Jyothy Laboratories Limited (JYOTHYLAB) Q2 FY23 Earnings Concall Transcript

Jyothy Laboratories Limited (NSE:JYOTHYLAB) Q2 FY23 Earnings Concall dated Nov. 14, 2022

Corporate Participants:

Manoj Menon — Moderator

Sanjay Agarwal — Chief Financial Officer

M.R. Jyothy — Managing Director

Analysts:

Percy Panthaki — IIFL — Analyst

Kaustubh Pawaskar — Sharekhan BNP Paribas — Analyst

Amit Purohit — Elara Capital — Analyst

Manoj Menon — ICICI Securities — Analyst

Pathanjali Srinivasan — Mirabilis Investment Trust — Analyst

Unidentified Participant — — Analyst

Bhakti Thacker — Investec — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to Jyothy Labs Limited Q2 FY 2023 Earnings Call, hosted by ICICI Securities. [Operator Instructions]

I now hand the conference over to Mr. Manoj Menon from ICICI Securities. Thank you and over to you, sir.

Manoj Menon — Moderator

Hi, everyone. Representing ISEC, it’s our absolute pleasure to welcome you to Jyothy Labs 2Q FY 2023 results conference call. Their company is represented today by Ms. M.R. Jyothy, Managing Director and Mr. Sanjay Agarwal, CFO. Over to the management for the opening remarks and we’ll open the floor for Q&A post that. Thank you.

Sanjay Agarwal — Chief Financial Officer

Thank you, Manoj and good afternoon, everyone. We welcome you to the conference call of Jyothy Labs. We will be discussing the performance of the company for the quarter gone by September 30, 2022, with all of you and we’ll follow up with a Q&A. So, overall, consistent performance with revenue growth of 12.6% and EBITDA grew by 20.8%. We have all — I mean, we have done well in spite of the inflation impacting general consumption. We continue to have healthy double-digit growth of 12.6% for the quarter, with a volume growth of 1.4%. This is on a good base of 16% growth in the same period last year.

Also if you look at it on a two year and a three year CAGR basis, we have been growing at a double-digit revenue growth and this has been consistent seven, eight quarters of double-digit for us. Even if we analyze our business or I would put the other way, if we analyze the business ex-HI and we’ll speak about the HI business, our value growth came in at 17.8% and a volume growth of 5%. We have been able to strengthen our core business with focus on distribution and brand investments and there is all — are aware about high inflationary pressures, which are there on the household project.

With regard to the specific commentary on channel performances, we have witnessed stable growth across all channels now and we have been focusing on our distribution platform and also focusing on sales of our existing product portfolio in newer geographies and that resulted us in strengthening our market share across all our brand categories. Regarding our different business categories, the demand for detergents, dishwash and personal care category has been stable. However, due to lesser rains in our core markets of North and East of India, this has impacted our HI business.

There has been a sequential improvement in margins, some of the raw material prices have softened, but a large number of them staying high and keeping — continue to keep pressure on the margins. So we’ll have to see how going forward the raw material prices behave. Both urban and rural continue to do well. The rural demand has been impacted due to inflation, as rural, they are more cautious than urban consumers at the time of inflation. But for us, we see a good potential or a strong potential for us in the rural market, continue to focus on our rural franchise.

Moving on to the key categories performance. Fabric care is doing well, we are at 33.7% this quarter. Our — we’ve taken extensive drives and on our detergent category and focused on mid-priced detergent brands, Mr. White, More Light. They have, I mean, accelerated our growth on a pan-India basis.

In Ujala fabric whitener, as we updated last time, we have launched the new media staring superstar Ms. Taapsee Pannu and digital campaigns have also been rolled out across all the key social media platforms, which is accelerating our brand awareness.

Also in the main wash category, all our detergent brands, even at the premium end Henko, Henko Matic and liquid, as well as Ujala liquid — Ujala IDD liquid, refill pouches, they all have received very good consumer attention. In dishwash category, both Exo and Pril continue to do well and we have been gaining market share there. We’ve undertaken some focused drives in Exo to connect with the young children and consumers on the theme of how much indispensable Exo is in their lives.

