Hindustan Unilever Ltd (HINDUNILVR) Q4 FY23 Earnings Concall Transcript

Hindustan Unilever Ltd (NSE:HINDUNILVR) Q4 FY23 Earnings Concall dated Apr. 27, 2023.

Corporate Participants:

A. Ravishankar — Group Financial Controller & Head of Investor Relations

Sanjiv Mehta — Chief Executive Officer, Managing Director

Rohit Jawa — Whole-Time Director

Ritesh Tiwari — Chief Financial Officer , Executive Director of Finance & Information Technology and Whole-Time Director

Analysts:

Abneesh Roy — Nuvama Wealth Management Limited — Analyst

Manoj Menon — ICICI Securities Limited — Analyst

Vivek Maheshwari — Jefferies LLC — Analyst

Latika Chopra — JPMorgan Chase & Co — Analyst

Kunal Vora — BNP Paribas — Analyst

Arnab Mitra — Goldman Sachs — Analyst

Mihir P. Shah — Nomura Securities Co. Ltd. — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to Hindustan Unilever Limited Conference Call for the Results for March Quarter and Financial Year Ended 31st March 2023. [Operator Instructions]

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

A. Ravishankar — Group Financial Controller & Head of Investor Relations

Thank you, Tanvi. Good afternoon, everyone, and welcome to the conference call of Hindustan Unilever Limited. We will be covering today the results of March quarter and financial year ended 31st March 2023. On the call be Sanjiv Mehta CEO and Managing Director; Rohit Jawa, CEO Designate; Ritesh Tiwari, CFO.

We will start the presentation with Sanjiv sharing an overview of our performance and the progress made on our strategic priorities. Ritesh will then cover our financial results and share the outlook. 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, Managing Director

Thank you, Ravi. Good afternoon, everyone. Thank you for joining us on the call today. My 39th and final quarterly earnings call as a CEO of Hindustan Unilever. This also happens to be the 9th consecutive quarter of double-digit growth for HUL. As always, it is a pleasure to interact with all of you. Let me begin with our full year results and progress on our strategic priority, then I’ll hand it over to Ritesh who can take you through our results and outlook in detail. This has been yet another year of strong and resilient performance. We grew our topline by 16% significantly ahead of the market and gained market share handsomely. In this fiscal year alone we added nearly INR8,000 crores through our turnover taking it to over INR58,000 crores. I’m even more pleased with the 5% volume growth that we delivered in the context of FMCG market declining volumes.

EBITDA margin for the year was at 23.4% profit after tax, and earnings per share grew 13% despite the high level of inflation. We managed the business dynamically. During the pandemic, at the beginning of the period of high inflation. We had articulated that our overarching objectives would be to grow our consumer franchise and protect our business model. I am pleased that we have been able to deliver on both counts. We’ve had impressive market share gains and our margins have remained healthy. Our solid performance is a testament to our clear and compelling strategy, backed by the strength of our biggest assets, our people, and our brands, we not only navigated the short-term challenges with agility but also made great progress on our long-term strategic priorities. Let me take you through some of the highlights of this fiscal. What a fabulous year this has been for our Home Care business.

We delivered 28% revenue growth and grew volumes at near double digits, despite the high inflation. Growth was led by our premium portfolio. To put in perspective, our Home Care business now has a turnover of over INR21,000 crores, which is bigger than most FMCG businesses in India. Our laundry brand, Surf Excel reached an important milestone this year, it became the first Home and Personal Care brand to cross $1 billion turnover. This was achieved with a relentless focus on product superiority, driving market development, and premiumization, and engaging consumers through our iconic long term engagement platform Daag Achhe Hain. We have strengthened our role as a market maker in Indian FMCG industry and a fitting example is our Home Care liquids business. Through our consistent market development efforts, we have scaled the business to over INR3,000 crores in this fiscal.

Our dish wash brand Vim has been on a strong growth trajectory expanding brand loyalty through innovation and purpose. The brand was recently recognized by Kantar for fastest consumer reach growth globally in the last decade. Beauty and Personal Care is another powerhouse business with a turnover exceeding INR21,000 crores, we delivered a competitive growth of 12%. More importantly, we grew volumes despite the mid-single-digit decline in market volume. Current assets Carlson confirmatory from the line from the Netherlands kind of bank borrowings of depending on what some of the Melbourne instruments formats with a very strong performance both brands crossed INR2,000 crores turnover. Excuse me. We now have five BPC brands, Dove, Lifebuoy, Glow & Lovely, Pond’s, and LUX in INR2,000 crores plus.

We are transforming our portfolio and driving premiumization through innovation and entry into fast growing demand spaces. During the year, we launched three new brands in the premium beauty space you’ve already heard about that Acnesquad, which is our specialist acne brand, and Find Your Happy Place, which is about experiential bath and body ranges. What you see on the left side of the chart is not new skin care brand Novology. It is a masstige derma therapeutic space. The brand includes clinically proven range of solutions created with experienced dermatologist to solve persistence can concern, such as pigmentation, dry skin, and acne, this year we also forayed into health and well-being category with strategic investments in OZiva and well-being nutrition. We are now providing support to scale this business further.

We are moving rapidly in our transformation journey to premiumized our portfolio and meet emerging consumer needs. Our focus on market development premiumization enabled us to grow our premium segment significantly ahead of the rest of the portfolio. Moving on to Foods & Refreshment, which is nearly INR15,000 crores business, our revenue growth was 5% led by strong performance in ice-cream, coffee, and foods. In health food drinks we steadfastly continue to focus on the fundamentals by building category relevance in telling the consumers about the benefits of HFT and driving a flux range by creating awareness for consumers through activation in home and in-store as well as by tying up with leading health-care diagnostic chains. In the wake of high milk inflation, we piloted three in one ready-mix variant of Horlicks to make a cup of Horlicks more affordable.

Millet Chocolate Horlicks is our new addition to the Horlicks portfolio. It made with multi and millets like Ragi, Jowar, kangani, and bajra which are a natural source of calcium, iron, protein, and fiber. As a result of actions, we strengthened our consumer franchise, gaining market shares, and penetration handsomely. In tea, we are the value and volume market leaders and have widened the gap versus our nearest competitor. Leveraging our WiMI strategy, we have been crafting unique blends for different parts of the country and driving premiumization. Our ice cream business delivered a stellar performance in this fiscal led by our strategy to de-seasonalize ice cream consumption. We launched a wide range of innovation across the portfolio like exciting flavors in Cornetto and ice cream cups. We are leveraging our digital commerce platform, I see now this to enable instant last mile delivery.

In a span of three years, it has become 10% of our business. Talking about foods, we divested salt and atta our business in line with our intent to exit non-core categories and focus on driving growth in the packaged foods business. Our Jams and Ketchup range continued to do well. We re-launched our brand Kissan with new packaging that highlights our deep connection with the farmers of India. Hellmann’s Mayonnaise and Kissan Peanut Butter are scaling up rapidly. Now looking at this chart, it is quite obvious that they are a part of — how the big purposeful brands. We have a total of 19 brands clocking over INR1,000 crores each in annual turnover. Put together with 19 brands account for over 80% of our turnover in this fiscal. At the top, we have Surf Excel and Brooke Bond with more than INR5,000 crores turnover each. Then we have nine brands in the INR2,000 crores club including LUX bonds which have moved up the table.

