don’t always look at absolute price, they always look at price value in equation. So that factor also gets into account and then we look at our portfolio from a lens. How do we — from a capacity to pay perspective, how do we protect the low price point packs and where do we have more capacity with people would be having more disposable income and that wanted to spend on our brands, that’s where to be taken.

So there are many variables that get into it and in increasingly, we’re using a lot of data and analytics to help take out the future.

Harit Kapoor — Investec India — Analyst

Got it. Thank you very much for this. The second is a much shorter question. Actually, I just wanted to get your sense on — in your view, do you expect media intensity over the next few months, also to keep trending downwards. I’m not talking about your share of voice, but from an aggregate perspective given probably players who have lower market shares, regional etc. might be bit more stretched than you are. We don’t have some of these levers. We’re going to do, or do you expect that that media intensity impact will also keep coming down progressively at least center the inflation impact is severe?

Sanjiv Mehta — Chief Executive Officer and Managing Director

See, it has come down by nearly about 20% if you look at the geographies on a total business. But let me be emphatic. We have our share of voice is more than share of market and for us, it is — we play for the long term, we don’t plan for the short term. If we see media intensity goes up, we will unblinkingly invest more behind the brands.

Harit Kapoor — Investec India — Analyst

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

Ritesh Tiwari — Chief Finance Officer and Executive Director, Finance and IT

Thanks, Harit. Thank you. The next question is from Shirish Pardeshi from Centrum Capital. Please go ahead.

Shirish Pardeshi — Centrum Capital — Analyst

Yeah, good evening, Sanjiv, Ritesh, and Ravi, thanks for the opportunity and really congratulations for beating our numbers.

Sanjiv Mehta — Chief Executive Officer and Managing Director

Thank you.

Shirish Pardeshi — Centrum Capital — Analyst

Two things, I am referring Slide 30 and on that, that is the full-year performance, I am referring. So when you reported full-year INR14,000 odd crore for food and refreshment and the growth is about 6.8%. Since we have completed 1 year of GSK acquisition, could you — I mean I don’t want to get into much detail, but if you can broadly tell me what is the growth and what is the contribution from GSK portfolio?

Sanjiv Mehta — Chief Executive Officer and Managing Director

Yeah. So overall, as you’ve seen that the growth that we have in foods and refreshment is very healthy and there are 2 dimensions to that growth. A. The growth is comprehensive in terms of the portfolio that we have. But more importantly as we called out Shirish earlier that growth is extremely competitive. But we have gained market share and we have further improved penetration and I was speaking a little earlier about kit down on Horlicks within that. So we have successfully integrated Horlicks. Our reach now that distribution is twice what we had pre, the period. Our market development at scale has been also done. When it comes to growth of Horlicks as I mentioned earlier, the key job to be done out here is to do — continue to do market development at scale and support the market growth. Now Horlicks within that is a discretionary category. The point I was making earlier with significant amount of inflation that consumers are witnessing in the kitchen. They are putting more priority at this point in time to essentials against discretionary categories like HFT categories like skin care. But our job is very clearly cut out, which is to keep doing market development. Fundamentally, it’s a very attractive category with a low penetration and hence our idea is to ensure that we are doing the job of building a portfolio, improving penetration and improving market share. Within March quarter and overall as I mentioned that our momentum is very strong there and we have gained market share while the category has seen decline in terms of market. We have further gained penetration as well. So it’s — I would say good set of results as we started to see impact of market development in early phase. But this is not a short one or 2 quarter journey. We will be accurate because the runway for growth is much higher and job of building penetration is long term. But overall within FNR, if I can call out certain other categories, we’ve seen very good growth across our Foods and Refreshment, in our foods portfolio. Tea, we’ve seen again very good competitive growth. We now have both value and volume leadership in our tea portfolio.

You heard us speaking about coffee having a double-digit growth in the quarter. So it’s pretty broad-based performance and in the Foods and Refreshment portfolio that we have today.

Shirish Pardeshi — Centrum Capital — Analyst

Okay, that’s helpful, Ritesh. Just one follow-up here. You did mention in the beginning that the entire integration in front and at the back end is done for the GSK full merger, which has happened and I did see from the margin perspective, the segmental margin for food and refreshment has gone up by 200 basis point. So the question here is that with the full integration now behind, do you think this another 200, I mean I am not saying number, but you’ll see that the further expansion on the segmental margin can happen now onwards. Despite the inflation, but is different.

Ritesh Tiwari — Chief Finance Officer and Executive Director, Finance and IT

Yes, so it’s from the cost synergy front. We had mentioned earlier that we made very significant progress. Entering the first year and half, we’ve already achieved our ambition that we had in cost synergy for the first 3 years in the business case. A good portion of that generation that we did a cost synergy, we have invested back in the business to keep driving market development and in the business. Now, if you ask me, is there a further headroom for us to gain synergies and grow further in terms of the margin headroom for Horlicks portfolio, answer is absolutely, yes. The area especially further get the savings will be nearly as supply chain and distribution.