We continue to invest both — in both the brands with involvement of — in few high impact properties, which have accelerated or helped us to accelerate the sales on a pan-India basis. In HI category, the category degrew by 8%. Our strong markets for Maxo being north and east of India, they received lesser rains, hence, they impact more for us this quarter, resulting in a negative growth. Overall, we remain positive on this category and we’ll continue to focus on the liquid format of the business.

Finally, our personal care segment, which is Margo franchise, it has again delivered double-digit growth. Neem-based Margo portfolio for soap continued to be our consumer preference for [Technical Issues]. This category has seen frequent price increases due to higher input prices. However, as we’ve seen very recently the soap model prices seem to have softened, so we expect to improve from here on.

In summary, we continue to focus on a volume-led growth and continue to win market scale in our operation. We see great potential for all our products and we’ll be focusing on distribution, continue to increase our investment behind the brands and thereby getting across to larger consumers, gaining market share and strengthening our position in the states where we have potential to gain further market share. We believe volumes will gradually grow from here and sequentially we should see improvement in margins and we’ll continue to — continue to deliver double-digit growth.

With this, I finish my opening remarks and we are happy to answer any questions or clarifications you may have. Thank you.

Questions and Answers:

Operator

Thank you very much. [Operator Instructions] First question is from the line of Manoj Menon from ICICI Securities. Please go ahead. Manoj sir, your line is unmuted. Please go ahead.

Manoj Menon — Moderator

Hello? [Technical Issues]

Operator

Yeah, your voice is breaking.

Manoj Menon — Moderator

[Technical Issues] Is it okay, not okay?

Operator

Now this is better.

Manoj Menon — Moderator

Okay. So before I ask my question, just want to tell you, which I think the audience should know is that Percy Panthaki from IIFL just messaged me that he is unable to press star-one and I am also finding parallelly that in the question queue there is no one there. Could you just check in the back end and try to resolve it? It is very unusual for not having a question queue at this point in time in a Jyothy Labs call.

Operator

Let me check, sir.

Manoj Menon — Moderator

Yeah, sure. Please do that. Okay. Jyothy and Sanjay, brilliant performance, given the market context in terms of demand, etc,. super congrats to you and team for that upfront. Now couple of questions actually, one on detergents specifically. Just wanted your top level thoughts, let’s say, for a 30% plus revenue growth performance, the volumes seems to be holding up for you and also for Unilever as per the comments from both the companies. What I’m trying to understand the consumer behavior here, for these sort of price increases are we to understand that there is no adverse effects of price elasticity whatsoever? Is that the way to think that consumers are not moderating usage at all or is it a case that there is significant consolidation which is happening for a few players, which is what we get to see?

M.R. Jyothy — Managing Director

Yeah. Hi, Manoj. So in our portfolio is the mid-price segment, so you see that the lower unit packs of INR10 added segment doing well — well for us and also for us the reach of these brands has been better compared to the last few years. So for us, distribution gain and also the [Technical Issues] maybe some bit of downgrading of premium products also would have happened is our guess. But it’s the INR10 packs and in the big stores, in the modern trade they will be bigger packs. And somehow the consumer has found a way to play around the price equation, their price volume equation, so that’s on detergents.

Manoj Menon — Moderator

Okay. Sure. Understood. Understood. Thank you. If I understood correctly, there is still some volume moderation, but probably it is not visible because we are only talking about the top few players?

M.R. Jyothy — Managing Director

Yeah, yeah.

Manoj Menon — Moderator

Okay. Okay. And does this largely hold good for, let’s say, any other home care categories, like a dishwash in which you are present in, because I mean maybe not of the same quantum of price increases in that, but that also would have seen input push?

M.R. Jyothy — Managing Director

Yeah, so for us in dishes, the input prices relatively compared to fabric care has not happened. Though the input materials have gone up, we have not taken price increases to that level like that in fabric care. And for the — again the low-unit packs continue to do well and that’s how we’ve been able to sustain the volume growth and — both in urban and rural.

Manoj Menon — Moderator

Okay. Sure. Thank you. And the second question is on Maxo, two sub questions there. One, Sanjay, I’m sorry if I missed that comment earlier about the performance of liquid vaporizer salience etc,. in the overall Maxo. And second question on Maxo, is if you could talk a bit about the geographical expansion attempts, efforts, execution, which you’re actually doing in Maxo, outside of the strong market of east for that brand.