Further our tally of INR1,000 crore brands have increased to eight with three more brands, Close Up, Pears, and Comfort joining the club. Consumers continue to be increasingly discerning and looking for highly superior products and making informed choices and demanding brands with a point of view. To serve consumer needs, we are creating more superior products bringing the best of our marketing insights and R&D together. We continue to have two times more superior products when compared versus 2019. Let me make it clear. This does not mean that the remaining of our products are inferior. It just means that they are at par with competition and functionality. We are waiving the magical marketing in our campaigns to create brands that traverse the minds and hearts of consumers.

Our marketing campaigns have won many external accolades remains deeply committed to championing the cause of everyone taking ownership for their own home chores. It’s un stereotype campaign won the Kantar Creative Effectiveness Award. The Vim Black campaign triggered a good response from our consumers. Dove continues to build on its Stop the Beauty Test platform and launched another award-winning campaign. Clearly, we are winning with the brands as a force for good powered by purpose and innovation. Customers are an integral part of our value chain and play a crucial role in reaching our products to consumers across the country. We continue to partner with them for mutual growth. Our eB2B app Shikhar is providing retailers the convenience and flexibility to order online anytime and get faster service. Shikhar is one of the highest adopted eB2B app with 1.2 million retail outlets.

Through Shikhar, e-com, and a 14 D2C websites we now capture over 30% of our sales digitally. We are rewriting our demand fulfillment capabilities through automated warehouses and intelligent back-end system. This action, not only help us in demand capture and fulfillment, but also enables us to do demand generation in a very disruptive manner. Excellent execution is the bedrock of our winning with customers agenda. We have continuously stepped up our first effective coverage assortment, which now stands at 1.2 times of pre-COVID level. Wherever the shopper wants to buy products we want to create an environment where our differentiated products would be appealing to the shoppers. That’s where the focus of creating perfect stores comes in, whether it is offline or online. While we are a very large organization trailing over 60 billion units annually, our focus, always has been to be the most nimble NHI.

Our agile innovation hub uses data and technology to pick up consumer trends and quickly launch new innovations by leveraging Unilever’s world-class R&D capabilities. In the last fiscal we launched over 60 SKUs through our agile innovation hub platform. We are driving digitization across the large factories and bringing more agility in our operation. One of the key parameters that we track in our factories is to measure the speed and agility is the days before the next round of what we call as DBNR for our A class SKUs that is our top SKUs, which contribute to 80% of our turnover. Our DBNR just 3.5 days. This means on an average all our A class SKUs are manufactured every third or fourth day. In order to cater to the need for premium products, we have set up seven nano factories. These are fully functioning many production lines that everything we need to produce a batch of final products.

These nano factories enable us to manufacture niche products in a much more demand now without impacting our cost efficiency. We are creating automated warehouses which enable us to further improve our distribution and drive efficiencies in the value chain. We recently opened our new distribution center in some airport which how the state of the art equipment such as a fully automated storage and retrieval system including stacker cranes, robotic palletizers, and rail-guided vehicles. Our mantra of doing well by doing good is very well ingrained across our business. Even in very challenging circumstances, we have continued to make strong progress on our sustainability agenda across the pillars of climate, nature, and social. We are decarbonizing operations and have achieved 97% reduction in CO2 emissions per ton of production across our manufacturing operations when compared against our 2008 baseline.

We are plastic neutral since 2021, that is for calendar year 2021 and 2022 we collected and safely disposed more plastic than what we use in packaging of our products. Excuse me, through the Hindustan Unilever Foundation, we are supporting amplifying scalable solutions to help address India’s water challenges. Till date, the foundation has delivered a cumulative, and water potential of over 2.6 billion liters across thousands of villages. We are committed to a deforestation-free supply chain. In this fiscal, 95% of our paper in board and packaging, 82% of our tomatoes, and 69% of tea gained from sustainable sources. Talking about our social initiatives with Prabhat, our community development program, we have reached over nine million people in last nine years to improve livelihood, health, nutrition, and environmental communities near our factories.

We launched Project Shakti as a pilot in early 2000 and today the program empowers is around 1.9 lakh women entrepreneurs by enhancing the livelihoods and promoting financial independence. To guide our ESG strategy and agenda, we have also created an ESG committee of our Board this year. As I get ready to hand over my responsibilities after nearly 10 years as the helm of HUL, I go with a huge amount of satisfaction and pride and what we have achieved collectively. In the last 10 years, we’ve added nearly INR33,000 crores and the delta turnover and over INR9,500 crores as delta EBITDA. Our business today has never been more stronger in terms of size, scale profitability, capabilities, and its impact on the country and society. I want to take this opportunity to thank all of you for your warm and tremendous support to HUL and to me in the last 10 years, it seems like it was just other day that I was introducing myself to you.

Now before I hand over to Ritesh to take you through our results in detail, I want to introduce my friend, my colleague, and a fabulous leader Rohit Java who will succeed me as the new CEO and Managing Director. I’m sure you will continue to extend your support to him and to HUL in the same way as you did during my tenure. Rohit, you may want to say a few words to our friends on the call.

Rohit Jawa — Whole-Time Director

Yes. Thank you. Thank you, Sanjiv, for your kind words and the big welcome. I’m deeply honored and privileged to join this great business and the HUL family.

I’m really looking forward to meeting you all and working with you. Thank you very much. I look forward more times together.

Ritesh Tiwari — Chief Financial Officer , Executive Director of Finance & Information Technology and Whole-Time Dire

Thank you, Sanjiv. Thank you, Rohit, and good afternoon everyone. I will now walk you through our performance in more detail and cover our outlook. Starting with the operating environment this year FMCG industry witnessed unprecedented inflation across a wide basket of commodities. Lately, we have seen commodities correct from the peaks. Inflation moderated on a year-on-year basis with easing in some of the commodities and lapping of high prices in the base period. Most of you would be familiar with the chart on the right, but let me reiterate. The blue bars represent maximum and minimum price range of commodities in last 10 years and the pink line is at 10 year median. The red and yellow symbols represent average prices for this fiscal and March quarter respectively. As you can see from the chart, all commodities except tea, are significantly above the median prices. Clearly, the worst of inflation is behind but inflation has not gone away. As we had anticipated and called out earlier the slowdown in FMCG market is bottoming out.

This improvement was led by volumes, which have turned flat in this quarter versus a mid-single-digit decline in December quarter. FMCG market is still showing a very high price growth of 11%. We expect this to go down as Nielsen starts to pick up price corrections taken by us and the industry. Talking about the FMCG market growth from an urban-rural end, urban market continue to lead the growth for FMCG. Rural has shown some signs of improvement with higher value growth sequentially while volumes continue to decline, the extent of decline reduced versus last quarter. In this context, HUL delivered yet another quarter of strong, all-round performance. Our turnover grew 11% with underlying volume growth of 4%. Growth was competitive with more than 75% of the business winning market share. EBITDA margin at 23.7% remained healthy and improved 10 bps sequentially. Let me cover EBITDA in a bit more detail in subsequent slides. Moving to our bottom line profit after tax, before exceptional items at INR2,471 crores was up 8%.