What we have now finished doing is full integration of our go-to-market structure. The point I was making that are put a direct outlet coverage is twice what we had earlier areas like media, overhead costs, those synergies, we have already realized. But in terms of distribution DCs depots in terms of factory manufacturing, there’s further headroom that we have to realize and we have clear line of sight as well of those. it’s just that we’ve been sequencing also what we should first dialog and then which is the second and third of call we should go in terms of driving synergies. So yes, there’s further headroom for growth and we have very clear line of sight over the next 2, 3 years to keep dragging that.

Shirish Pardeshi — Centrum Capital — Analyst

Wonderful. And my last question when I look back since the time I’m tracking this company, what I understand, you did mention that we are ahead of share of market in terms of spends and RI. So this is much higher, but just an observation. Having worked in the industry, what I find that when we have done the activation and the rural penetration and through the Axis Bank and you did mention that LUP is also a big number. What I’m trying to say here in the volatile demand condition and last 2, 3 quarters, Sanjib did mention that rural is slowing down. So we did pick up that. But in the context when the demand is not coming and when our prime goal is to improve the frequency of usage, do we think that to gain further market share or to maintain ahead of the curve. Even if the rural is not coming back at some point of time in next 4 quarter, we’ll have to up the investments in advertising?

Sanjiv Mehta — Chief Executive Officer and Managing Director

Yes, advertising, we look at it from a couple of lens. One is of course competitive yeah. We want to be ahead of our market share. The second is, we will also look at it from a reach perspective because let’s also accept that we are not — FMCG doesn’t operate in isolation. We operate for the bonds with other industries as well. So we need to have a minimal reach to ensure that our brands remain salient. We do that.

The third thing also, we must accept that market development, when we invest in it, these are generally first purchase by early adopters and early adopters, are people who have more disposable income. So market development, we believe will continue to grow at a pace faster than the rest of the market, which we have seen over the last several years and it will continue to be so and we will not crazy away from investing in market development.

Yes, we have very clear portfolio. Why not overall an imperative that Ritesh articulated remains and which we have been really consistent that in case of this kind of volatile hyper-inflation environment, protecting our consumer franchise not only protecting but growing and protecting our business model rather to too imperative, but we play for the long term and we will not do anything which is anyway will hurt our business from the long-term perspective.

Shirish Pardeshi — Centrum Capital — Analyst

Sure. Thank you. Sanjiv and all the best. I hope FY ’23 will break the previous record. All the best to you.

Sanjiv Mehta — Chief Executive Officer and Managing Director

Thank you so much.

Operator

Thank you. We will take some questions on the web now. I’ll start with a question from Avi Mehta of Macquarie. The question is we have traditionally looked to maintain EBITDA margins in the 24% to 25% range as we play all lines of P&L to offset inflation. Would it be fair to expect margins to move to the lower end of this range in the near term and moved back ahead ensuring that FY ’23 margins are in this range.

Ritesh Tiwari — Chief Finance Officer and Executive Director, Finance and IT

Yeah, thanks Avi for the question. This is the point I was clarifying and giving more details earlier. We do expect in next 2 to 3 quarters sequentially, inflation to further go up in terms of commodity cost and input cost inflation. As I mentioned, the strategy is very clear protecting the business model with a very clear objective to grow our consumer franchise and the point that you made are we keep investing for getting the job done. Hence, in the next 2 to 3 quarters, we will see margin to decline and why that will happen because the price versus cost gap, when you have certain increase in cost and you’ll continue to do the job in terms of reducing the cost impact through savings. But with the increase, which is a substantial in short term, it will lead to in short-term of price versus cost gap and that’s what will end up impacting margins in short term, but as I mentioned that in our mind, it’s very clear that we will build this margin back in a phased manner over quarters after that. So that’s our clear strategy of — from a margin perspective. I hope that gives a very clear understanding of where do we see margins for next few quarters.

Operator

Thank you, Ritesh. Sanjiv, there is a question on how we access product superiority?

Ritesh Tiwari — Chief Finance Officer and Executive Director, Finance and IT

Yes. In product superiority, we do blind test and because you know, if you were to do branded test, we will have an unfair at one day. So we do very clear blind test to test attributes which are most relevant for the consumer and that’s how we access the product superiority.

Operator

There is a question from Richard. The question is on understanding the sudden spike in the other operating income in Q4. That is one part of the question. The second is a little bit of color on the capex numbers and how much of this is P&L?