M.R. Jyothy — Managing Director

Yeah, so for us right now coils are 60% and LV is at 40% and this time both the categories — when the seasons play havoc, both these categories do get affected. And we are most skewed in the north and the east compared to the rest of the geographies. Larger sales come from geographies and this time if you would have read few reports on rain and things, these — they [Technical Issues] rainfall. And the whole thing on mosquitoes is, if you have too much of rainfall, the mosquito larvae gets washed away. And if there is lesser rainfall, then it doesn’t help in the breeding of mosquitoes. So if you see, right from Jan, Feb onwards, the season has not played really well this year, but we are still hopeful going ahead the season should come back.

Once in so many years it may happen and we are seeing this after really, really long time this kind of play of season really affecting. The brand was — is on a good traction among consumers. We had kind of reached a good level and we were — also we have plans to grow the liquid category. I guess it’s a temporary phenomenon and it should sooner come back.

Manoj Menon — Moderator

Sure. And the HI category segmental performance is still close to zero, is it — maybe this is just not an appropriate quarter to do any sort of meaningful analysis given the revenue. Sanjay, is it a significant, let’s say operating leverage and or rather deleverage angle sitting there or how do we think about the trajectory of profitability in Maxo for HI rather?

Sanjay Agarwal — Chief Financial Officer

Yeah, so Manoj, profitability is one key area which we have been focusing on inside and that was going to get driven through the LV side of the business. So — but this quarter, as we see, I mean, the sales have not picked up or they have been quite negative. So going forward we hope, as Jyothy just mentioned that the season should go fine and then we should be on the path to profitability soon.

Manoj Menon — Moderator

Sanjay, one last thing on Maxo, I’m sorry for pushing the envelope a bit, with let’s say, one-third 40% of your business is from LV, how is it possible to actually have — is it basically then — are we saying that you’re selling below marginal cost on the rest of the portfolio, which is largely coil?

Sanjay Agarwal — Chief Financial Officer

Yeah, so Manoj, I think for long period of time we have mentioned that if we exclude the [Indecipherable] then yes, the category remains positive for us. But since we wanted to focus on the LV side of the business, so there have been over-investment to that extent and when you look at the EBIT margins for the category, you tend to see a negative number there. So I think at a point of time when — and we are seeing those investments have been very result for us. So it will take some time for us to get stabilized at a decent LV number and then the whole profitability will kick in.

Manoj Menon — Moderator

Sure. Sure, sir. Thank you. I’ll step back in the queue. Thank you so much and all the very best.

Sanjay Agarwal — Chief Financial Officer

Thanks, Manoj.

Operator

Thank you. [Operator Instructions] Next question is from the line of Percy Panthaki from IIFL. Please go ahead.

Percy Panthaki — IIFL — Analyst

Hi. Good evening. My first question is on the Fabric Care business, especially the detergents. I’m assuming that the detergents portfolio within Fabric Care has actually grown at a higher rate than the overall Fabric Care business. And if my assumption is correct, I just wanted to understand what has led to this sudden spurt in growth, I mean, it was not so high in the last few quarters. So is there some sort of adjustment in the pipeline that we need to do to understand what is the underlying sustainable growth in this for the next couple of quarters?

M.R. Jyothy — Managing Director

Yeah, so, hi, Percy. The thing is, it’s not just detergent for us, as Ujala Supreme also has grown in double digit. We also have Crisp and Shine, which has got — deeply during the COVID times, that has done well. So it’s not just detergents, it’s the post-wash also which has contributed to the overall Fabric Care. And detergents, yes, have done well, the low-unit packs have done well, the larger packs in big stores have done well. So it is across the geography, across brands we’ve been doing really well and have been maintaining the market share more or less.

Percy Panthaki — IIFL — Analyst

And do — is there any difference in the primary versus secondary this quarter in fabric wash?

M.R. Jyothy — Managing Director

There is nothing, secondary, primary [Technical Issues].

Percy Panthaki — IIFL — Analyst

So in that case, what I just wanted to understand is that this kind of growth that we have shown, if there is no one-off or anything, is that something that same percentage growth Y-o-Y, is it sustainable over the next couple of quarters at least? And if not what is the reason for the same?