Net profit at INR2,552 crores increased 10% year-on-year. Gains from sale of property and brands largely explains the higher net profit growth as compared to PAT by growth. Now talking about gross margin, the unprecedented inflation that FMCG industry witnessed this year, resulted in two things. Number one, pressure on gross margin, and number two, reduction in media intensity. In the last results update, we had called out that it’s softening in commodities our focus is to build that gross margin and step up A&P investments. If you look at March quarter results we have improved our gross margin sequentially by 120 bps and increased our A&P investments by 80 bps. We will continue to focus on building back gross margins and stepping up investments in coming quarters as well. Moving on to performance across our three segments. Home Care delivered yet another quarter of standout performance and grew 19%. Beauty and Personal Care delivered broad-based 10% growth.

Foods & Refreshment grew 3%. Margins in all three segments remain healthy with Home Care at 19%, BPC at 26% and F&R at 18%. We will keep down to talk about performance within each of the divisions in subsequent slides. Starting with some of our key innovations for this quarter. Sanjiv spoke about our new masstige skincare brand Novology, created experienced dermatologist, the brand provides clinically proven results for persistent skin issues such as dry skin, acne, and pigmentation. LUX launched a new Bath & Body collection, which is inspired by rich biodiversity of the Himalayas. Dove’s Beautiful Curls range was launched in India, especially, crafted to meet the unique needs of Indian curly and wavy hair. Lakme introduce new face and lip mousse. Our digital first brands Love Beauty & Planet, and Simple further expanded their offerings with new, on trend innovations. TRESemme expanded its portfolio with the new moisture boost of range of products.

To beat the summer heat, ice-cream launched exciting new flavors such as Cornetto Salted Caramel Brownie, Hazelnut Chocolate Ice Cream tub, Boost Sandwich Ice Cream, and range of ice candies. Horlicks expanded its range with introduction of milk chocolate Horlicks, millet chocolate Horlicks which is made from goodness of multi millets like ragi, jowar, and bajra combined with the taste of chocolate. It is currently available across South markets. Talking about some of our activations in this quarter. Lakme has always been synonymous with fashion and beauty in the country. The brand has stayed contemporary over years, but constantly reinventing itself. At the recent Lakme Fashion Week, the new look of Lakme was seen. Boost has a rich legacy of inspiring kids to persevere, search it out, and overcome any sporting challenge with the grit and stamina. Recently Boost partnered with rising cricket stars to celebrate the story of determination. Red Label launched a new heartwarming TV campaign about two strangers bonding over a cup of tea.

Moving to our performance in Home Care, this was another stellar quarter for Home Care with strong performance in both fabric wash and household care. Revenues grew 19% with mid-single-digit volume growth. Fabric wash delivered solid double-digit growth led by premium portfolio. Household care had double-digit value and volume growth led by outperformance in dish wash. Both categories continued to gain handsome value and volume market shares. Talking about Beauty and Personal Care, our business grew 10%, with broad-based performance across categories. Skin cleansing delivered double-digit growth with all brands performing well. With softening in palm oil, further price reductions were taken in soaps portfolio. Hair-care strengthened its market leadership further and delivered mid-single-digit value and volume growth. Skincare grew in double digits led by strong performance in premium portfolio. We continue to make excellent progress in our portfolio transformation journey, especially in hair and beauty categories with the launch of several premium and on-trend innovations and entry into high-growth demand spaces.

Oral Care delivered high single-digit growth led by strong performance in Close Up. Let me now turn to Foods & Refreshment, F&R grew 3% led by foods, coffee, and HFD. Tea strengthened its market leadership and widened the gap versus nearest competition. The category witnessed consumer downgrading due to higher inflation in premium teas vis-a-vis loose tea. Combined with price reduction, the business declined marginally in the quarter in value, while tonnages grew 3%. Coffee sustained its strong growth momentum and grew in double digits. Health food drinks grew mid-single digits, led by Boost. We continue to gain market share and penetration led by effective market development actions. HFD market remains subdued due to impact of inflation, especially in May, which is carrier for HFD products. Foods delivered mid-single digit led by strong performance in ketchup and food solution. Hellmann’s Mayonnaise and Kissan Peanut Butter continued to gain consumer traction.

Ice cream grew in mid-single-digit on a high base. Ice cream consumption was impacted due to unseasonal rains in the quarter. Summarizing our performance for this quarter, we had a strong top-line and bottom-line delivery. I’ve already covered most of the lines, but let me give you a quick highlight on a few other items. Our employee cost was up year-on-year due to impact of these employee benefits. On a full year basis, our employee cost is down by 20 bps. Other expenses include the impact of higher royalty and central services from February 23 onwards. Other income saw an increase into higher treasury yields. As I mentioned earlier, our exceptional income increased year-on-year with gains from sale of property and disposal of Annapurna and Captain Cook brands. Our full year ETR excluding prior period adjustments got up 26%. Including PPA, we had a reported ETR of 23.8%. Sanjiv has already spoken in detail about our full year delivery. Let me quickly recap the numbers. Our full year turnover was INR58,154 crores, an increase of 16% year-on-year.

We added about INR8,000 crores to our topline. Underlying volume growth was 5%. Moving to bottom-line performance, despite the unprecedented levels of inflation through the year. We have dynamically managed the business and delivered and healthy EBITDA of 23.4%. Net profit at INR9,962 crores grew 13%. Let me cover this in a bit more detail in subsequent charts. It is important to put our gross margin performance in perspective. The net material inflation or NMI that our business experienced in last two years was clearly unprecedented. Put together we have a accumulative NMI of about 30% which is highest in the recent past. In such times of extraordinary inflation the assets swiftly to drive the savings harder and take calibrated pricing actions with an intent to grow competitively whilst protecting our business model. Over the last two years, our price growth is about 18% cumulative. Consequently, our gross margin declined over 600 bps versus this pre-inflationary period.

Despite the record levels of inflation through dynamic financial management, we maintained our EBITDA margins in a healthy range. EBITDA in this fiscal was 23.4%, a decline of 140 bps versus last year. The cost of goods sold was higher by 360 bps reflecting the impact of inflation. Our absolute A&P investments were INR140 crores higher than last year as we continue to invest competitively behind our brands and maintain the share of voice ahead of share of market. A&P as a percentage of turnover improved by 100 bps due to growth leverage. Employee benefit and other expenses put together was lower by 120 bps. In absolute terms, our EBITDA grew 9% year-on-year. Building on our EBITDA growth of 9% we delivered EPS growth of 13% led by a 1% benefit from depreciation and about 2% each from finance income and exceptional items. Through strong capital discipline and an asset-light model we generated 1% incremental profits as leverage from depreciation. Higher treasury yields and prudent allocation led to higher finance income in this fiscal.

Gains from prior period tax adjustment along with say of non-core assets, helped to generate 2% incremental EPS growth, even if you were to exclude the benefit from exceptional items, we have delivered a double-digit EPS growth this year. Overall, this was an excellent performance of balancing strong top-line growth and profitability, leading to double-digit EPS growth. Sanjiv has already covered the highlights of each of the divisions, let me quickly summarize the performance. Home Care delivered stellar results with 28% growth, BPC grew 12%, and F&R delivered 5% growth. Margins remain healthy with Home Care at 18%, BPC at 26%, and F&R at 18%. Considering our strong performance, the Board of Directors have proposed a final dividend of INR22 per share. Along with the interim dividend of INR17 per share. The total dividend for this year is INR39 per share, which is a 15% year-on-year increase. Now, before moving on to our outlook, let me summarize what we covered till now. It was a solid all-around performance in a challenging environment.