Ritesh Tiwari — Chief Finance Officer and Executive Director, Finance and IT

Yes. Definitely pick up. The first question on the other income, there are 3 reasons why the number is higher compared to previous earlier. Number one, it’s been announced that we do have now a participation in PLI scheme, and this is as part of that is the first year and to get revenue of OTC income which again gets accounted in this line and hence with the business which has happened there, it has seen better income compared to same period and the prior period. This is the second reason. Third as you know we host our global cost centers and global capabilities which we invoice globally Unilever, and that is further increase in the quarter in terms of investment in those capabilities and hence since we host them, we also invoice on income through markups. Other income is higher compared to what you saw earlier. Capex. Yes, very clearly we have stepped up investments and the investments step up in capex in few areas. To start with, you have seen URL. We have blown photo capacity that is setting it up and as part of that investment has been called out a couple of years back, that is accounted in UAL both and hence also comes in the consolidated. The subzone powder capacity in some airports that is setting up with the kind of growth that we’ve seen in Homecare. I’m saying there is no surprise that you said, setting up the capacities to support the growth that we’re seeing. That’s one, but also other buckets of investments that we have done be it our distribution centers, be the nano factory, which we spoke about the way we are reiterating that factory and we invested in those capabilities offered, but I think covenants. This is also the time for us with a good seasonal price scheme. As you know, March quarter we called out, we had pretty good strong growth in ice cream in taking our business nicely now is higher compared to pre-COVID levels. So those are the areas where we have an investment in our capex and hence we’ve seen number inching up.

In the COVID period, we were measured with our cash expenditure and our capital discipline and now the growth is coming in and we have appropriately linked in to ensure that the last thing that we want is our growth getting compromised by — for not having invested. investment bid in capex or investment bids in BMI also with better product superiority across the board, we do ensure that growth in no way gets compromised. So that’s the reason why you have seen an increase in capex expenditure in this financial year.

Operator

There are few questions on price again and LUV, which we have already covered. So I am going to skip over them. There is a question from Chirag on what it had to secure the strong margins in foods business, also what has led to strong performance in fabric care and homecare.

Sanjiv Mehta — Chief Executive Officer and Managing Director

Yeah. You want to go ahead?

Ritesh Tiwari — Chief Finance Officer and Executive Director, Finance and IT

Yeah. The margin in the food business. I think is absolutely got the performance in fabric care and homecare. So the food business margin, of course there are 2 broad drivers of that. One, as you know the F&R business includes the nutrition business and we give the narrative of the kind of margin we have driven because of cost synergies with Nutrition, that is one clear driver and of course tea, we know that we had very high amount of commodity at one point in time. And as we speak now though, commodity is still elevated over 2019 by year-on-year. Now the inflation is not as high as you’ve seen in the past period. In fact, your digital [Phonetic] costs have come down of commodity. So there are 2 factors. But I would say the predominant factor is the kind of work we have done in Horlicks. Beyond Horlicks, beyond tea of course, overall, as I mentioned that the job that we keep doing in driving cost synergies across the board, by driving various operating synergies, be it on distribution by traveling kilometers per product movement or alignment of cost synergies of media or promotions or the other supply chain element. So this — lot amount of work, which happens in the P&L across the board that also benefit you see within F&R spell. So those are the 3 reasons. I would say why you’re seeing better profitability compared to what we have seen in the past.

Sanjiv Mehta — Chief Executive Officer and Managing Director

And just to add to what the Ritesh had said as to why Homecare has done so well. I think, first, we need to step back and take a bit of a macro picture that’s in the last about 9 years, we’ve added INR25,000 crores to our turnover, yeah, which is doubling up business and which is more than the absolute turnover of any other FMCG companies.

The second is we have tripled our EBITDA during this period. On market gap, you guys monitor more closely than I do and I’ll leave it to you. And building this period or even if you look at it during the last couple of years, we have — that is the strength of our portfolio. Not any category will keep growing at a linear pace, that doesn’t happen but if you look at it in recent times, we’ve had a great journey with tea where we have taken not only value leadership but volume leadership and phenomenal growth.

When you look at our hair care, where we have got record shares right now, where we have created market. An amazing journey we have and similarly on home care, it’s been a consistent delivery of superior products with great brand and consistency of engagement platform. Now dirt is good, it’s something that’s improved manifest — different manifestations. We have been running this engagement platform for years to come and that is how we build this great property on product superiority, brand fab, brand salience, distribution progress, our reimagine actual agenda, these all contributing in a different way to ensure that we have a rhythm on growth and have ensured that we make such a robust business model and that’s the reason I say that many times people talk about this brand, they will always be there. But that our scale and size, I think INR5000 crores as delta turnover in the year. That gives a sense of the kind of strong business that we have created with Hindustan Unilever.

Operator

Thank you, Sanjiv. With that, we will now come to the end of the Q&A session. If there are any further or unanswered questions, please feel free to reach out to us on the IR team and we’ll be happy to clarify it. Before we end, let me again remind you that the playback of the event will be available on the IR website in a short while. A copy of the results and the presentation if not with you already, it is on the website as well.

With that, we would like to draw this call to a close. Thank you everyone for your participation and have a great evening.

Sanjiv Mehta — Chief Executive Officer and Managing Director

Thank you.

Operator

[Operator Closing Remarks]