M.R. Jyothy — Managing Director

See, we will definitely see a double-digit growth and we are happy that Supreme sales also have bounced back and it has been consistently doing a double-digit growth as well. So right now, I can only say that we continue to wish that all our efforts are behind the brands, we have been investing behind the brands and our effort is definitely to do better. I’m not sure of the kind of percentage that I can put a this thing, but definitely double-digit growth is what we are looking at.

Percy Panthaki — IIFL — Analyst

Understood. Secondly, on the Personal Care portfolio, on a Y-o-Y basis, I’m sure there is significant amount of price increase is sitting in that, despite that the sales growth is only some 10%, 11%, which means that volumes might be negative. So — and despite being such a small player, I mean, we have so many drivers of growth, levers of growth, wouldn’t you say that the growth here should have been much higher?

M.R. Jyothy — Managing Director

See, yes, like you said, there have been several price increases which have happened, while that has happened, our volumes have not dipped. I would say it is somewhere around 1% sort of a thing. So it’s not negative, it’s slightly better than flat. But because of consistent price increases, obviously, the consumers I think overall in general, it has definitely taken some impact. But going forward, if things are better, we would [Technical Issues] advantage to the consumers and we’ll see — definitely see volume improvement there.

Percy Panthaki — IIFL — Analyst

So, Jyothy, my impression was that in the soaps category, the Y-o-Y pricing is in double digit. So is my impression wrong or is it that in Margo you have sort of consciously taken lesser price increases than the industry?

M.R. Jyothy — Managing Director

No, we have taken price increases, I literally forgot how many rounds of price increases have happened there definitely. So if you are the consumer, you go to a shop, you would see Margo at many different price points, that definitely has created some sort of issues also in the sense from a consumer point. If you — Margo available at some two, three price — different price points, which has actually moved, definitely that impacted the volumes. But going forward, we don’t see any more price increases happen, rather we would pass on any advantage that comes out of softening of the raw material. So yet to happen, but we’ll see that, that will be passed on.

Percy Panthaki — IIFL — Analyst

Okay. And last question from me, for next fiscal, what kind of EBITDA margins would you be targeting as a company overall?

Sanjay Agarwal — Chief Financial Officer

Percy, as this quarter is, we’ve done some sequential improvement in the margins, very tough to put a number for now given the SKU mixes we have and the raw material prices the way they’re behaving. So for now, we can only comment that, yes, sequentially there should be improvement and we would love to go back to our earlier margin profiling of 15% odd, but we’ll have to wait for that.

Percy Panthaki — IIFL — Analyst

Okay. Okay. Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Kaustubh Pawaskar from Sharekhan by BNP Paribas. Please go ahead.

Kaustubh Pawaskar — Sharekhan BNP Paribas — Analyst

Yeah. Good evening, sir. Thanks for giving me the opportunity. My question is again on the detergent front, I just want to understand, is it because of the downtrading our mid-premium and low-price products gained this quarter and that’s why the growth in detergent segment was much better in this quarter and that might be not the case once this inflationary scenario tone down and growth will normalize over the next maybe two to three quarters?

M.R. Jyothy — Managing Director

See, for us, this has not just been — it could not be completely the down-gradation that you’re talking about. We have also increased our distribution, we have reached many more retail outlets. And it’s also the lower SKUs, the lower unit packs that has done well. And it is different for different brands across geographies, so it will be too early to conclude whether it is only down has happened. But we would — we will — going forward try hard to maintain the double-digit growth in detergents business.

Kaustubh Pawaskar — Sharekhan BNP Paribas — Analyst

Right. And what is the low unit pack contribution to — for our detergents segment, for fabric care? And what will be it for the entire overall product portfolio for us?

M.R. Jyothy — Managing Director

Yeah, it’s around 35%.

Kaustubh Pawaskar — Sharekhan BNP Paribas — Analyst

For detergent or for the entire…

M.R. Jyothy — Managing Director

For detergents.

Kaustubh Pawaskar — Sharekhan BNP Paribas — Analyst

Okay. Okay. And my second question again is on the margin. So as this first half we have seen margins to be at around 11% to 12%, we have seen most of the — we have heard from most of the companies they’re expecting margins to improve sequentially from quarter four — from quarter three and by Q4 they’re expecting their margins to come back to their historical level. So for us, are we looking at the same trend or it will take some time for us to recover back to around that 15%, 16% kind of margins?