We grew 16% adding circa INR8,000 crore to our turnover. Growth was significantly ahead of the market with 75% of our business winning market shares. Our dynamic financial management helped to strike the right balance of competitive top-line growth and managing healthy margins in the face of unprecedented input cost inflation. EPS grew 13%. We were the best ESG-rated Indian FMCG company by leading agencies, making it a comprehensive 4G growth. As you heard from Sanjiv earlier, we also made excellent progress on our strategic priorities. Now moving on to our outlook. Looking ahead, the near term operating environment is likely to remain volatile with global slowdown risks and weather-related uncertainty. With the financial sector stress, geopolitical crisis, and lingering effects of COVID, IMF has forecasted, global growth to be below historical average. Consumer perception of inflation continues to remain high, which impacts the propensity and confidence to spend. Impact of weather phenomenon like albedo and heat waves remain uncertain at this point in time.

We need to be watchful of how these variables play out, especially the onset and intensity of monsoon. Going forward, we expect the price volume growth to rebalance further. Price growth will continue to tail off as we lap higher prices in the base and due to price reduction in categories where we are seeing commodities situation. We expect volumes to recover gradually due to high levels of cumulative inflation and the fact that consumption habits will typically recover with a lag. We need to be mindful that FMCG market volumes have been declining for almost a year and a half. Rural market volume is still declining. In these circumstances, we will continue to manage our business with agility to grow our consumer franchise whilst maintaining margins in a healthy range.

Our focus is on ensuring a right price value equation for competitive volume growth, building back gross margins, and setting up A&P investments. From a mid to long-term perspective Indian FMCG sector continues to be very attractive. Favorable macros coupled with lower FMCG per capita consumption continued to provide a huge runway for growth. Our focus remains on delivering 4G growth. Growth that is consistent, competitive, profitable, and responsible. With this we complete our prepared remarks. Over to Ravi now to commence our Q&A session.

A. Ravishankar — Group Financial Controller & Head of Investor Relations

Thank you, Sanjiv, Rohit, and Ritesh. We will now move to the Q&A session. We request you to kindly restrict the number of questions to a maximum of two at a time. In case you have any further questions, please feel free to join the queue again.

In addition to the audio, our participants have an option to post the questions through the web option on your screen. We will take these questions towards the end. With that, I would like to hand the call back to you, Tanvi, to manage the next session, please.

Questions and Answers:

Operator

[Operator Instructions] The first question is from the line of Abneesh Roy from Nuvama.

Abneesh Roy — Nuvama Wealth Management Limited — Analyst

My first question is on the tea downgrading which you have mentioned. So I wanted to understand this because you and the other national player both have highlighted this and when I see your other categories in the Home, Personal Care, et cetera, you’ve called out the premiumization quite strongly. So why there is a disconnect here and is there a possibility that some of the other categories also could see downgrading if say El Nino happens if the overall macro again further deteriorates?

Ritesh Tiwari — Chief Financial Officer , Executive Director of Finance & Information Technology and Whole-Time Dire

Let me start with tea. See, the development of tea commodity has been different from other categories. If I look at, for example, skin cleansing, if I look at Home Care impacted by crude, there a base commodity like crude oil, or soda ash, or a vegetable oil impacted across the portfolio. Doesn’t matter it’s a premium brand low brand, et cetera. But for tea, the way the commodity market played out last year — the commodities, which we are selling as you speak today in our key products. The premium tea basically saw much higher inflation and cleaner which essentially go into making loose tea did not see that amount of inflation and in fact, it saw price correction. And hence the gap between premium tea commodity price and loose tea price widened in the year. This is the reason why we saw in the year consumers downgrading.

A feature that we did not witness as we spoke earlier in other parts of the portfolio when we saw high inflation coming, where people in fact moved to trusted brands and in this case for tea, since the gap for premium tea prices and loose tea prices widened to that extent, it led to downgradation. Now of course, as we speak we are at the tail end of the tea season and new crop will get plucked later part of the year, and we are hoping that like every year, tea commodity moves in tandem and this distortion does not repeat. And with that the market will rebalance to be that the tea has done, yes.

Sanjiv Mehta — Chief Executive Officer, Managing Director

Just to add to what Ritesh has said, we must also Abneesh take cognizance of the fact that tea business has a large quantum of loose tea players and what our job has been to basically upgrade them and get them into packaged tea. But when you have the differential that we’re talking about, it is not surprising that many consumers gravitate towards the loose tea players. Yes. And that is the reason this has happened. But in the long term, we believe the upgrading from loose tea to packaged tea will keep happening and I also believe that the equilibrium in the price will also happen.

Abneesh Roy — Nuvama Wealth Management Limited — Analyst

Just one follow up I had on F&R was your ice cream sales past few quarters has been fairly strong. This quarter 5% growth seems lower than some of the other summer categories, for example, the beverages, et cetera. So is quick commerce slowed down because of the funding constraints impacting you, because for ice creams 10% of the sales pan India was coming from quick commerce. Is that the reason or is it only the unseasonal rains which pointed out because that would have impacted even the beverage for other companies.

Sanjiv Mehta — Chief Executive Officer, Managing Director

Yes. Abneesh, if we look at the full year figure, we are talking about ice cream, which has grown really handsomely. Its 37% has been the ice cream growth. So I wouldn’t worry about a quarter here, a quarter there. And I believe that as we get into the peak season of ice cream, the growth will come back.

Abneesh Roy — Nuvama Wealth Management Limited — Analyst

Okay. My last question is essentially on HFD, so any impact of the current issue of high sugar content in one of your competition brands. I understand that’s for the competition, but does it impact you also in any way and 5% growth is a good number, given the current slowdown. Any number you have for the category growth? I’m sure you’re gaining market share because of the initiatives, is the category still declining?

Sanjiv Mehta — Chief Executive Officer, Managing Director

We are still gaining market shares and we are still increasing our penetration. So the controversy which has happened has not impacted us really. And one would also like to add that if we look at from a sugar perspective, there is a component of total sugar, there is a component of added sugar. In our Horlicks brand, the total added sugar per 27 gram, which is one serving just about 3.6 grams. And when you look at the Diabetes Plus range or Horlicks Lite more, there is no added sugar at all. And clearly, these are brands, which have been formulated to address the nutritional needs of India where the micro-nutrients, vitamins, and minerals, there is a very clear deficiency.

Operator

The next question is from the line of Manoj Menon from ICICI Securities.

Manoj Menon — ICICI Securities Limited — Analyst

In the context of the changing intense index scenario, some qualitative, and possibly competitive comments on the relative competitive intensity situation in Home Care, particularly in the mid March segment will get?

Sanjiv Mehta — Chief Executive Officer, Managing Director

First is I think Home Care business is on a song. Yes, we continue to gain market shares handsomely. And we continue to gain shares across the different price tiers. And we have strengthened our business and the gains that we are seeing is not restricted to a pocket of the country, but it is very broad-based. And when you look at the size of our business today at over INR21,000 crores, delivering the kind of growth we have done in Home Care on a full-year basis of 28%, in here 9% volume growth — there 9% plus volume growth under the circumstances, it’s fabulous.

And then when you look at thrust on market development in premiumization, there we have created a business of liquids of INR3,000 crores is very clearly a testament to our ability to create the segments of the future. Yes. So we have been very pleased with the performance and while it would be wrong to expect that we can extrapolate the 28% growth on a year-on-year basis, but we are very clear that we will protect the market shares that we have gained and keep working on developing this category and as you know, Manoj, there is a huge market, which exists in the — basically at the bottom tier in powders, there is still a large segment of the category, which is into bars, and our trust of moving them up into higher order benefits will continue unabated.