Sanjay Agarwal — Chief Financial Officer

So, Kaustubh, we would also [Technical Issues] a similar trajectory to happen for us as well, wherein Q4 onwards sequentially the margin should improve. But we were expecting it — sort of raw material prices to improve or soften, but they haven’t been in the last few months. See, they’ve fallen off from their peak, but they still remain quite — and so we are also on the same school of thought, but let some early signs confirm that.

Kaustubh Pawaskar — Sharekhan BNP Paribas — Analyst

Okay. And one last on the distribution, currently, what is our distribution reach and by maybe end of 2023 and 2024, where are we targeting our distribution to be?

M.R. Jyothy — Managing Director

See, currently, we reach 1 million outlets directly and overall around 3 million indirectly, both direct put together. We have our internal targets. Obviously, we would want to increase the distribution much more.

Kaustubh Pawaskar — Sharekhan BNP Paribas — Analyst

Okay, okay. Thank you.

M.R. Jyothy — Managing Director

Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Amit Purohit from Elara Capital. Please go ahead.

Amit Purohit — Elara Capital — Analyst

Yeah, sir. Thank you for the opportunity and congrats for the good numbers. Sir, just wanted to check on the liquidity condition in the market, especially when I look at both trade receivables for us has been higher even if I look at from, say, pre-COVID or during COVID also, from there also it has gone up. Are there any challenges the distributors are facing or…

Sanjay Agarwal — Chief Financial Officer

So Amit, good question. See, this for us has been slightly higher one because of the institutional business. Nothing alarming, but marginally they are a bit on the higher side.

On the side of the — what you mentioned about the distributors, see, when they are also facing these inflationary pressures, and for the working capital, they have to deploy. If the goods, finally what they’re selling is moved by 10% or 20%, then it also blocks an equal amount of working capital at their end. So we haven’t seen any pressure from distributors. But yeah, the overall business cycle in which they all operate, where the volumes are not growing much, definitely impacts them. But nothing on the receivables. For us, the entire general trade business is on cash and carry.

Amit Purohit — Elara Capital — Analyst

Sure. And on the inventory side, this is largely because of the high cost of inventory right on [Indecipherable] this quarter?

Sanjay Agarwal — Chief Financial Officer

Yeah. The high cost of inventory, higher level of scale of operation from last year, to some extent on the HI, the inventory which is coils and all, obviously, one has to make, but if it doesn’t pick up, then obviously it goes to the next season. So a combination of these factors has been on the — for the inventory rise.

Amit Purohit — Elara Capital — Analyst

And lastly, how has been the demand now in HI because we understand that there was a delayed monsoon, so hence October was probably a good month, is that what you also experienced, if you could…

M.R. Jyothy — Managing Director

So as of now, it’s looking fine, but too early to say that.

Amit Purohit — Elara Capital — Analyst

So, I mean, fine in the sense, are you able to regain the loss thing or it is just as usual — business as usual.

M.R. Jyothy — Managing Director

No, that’s a huge loss that has happened. See, mosquito as in — we have two big seasons that is usually the Jan quarter and the Feb, March — the JFM quarter. These are the two big quarters. So if you miss these quarters in terms of season, then obviously it’s difficult to catch up on that. But having said that, we are still hopeful that maybe this year is an aberration and the season will come back next year.

Amit Purohit — Elara Capital — Analyst

Okay. Sure. Thanks a lot. That’s it from my side.

M.R. Jyothy — Managing Director

Thank you.

Operator

Thank you. The next question is from the line of Manoj Menon. Please go ahead.

Manoj Menon — ICICI Securities — Analyst

Hi, team, quickly three different questions over here. One, there is a comment in your presentation about the demand conditions being positive, which was very pleasing to see and you appear to be an outlier in terms of saying that the demand conditions are great. So when I look at your performance of 5% volume growth, which is definitely industry-leading, is it just a case of you actually executing better or you do think actually that the conditions are positive and you have tailwinds, etc? And if yes, please elaborate that will be helpful.