Manoj Menon — ICICI Securities Limited — Analyst

But I saw you mention the new sort of market share assuming that you are also including volume market shares, right, and not just value.

Sanjiv Mehta — Chief Executive Officer, Managing Director

Absolutely. We are growing our volume growth at over 9% annually and in that context overall FMCG has decreased and you’re talking about a scenario where we have gained both volume and value share, very impressively.

Manoj Menon — ICICI Securities Limited — Analyst

The second and last question is this partakes both to let’s say nutrition and BPC, just again I wanted some quantitative and qualitative color on, let’s say, if you could segregate some of the potentially — let’s say structural issues, which are facing versus cyclical, what I am referring to is that, let’s say BPC distribution of that let’s say Glow & Lovely, it will possibly is having consumption challenges because of higher consumer inflation and consumer have to make choices, versus let’s say nutrition the milk inflation which you alluded to can possibly be a cyclical issue, but also particularly nutrition that are actually some questions — let’s category relevance, et cetera. So any comment with some quantitative backing would be super helpful to segregate as the narrative of the structural versus cyclical.

Sanjiv Mehta — Chief Executive Officer, Managing Director

Sure and certainly. Certainly, Manoj. When we look at BPC and we have certain big categories, yes, like skin cleansing, skincare, hair care, and then we have Lakme in DMT and oral. Now on a full year basis, skin cleansing which is toilet soaps, skincare, hair care, Lakme, DMT all have grown double-digit, yes. So it has been a very broad-based growth. So we are very satisfied with which the BPC has performed during the year and even when I look at the quarter that has ended, BPC has again delivered very broad-based growth and it has delivered a double-digit growth and it has delivered a double-digit growth with handsome, yes, mid-single-digit volume growth.

That really gives me very clearly and comfort that this business is on the right trajectory, and the other more important bit is our premium portfolio is growing ahead of the market and it is growing ahead of the rest of our portfolio and our thrust again, Manoj, on market development and premiumizing our portfolio will continue and that is how we will get growth and you know a couple of years back, you would recall that we had issues with our skin cleansing business. Now we are very pleased with the turnaround that has happened in skin cleansing, and you would have also seen how agile we have been with the pricing of skin cleansing both up as well as down.

Manoj Menon — ICICI Securities Limited — Analyst

Just one follow up, sir, if I may, there was just comment about let’s say milk inflation impacting HFD just consumption, the logical sort of thought, which comes to mind is, let’s say, why that’s not an impact let’s say for tea or coffee consumption also when is an important ingredient. Is it essentially to do with the kind of let’s say the discretionary element in HFD or is there some other angle there?

Sanjiv Mehta — Chief Executive Officer, Managing Director

No. If you look at tea, the component of milk is a small component of the total consumer price. Yes. Whereas on HFD is even what goes into HFD are the milk products. And then you use HFD in milk, that’s general habit. So the impact of high prices of milk certainly would be much more accentuated on HFD. The other bit also we must understand that the tea prices has moved in a bit different direction compared to rest of the commodities. Tea prices went up in 2020, when rest of the commodity inflation wasn’t there. The Ukraine and Russia war wasn’t there and when the other commodities went up the tea prices started deflating. So if we look at it from that perspective, in tea category we’ve had a negative price growth. So it is a very different context. When it comes to tea and when it comes to HFD.

Operator

The next question is from the line of Vivek. M from Jefferies.

Vivek Maheshwari — Jefferies LLC — Analyst

Firstly, Sanjiv, thank you for all the perspectives and interactions over the past 39 quarters and I definitely wish you all the very best and Rohit good luck to you as well, on your new role.

Rohit Jawa — Whole-Time Director

Thank you.

Vivek Maheshwari — Jefferies LLC — Analyst

Two questions from me. First on, if there is one thing which has been a constant, Sanjiv, in the last decade or probably even longer has been this premiumization trend and I think Abneesh was trying to ask that question. Do you think with — and generally like it or not, but the stress has been more around the rural — the stress has been more urban pool, but whether it’s your portfolio, and generally speaking in the market, the premium part of portfolio has done well. With whatever news flows coming, sentiments, interest rates, EMI’s, everything put together, do you think that premiumization is for the next few quarters can take a backseat or how concerned you would also be on overall urban demand in the premium side of things.

Sanjiv Mehta — Chief Executive Officer, Managing Director

Yes.

Vivek Maheshwari — Jefferies LLC — Analyst

When you look at QSR companies, they are obviously struggling the market leader is seeing SSS decline.

Sanjiv Mehta — Chief Executive Officer, Managing Director

Yes.

Vivek Maheshwari — Jefferies LLC — Analyst

How worried you would be?

Sanjiv Mehta — Chief Executive Officer, Managing Director

It is very difficult to give a very precise answer because there are many factors at play. But let me try to put things in perspective. First is rural consumption of FMCG is one third of urban and you would recall Vivek that we always have been talking about we in fact have been measuring the health of the market by looking at how rural growth has been ahead of the urban growth. And you remember we used to talk about 1.3 times, 1.5 times urban growth, and a medium to long term that should continue for many years, if not for a couple of decades. Because you come from a very low base and today we are seeing a scenario where the rural growth is really muted, even with the recovery that has happened. We are still talking about the rural volume growth at minus 3%. And if I look at the value growth for the entire year, where urban has been about 11% for the market, rural has been just about 4%. So that kind of differentiates.

The other important bit we must always appreciate that whenever inflation happens, it bites the poor much more because the poor, the FMCG as a share of the wallet is much higher as compared to people with higher disposable income. And as far as FMCG is concerned for middle class and above, it is FMCG is not recession-proof, but it is certainly recession-resistant because of the element of necessity and also because it is a small share of the total wallet spend. So I don’t think premiumization as a trend will stop, so long as the country keeps growing at 6%, 7% real GDP and then when you take into account the inflation you’re talking about a nominal growth of 13%, 14% even when you look at the salaried class, all surveys are indicating that the salary increases this year are going to be anywhere in the vicinity of 8% to 10%.

So money definitely will come in, if the economy keeps growing. And when we talk about premiumization, we are not yet talking about masstige or prestige which is in a different class of its own. We are talking about premiumization relative to average of the market. And relative in that sense, above 1.2 times to the average of the market. And take a look at laundry, yes, with tough scenario, commodity price is going up tremendously, growing volumes at 9%. We are growing the total value at the kind of value we have grown at high 20s, which again gives us comfort that premiumization has that secular trend will not stop and our investment in upgrading the consumer to higher-order benefits with consequential higher prices, that trust will continue in the future.

Vivek Maheshwari — Jefferies LLC — Analyst

Got it. And just a quick follow up, Sanjiv. You don’t think in the interim in the next few quarters that pace of premiumization also slows down, you think it’s a secular change and it keeps happening that way.

Sanjiv Mehta — Chief Executive Officer, Managing Director

Let me take this to talk about a bit of rebalancing that will happen. Yes? If you look at the market, Vivek, the value grew at 8% for the full year, the volumes declined by minus 4%, the difference between the two was 12% price growth very similar to our full year results, where our top-line grew at 16% volumes grew at 5%, the difference of about 11% was the price growth, right? Now what is happening is that period on period commodity prices are not increasing at the same rate. So at an aggregate level, we are seeing the price increase, which last year was 11% and 12%, in the last quarter which we have just presented the results, the price growth has come to 7%. Now many times people feel that price growth has come down that means deflation had happened.

There is a fine difference between deflation and further commodity increase moderating. At an aggregate level, we are not seeing a deflation yet because the prices of commodities on general are still much higher than the average or the median level for the last 10 years. Yes? So once the commodity prices started deflating, then you will see the volume with the price value equation changing and then you will see a volume kicker coming in, but in the intervening period, there would be this period where the price tapers off but the volume will not get a kicker and this we have to be very cognizant of.

Vivek Maheshwari — Jefferies LLC — Analyst

And one question to Ritesh. Ritesh, somewhere around your concluding slides where you have mentioned about there is a chart on UPG, you’ve mentioned that something like consumption habits will revert with a lag. Can you just elaborate what is your thought process, how much time will it probably take et cetera, because the price — the UPG will certainly go down. So will the lag bit too much or how should we think about volume versus pricing equation as we go forward?

Ritesh Tiwari — Chief Financial Officer , Executive Director of Finance & Information Technology and Whole-Time Dire

Yes. So that’s what, Vivek, that’s what also Sanjiv was alluding as he concluded his thought. So price growth to start with, you need that on an average, we had a 12% price growth, which then came down to 7% this quarter and to the point that he spoke earlier with sequentially, inflation moderating and lapping price base and see sequentially some commodities also are coming down and hence we also giving price-offs. We will see this price growth of 7% for the feeling of as we expected, number one. Number two, this volume, as part of that then has to come up. Now, there is always a big question as to how much lag it happens between price coming off and then volume taking over. And there are two variables out here cumulatively over two years, we still have 30% inflation, and cumulatively over two years, effect of actual numbers, we’ve taken 18% price increase. So there is not overall deflation which has happened as far as consumers are concerned, the price that they’re paying to buy commodities.

That’s a number one fact. Number two, if you look at the RBI’s survey, the expectation that consumer has is still inflation being stubborn and hence it then also impacts their confidence in spending money. So both elements are play out here and which is why in our view the coming of volume will be gradual and, of course, different categories have different amount of impact. Overall as you know, skin cleansing as a market, for example, went to much higher amount of commodity inflation as a market and it impacted at peak of that inflation as a market much heavily overall volume growth of the market. Now, we have seen that coming off, it is still negative market growth, but it has come off significantly from the peak it was. So in our view, it will take few months. It could be a little more than a few months. All depends upon as to how the income level and how overall inflation basket stabilizes over the next I would say quarter or two.

Sanjiv Mehta — Chief Executive Officer, Managing Director

Yeah, if I may, Vivek, I would just like to complete the other half of the conversation. If we look at where he — Ritesh, rightly said that cumulative NMI was 30% and we took a price increase of 18%. The price increase on the price point packs was much lower than what we took in the mid-size or the large price packs. Consequently, we took a big hammering on the margin of the low-price point packs. Now when the commodity starts softening one of the things we would do is price point packs, we will start putting the grammage back. When we start putting the grammage back, you will also see the volume growth consequentially coming in. But here again one wants to explain to you the principle that what is happening. The 30% as all of you would recognize there has been an unprecedented inflation and that took a knocking on a variable margin of about 700 bps from a pre-COVID level.

Now the lowest point of margin was the September quarter of ’22. Since then, our variable margin has moved up by 290 bps. And during this period, we have also put back 160 bps of A&P. And also from the lowest EBITDA margin of June quarter of last year, we are now talking about even the EBITDA margin. Having gone up by 50 bps. So there are going to be various variables at play, but going forward, there would be just like we have always considered consistently talked about consumer franchise protecting the business model going forward, there would have to be a focus on the volume growth and the gross margin improvement.

Operator

The next question is from the line of Latika Chopra from JPMorgan.

Latika Chopra — JPMorgan Chase & Co — Analyst

I just wanted to extend the discussion that we just on the revenue growth. It seems probably we have to deal and sit with single-digit revenue growth in coming quarters as we wait for volumes to catch up. My question was on the operating margin outlook. Clearly step up in A&P spend, do you sense that the competitive landscape is toughening relatively more as you know in this low volume environment everybody would try to grab whatever market share they could and hence the EBITDA margins that we saw and maybe FY ‘2021 of 24.5% and 25% could take longer time to come back. At the same time if you see there is a lot more intent stated by some of the large leading retailers on their own label side. I understand you always dealt with regional brands in the marketing space, but this time it seems at least, efforts could be a lot more and does that in any way kind of influence brand investments from the company?

Sanjiv Mehta — Chief Executive Officer, Managing Director

Let me give you that. When we took knocking of 700 bps or variable margin during this crazy commodity cycle, what’s also happened not just with us, but with the competitors as well that the spend on A&P went down. But one thing we were highly focused on that our share of spend has to be greater than the share of market and that we ensured during this period. But if you were to re-look at our numbers, our A&P during this year was the lowest in several years at about 8.4%. And when you compare with the pre-COVID level it was at 12.2%. Yes. Now, what is going to happen as the variable margins come back, one of the things would be the correction of the price value equation. The other would be the increase in the spend in A&P. And when we look at A&P spends, we look at it from two lens, one is our own activities, our own innovation plans, our own getting into new brands launching, et cetera. And the other is competitive spend. Yes. We also are very focused on recent frequency.

Yes. So we would be very clear that the market shares that we have gained, we will not give up. So protecting the consumer franchise, not only protecting, increasing the consumer franchise is going to be our key priority. And just like we have improved the margins by nearly 50 bps from June quarter ’22 to March quarter ’22, if scenario remains as it is without much deeper competitive heat than the modest improvement in margin, we would be looking at, but we must also accept, Latika, that we have very healthy margins today, yes, at 23.5% kind of margins. It’s very good. So for us growing our business, investing behind our business, protecting our market shares, that would be the key focus area. And we will certainly — just like we have been very efficient wherever we have found an opportunity of giving value back to the consumers. We will be very adapted to continuing to do so.

Latika Chopra — JPMorgan Chase & Co — Analyst

And just second question was very specific to the hair care category. You mentioned a mid-single-digit volume and value growth in the quarter. Just trying to understand, was it because of a more price discount or was there any mix issue here?

Sanjiv Mehta — Chief Executive Officer, Managing Director

If you look at hair care, that’s the reason time just looking at a quarterly number, never gives the full picture. Hair has been on a great track. And even for the year, we have grown double-digit, and despite the price increase we had a good solid volume growth increase. So I am not much worried about the hair category at all, and sometimes you have a base effect and you look at the numbers in a quarter and we should not get — we should also look at it from the perspective that it was mid-single-digit price — a top-line growth, but even within that volume growth was still handsome.

Operator

The next question is from the line of Kunal Vora from BNP Paribas.

Kunal Vora — BNP Paribas — Analyst

My first question is according to Slide 17, market growth, both on value and volumes on a recovery trajectory. While what you’ve seen is in your case there is some moderation. Can you explain the disconnect, since you are the largest player in the industry?