Sanjay Agarwal — Chief Financial Officer

It’s basically, when you look at our business, the efforts which have been built — put in, which is brand investments, the distribution drive, the expanded distribution, and being able to have a very balanced portfolio across sub-categories and price points. So I think when we put all these things together, is we see the business doing okay for us, or well for us.

There are challenges, no two doubts about it. But as we move along, the festive demand has been okay. We are seeing some good pickup, partly offsetting the inflationary headwinds. So we are seeing all this thing in this macro perspective. And we hope that for our business, for the portfolio we have, we should be able to deliver our target of double-digit growth.

Manoj Menon — ICICI Securities — Analyst

Okay. Understood. Sanjay, one follow-up on — okay, maybe not actually, I will ask you separately. On working capital, so there is some increase in working capital. If you could just help us understand, is it raw material, finished goods, what exactly is the — or is it just a seasonal thing?

Sanjay Agarwal — Chief Financial Officer

No. So I think, there’s a question before with Amit, the working capital days, they’ve marginally increased because of slightly higher inventories. Receivables is more on the institutional business and inventory is on the higher scale and higher cost of whatever raw materials and FG. And to some extent, marginally on the HI inventory as well. But these all will be fine. We don’t expect it to be at these levels. On a — for the last — long period of time, we have been managing it between 20 to 22 days. So hopefully, we’ll be in that range soon.

Manoj Menon — ICICI Securities — Analyst

Sure. And third, some qualitative and possibly quantitative performance commentary about Henko, with some detailing if at all possible would be helpful. Trying to understand — what I’m trying to understand is, let’s say, if I look at the Unilever commentary, it is very clear that it is premium detergents within that Surf, within that the LUP. So there is a level of [Indecipherable] analysis, which tells us that — what is the driver for growth. So fair to say that premium — at least as per Unilever, appears to be outperforming the other segments of growth.

Your drivers of growth is mid-segment and you do have a key brand proposition in Henko, does attempts [Phonetic] made in the past, significant attempts, rather, with investments etc to rejuvenate Henko. Now as a consumer when I observe, at least it’s a perception, even anecdotal perception that it is all Surf and not much of Ariel or limited Henkel to be [Indecipherable] to be seen. So just some color on where we are in the journey with Henko, qualitatively and quantitatively, would be super helpful.

Sanjay Agarwal — Chief Financial Officer

So Manoj bhai, Henko has been doing good. And as you know, it’s on the premium side of it and we launched the [Technical Issues] which has done well. It’s a pan-India brand. Seeing the demand trends or the consumer preference for liquid, the liquid was launched. So as of now, yes, in our overall portfolio this is at the premium end of the business, obviously, for more metros and modern trade type of channel, and it’s doing well. And we have brand ambassador, Kajal Aggarwal there, and things have been doing well for us. So I think we will restrict it — our comments to that.

Manoj Menon — ICICI Securities — Analyst

Okay, sir. Now, one last thing and I’ll get back in the queue again. When I look at the ad spends, INR86 crores versus INR83 crores last year, should I think of ad spends the way you are looking at it in terms of absolute or because of the revenue growth being so strong, price-led, there is significant operative — kind of, let’s say, 100-odd bps reduction. So should I look at it as a percentage of revenue, how are you looking at, or is it more like an absolute modeling, which you are doing?

Percy Panthaki — IIFL — Analyst

Yeah. Manoj, it has to be looked at absolute. And when we drop our yearly OP, obviously, one looks at it as a percentage basis also. But as of now, I think we have been — in the environment in which we are living, I think we are doing a fair degree of brand investments.

Manoj Menon — ICICI Securities — Analyst

Sure. And one quick follow-up on this is, is it suffice to say that in all the categories your [Phonetic] SOV, SOM is favorable?

M.R. Jyothy — Managing Director

Yeah, more or less. It depends on each geography, regional and Hindi-speaking, it would differ. But more or less we are there.

Manoj Menon — ICICI Securities — Analyst

Okay. Sure. Thank you. Thank you. Good Luck.

M.R. Jyothy — Managing Director

Thank you.

Operator

Thank you. The next question is from the line of Patanjali from Mirabilis Investment Trust. Please go ahead.