Sanjiv Mehta — Chief Executive Officer, Managing Director

So remember I gave you the figure of 8% top line growth and minus 4% volume growth for the market for the full year with the difference between the two being 12% of price growth. Yes. Then you come to for the quarter. For the quarter the value, growth was 11% and the volume growth was flat. That means that the Nielsen numbers are still reflecting a price growth of 11%. Whereas in our case, the price growth has come down to 7.5%. So what does that mean, when you take a price down. Our sales numbers are based on what we sell to our distributors, whereas what the Nielsen captures other store number and between our numbers and the store number there would always be a lag because there are inventories on the pipeline. So it will be a time before Nielsen starts capturing the reduction in the price growth and that is the difference is what you are looking at.

Kunal Vora — BNP Paribas — Analyst

And I also wanted to get your sense on the industry revenue growth going forward. Before the inflation hit industry was growing at single digits, same was the case with HUL, now that the price hikes are fading, do you see this industry revenue growth again going back to single-digits in FY ’24? And why is the industry in last like five years, 10 years grown below nominal GDP growth rate in your view?

Sanjiv Mehta — Chief Executive Officer, Managing Director

Okay. So now you are talking about serious macro issues. Now, let me tell you. Say over the last 10 years, we have grown at a CAGR of about 8%, 9% and with about 60%, 70% of our growth coming from volume growth. And during these 10 years, there have been two years of no growth. One was the period of demonetization and the other was the period of COVID. So if you were to remove this, then certainly our growth would have been in double digits. Yes. With the volume growing at 6%, 7%. Now if you were to look at the GDP growth rate, yes, while in over the last three decades, the GDP growth rate at the CAGR has been about 6.5% during the last eight, nine year period there have been a period when the growth has been 4%, 5%. And when you look at the growth versus the GDP, then you would be looking at a volume growth.

And not the nominal growth and so the GDP growth rate has been in the vicinity of the market growth rate and volume has been very close to the GDP growth rate. Not very different from that. But as the economy picks up, I would believe that the FMCG growth rate and the volume growth rate, if we have consecutive growth of 6%, 7% consistently, and remember something 6%, 7% when we look at over the GDP growth rate, that’s an average. If number income goes up, that does not mean that the entire country there has been inclusive growth. So what we always need in our sector is more money in the hands of more people. So inclusive growth is what will drive the consumption in FMCG.

Kunal Vora — BNP Paribas — Analyst

Sure, Sanjiv. I just wanted to get some sense on FY ’24. I mean like pricing contribution will moderate volumes also, it doesn’t look like there will be a big recovery, are we looking at a much lower growth rate compared to what we saw in FY ’23. See the headline growth will be lower. There’s certainly no question about that, if the commodity prices don’t spike. Yes. But the volume growth, I would believe should start picking up if there is no further increase in commodity price and the macroeconomic situation in the country remains good with 6%, 7% GDP growth rate. Sorry, to like just for a big hype on this but like if even if I look at last decade, our volume growth has been 5%, 6%.

Sanjiv Mehta — Chief Executive Officer, Managing Director

Yes.

Kunal Vora — BNP Paribas — Analyst

Right now, also, you are like in that range only. So is there a reason to believe that going forward the volume growth will be much higher than that?

Sanjiv Mehta — Chief Executive Officer, Managing Director

Again look at it from this lens. A very important picture is that when you have a small economy or people have smaller income, the FMCG as a percentage of your wallet consumption is much higher. If the country becomes say $5 trillion, $6 trillion, $10 trillion economy, then you FMCG consumption as a percentage of share of wallet becomes much smaller. And then the increase in consumption is at a much rapid rate. Today people who want the higher order benefits brand, they may find it difficult to buy it, but tomorrow if the incomes go up they won’t hesitate to buy it and that would be the macro picture.

Operator

The next question is from the line of Arnab Mitra from Goldman Sachs.

Arnab Mitra — Goldman Sachs — Analyst

We look forward to interacting to you. So, Sanjiv, my question was actually on the volume growth, which has come — moderated a little bit from 5% to 4% this quarter. I think it’s not a very large moderation, but this is a quarter where almost all companies in a competitive set, which have reported seem to have had a slight acceleration in the volume growth in the 4Q versus 3Q. And also, as you rightly mentioned as the price comes down volumes takes time to pick up but in this case, it’s actually moderated a little bit, half the price came off so sharply. So anything to read into this, or was there something specific in one of your category which led to little bit of moderation from 5% to 4%.

Sanjiv Mehta — Chief Executive Officer, Managing Director

5% to 4%, I wouldn’t make much about that. Yes. I don’t think it is something which would overtly concern at this stage. The good bit is that our competitiveness remains very strong. We are gaining shares in much above 75% of our turnover and we are gaining corporate value share. So that’s a very good indicator that our competitiveness remains very strong. And one must also remember that in a scenario where your market is still flat, us growing 400 bps, 400 bps above the market growth is still a very handsome difference. Yes? Hello? Have I lost you, Arnab?

Operator

Arnab, are you connected?

Arnab Mitra — Goldman Sachs — Analyst

Sorry, I got on mute. Sorry. So I meant that one is that you are saying it’s not a big number. And secondly, there’s not one category or segment, which has dragged down the number from 5% to 4% which you need to kind of think — we need to worry about.

Sanjiv Mehta — Chief Executive Officer, Managing Director

That’s right.

Arnab Mitra — Goldman Sachs — Analyst

Got it. And my second question was on gross margin. So in your charter, as you show you are at a 53% before COVID which has obviously pent down and now come back to 48%. So should we even think of going back to that 53% level, given that there was a very unique situation where commodities were low and we had the entire industry has high margins at that stage given that if commodities remain at the current levels, is there even a possibility in the near term to get anywhere close to that 53% level or should be settled somewhere in between where you are today and where you were before the COVID period and a combined question to that would be the A&P expense going back to that normal 12%. Is it contingent on the gross margin fully recovering and if it is contingent, does it mean that there could be some under-investment which had — maybe if a lag starts affecting the growth rate?

Sanjiv Mehta — Chief Executive Officer, Managing Director

Yes. So my friend, you have several questions rolled into the couple of sentences that you’ve spoken. But let me try to answer you. Yes. First is when we look at the way we improve our margins, it is not all linked to commodity. Yes. But margins have also gone up because of a better mix. That’s one very important bit. Remember, our thrust on premiumization and today we are much ahead of the market when it comes to premiumization and then on average over the last 10 years, we have increased our premiumization by 100 bps every year, so that’s one very [Indecipherable]. The second implicit in your question, is what will happen to the commodity prices. If commodity prices overnight were to go back to the pre-COVID level, then I will be much more confident in saying, yes, the margin will also go back to the pre-COVID level. Yes. So one doesn’t know how much time it will take and what will be the stimulus for the commodities to commodity prices to go down to the pre-COVID level. Some may, some may not, but it will depend on lot of factors and they’re not just linked to commodities there are a lot of geopolitics also involved in it.

So that’s a bit unknown factor. But from a strategic point of view, we will ensure that we protect our market share. That’s first the most important bit so if, for instance, it requires that we spend more, we will spend more, for protecting our growth and market share. But we have got a huge focus on effectiveness of spend, efficiency of spend and we’re not going to waste money and just because pre-COVID it was at 12% that doesn’t mean automatically will spend that same money, it depends on activities, it depends on what the competitor spends and that’s what we’re going to do. But protecting our market shares will be an overarching objective. That’s certainly not — we are not going to shy away from that. And remember also that we have been generating savings in the vicinity of 7%, 8% of our turnover over several years and that focus is bound to remain. So when you get this kind of money we will put behind investments, we will put behind correcting the price value equation, and we will also look at if there is a room, certainly, a modest improvement in margin.

Operator

The next question is from the line of Mihir Shah from Nomura.

Mihir P. Shah — Nomura Securities Co. Ltd. — Analyst

So since most of the key questions have been asked already. I had a few near term question. Firstly on the margins, HUL has seen a smart recovery in gross margins with normal pricing action and relatively less trading intensity in the markets. What could be the possible margin drivers except for a better mix and can one expect a sequential margin improvement to continue, including the seasonality in the near term?

Ritesh Tiwari — Chief Financial Officer , Executive Director of Finance & Information Technology and Whole-Time Dire

Yes. So let me pick it up. So there are two, three different ways one can look at it. The point that Sanjiv mentioned that at a very peak of inflation, our commodity costs impacted overall material cost and in that period, we basically lost 600 bps on an average of margin. If you look at last two quarters alone because this price versus cost gap, which had gone as high as 1,000 bps plus now it has come down to 200 bps from last few quarters out of the 600 bps. We have already recovered 290 bps. So half of that has already got recovered. And of course the journey from that half, which is already got recovered to further will all depend upon what happens in terms of price value equation and hence also more importantly competitively, price value equation going forward. The strongest muscle that we have of driving savings at any point in time, 7%, 8% at a gross level we do drive across all lines of P&L and on the savings and that reflects muscle that we have as an organization will continue to come into play.

Since you’ve talked about that overall premium products keeps becoming larger part of our portfolio and we keep driving that on an average ahead of the rest of the portfolio, that will continue to drive margins going forward. Number three, even items like HFD the point that you’ve spoken last few quarters that we have driven pretty good amount of savings as we have generated synergies from the acquisition, there’s still some more job to be done in terms of realizing cost synergies from HFD portfolio. So the levers of savings, levers of mix, levers of supply chain transformation, Yogesh spoke at length about our supply chain transformation that we’re doing. We will be reducing the number of kilometers the product travels. Those elements items continue to give us cost synergies.

And last but not least, we have articulated in the last couple of Capital Markets Day that over medium to long term, our double-digit EPS growth will be driven from top-line growth, and that in turn will continue to give us leverage in our P&L because we do ensure that our fixed costs that we have in our base, we are very mindful of and very frugal in our mindset in terms of incurring the fixed costs, so turnover growth will keep giving us leverage on our fixed cost structure, be it supply chain fixed cost or be it non-supply chain fixed costs that further will end up giving us margin. So there are many levers that will end up having margin and the way we mentioned there are three different ways we look at it. A, price value equation, keep it competitive to driving volume growth, B, drive gross margin, and C, equally important invested gross margin in driving competitive A&P spends. The share of voice ahead of share of market. So that’s how we look at our margin model and EBITDA in our mind is basically outcome of these three variables.

Mihir P. Shah — Nomura Securities Co. Ltd. — Analyst

On price cuts, if raw material prices remain steady at current levels, would there be a need to further take any size cuts to remain competitive or the current product prices are competitive enough to drive volume growth, and also any color if you can share on what would be the ratio of absolute price cuts taken in the portfolio versus the grammage increase?

Sanjiv Mehta — Chief Executive Officer, Managing Director

Okay. So coming to overall prices. First of all, the bottom line point that we mentioned earlier that from 12% to 11% price growth to 7% this quarter, and this price growth element as we start lapping the price-based increase and as you start seeing sequentially taking price decreases in certain categories like skin cleansing and laundry, we will see this price growth tapering off. Now, of course, when you look at over a long term, that doesn’t change. Long term, two-third business of overall FMCG coming from volume, one comes from price, that’s a long-term price value accretion. In short term if everything else being equal to your point, if we don’t see further coming in of commodity inflation, we will continue to see price growth tailing off.

Now the balance between price point pack and non-price point pack. Remember, the conversation that we had the 30% of our portfolio is at price point and this is the part of the portfolio, which has seen a biggest of impact when commodity went up because of our ability to take price increase was limited in this part of the portfolio compared to non-price locked portfolio now as prices come off and then I would like to just get into some amount of detail here, laundry and skin cleansing has seen sequential price decreases and these are the places where also we have seen a good amount of commodities coming off, be it vegetable oil or be it crude oil.

Tea has already finished, I’m saying, in terms of commodity inflation, tea is at baseline, we’ve seen very high amount of inflations. We don’t expect any new news on tea coming in before the next season kicks in, in August, September and until that there is no new conversations with them on price value equation as far as tea is concerned. But laundry and skin cleansing, we’ll continue to watch and as required — as I mentioned earlier, the first vote of call, keep competitive price value equation. So we will do that if at all we do require to do. So that’s how I will probably take in all key commodity-driven categories, different amount of nuances, and conversations happening.

Mihir P. Shah — Nomura Securities Co. Ltd. — Analyst

If I can squeeze in one small one, on competitive intensity with most companies witnessing this improvement in margins, are there any signs of competition from organized players heating up, and if you can throw some light on the unorganized players as well, have they started mushrooming back as margins are getting better for them?

Sanjiv Mehta — Chief Executive Officer, Managing Director

So some of these again, we have probably the two extreme example if we quote, one is skin cleansing if you see. What we saw to the point you were spinning earlier, tea has had a very different amount of development where premium tea kept market commodity kept inflating and cleaners, which goes into making loose tea was deflating and hence we saw that lose tea market which essentially have kept using planar at a low price point, we saw that element of the market growing ahead of the average of the category and why that happen as we explained earlier as a price level gap between premium tea and loose tea increased, we saw consumers downgrading and hence the loose tea market — the group of players have had better outcomes to their growth and hence their market share. But if I take a corollary of skin cleansing. Now skin cleansing also has a portion of the market which sits at that price point of INR60, INR70 price index.

This price index market again when we had very high amount of inflation and the point that we made consumers do turn to trusted brand during those periods where price value equation is much better protected and we saw that in this segment of INR60, INR70 price index. There was a stress building up, where either players did not participate actively or they reduce the level of participation. We did see as commodity of skin cleansing has come down, this segment of the market has started to grow and players has started to come back. So we have seen in tea and in skin cleansing that developing. But a complete different example would be laundry, where our portfolio is very different compared to average portfolio of the market given the work that we’ve done over the last several years of making our portfolio more premium, with liquids, with premium offering of Surf Excel, and stuff like that.

And hence our overall portion of the business, which is in mass market is much lower compared to what we had a decade ago and hence the amount of impact on mass market players again coming back and growing is a very different impact as far as laundry is concerned to us. So hence a different amount of I would say nuances to different categories. But the point contrary point is, across inflationary situation, across moderating situation, our market share is ahead. So we have grown market share last year. And as we see now in some categories mass market players, they are increasing their share. We continue to gain market share in all these categories be it BPC, be it Home Care, both the places we have seen our market share continuously gaining.

A. Ravishankar — Group Financial Controller & Head of Investor Relations

With that, we now come to the end of the Q&A session. I do notice that we had more questions in the queue, but paucity of time, we will need to close the call. If there are any other questions which are unanswered, feel free to reach out to us at the IR team and we’ll be happy to clarify. I also noted some comments on poor quality of sound on the web link apologies for any technical difficulties. The playback of this call will be available on our website very shortly from now and hopefully, that should answer any questions that you had. Thank you for your participation and have a great evening ahead.

Operator

[Operator Closing Remarks]