Pathanjali Srinivasan — Mirabilis Investment Trust — Analyst

Hi. Sanjay. Congrats on the results. I just wanted to know what is our volume and value growth for the detergent business or the fabric care business, as a whole?

Sanjay Agarwal — Chief Financial Officer

So volume growth is around 20%-odd [Phonetic] and the balance will be the price growth..

Pathanjali Srinivasan — Mirabilis Investment Trust — Analyst

Okay. Yeah. Is that right 20%-odd [Phonetic] you said?

Sanjay Agarwal — Chief Financial Officer

Yeah.

Pathanjali Srinivasan — Mirabilis Investment Trust — Analyst

Yeah. And any plans for NPD for the current year because I think last year we didn’t do much NPD, anything in the pipeline?

M.R. Jyothy — Managing Director

Yeah. There are some things in the pipeline, but will — it’s a part of the next year.

Pathanjali Srinivasan — Mirabilis Investment Trust — Analyst

Okay, ma’am. So nothing for the current year, is that right?

M.R. Jyothy — Managing Director

Current year, we — in the beginning of the year, we had launched Henko liquid — liquid detergent. And we were launching and then doing our investments on that, reach a certain scale and then launch the next. So that’s our principle. So we have launched Ujala IDD liquid detergent and Henko liquid detergent just about six months back.

Pathanjali Srinivasan — Mirabilis Investment Trust — Analyst

Okay. And I think based on our inventory levels, it will take us about two months for us to roughly get on any cost benefits that come from softening commodity prices, is that right?

Sanjay Agarwal — Chief Financial Officer

Yeah. That’s right.

Pathanjali Srinivasan — Mirabilis Investment Trust — Analyst

Okay, sir. Thank you. That’s it.

M.R. Jyothy — Managing Director

Thank you.

Operator

Thank you. [Operator Instructions] Next question is from the line of Shreyansh Jay [Phonetic] from Swan Investments [Phonetic]. Please go ahead.

Unidentified Participant — — Analyst

Hello. Thank you for the opportunity. Just wanted to understand, ma’am, when we talk about LUPs, so our understanding was LUPs gross margins are significantly lower than your normal larger packs. But still, if you look at this quarter, in spite of selling almost LUPs in most of our product categories, we’ve been able to hold the gross margin. So is the understanding correct here?

Sanjay Agarwal — Chief Financial Officer

Sir, at the company level, when we have LUPs, one, manufacturing is in-house. So it does not impact us that much. But we see LUPs more as our investment and our way to get into new consumers. So we see as a good — if we are able to increase our LUP share, give good result in the long term. And margin level, it does not impact that much at the category level.

Unidentified Participant — — Analyst

Okay. Okay. All right. And the second question is, would we be largely done with the high cost RM or do you think like Q3 would be the last quarter, where we will be able to use that and post that, we’ll see some relief in your margins or improvement in your margins?

Sanjay Agarwal — Chief Financial Officer

Yes. I mean, as — the earlier question was, any inventory what we have, it takes at least two — a quarter actually for it to get — and the new pricing comes in. But even if we look at this point of time also, prices of soda ash, some of the raw materials are still at very elevated levels. So — but too early to call it that they have come off from the peak, but they are still at high levels for some of the raw materials. Some of them have come off, your palm oil prices have come off, but rates are still at the same levels.

Unidentified Participant — — Analyst

Okay. But just to like get a [Phonetic] sense in the margins, do you think we’ve reached the trough in some sense? I’m not asking for any guidance, but just to get a rough idea of where we are and there’s only one way up from here on?

Sanjay Agarwal — Chief Financial Officer

Yeah. We’ll definitely hope that’s one way up, but life is generally not that way. So we hope things will improve from here on and that’s what we are expecting this quarter. Sequentially margins have gone up, and we hope things will fall in the same trajectory or the upper trajectory only.

Unidentified Participant — — Analyst

Okay. And just my last question. Sir, just broadly, fundamentally just wanted to understand, we are seeing growth of about 20%-odd [Phonetic] in volumes in fabric care, whereas soap you just said 1% volume. So what is the psyche of a customer like is he not willing to buy soaps, rather spend on fabric care? Or do you think it’s more about competition in the soaps category, where Margo faces a lot of challenges from other brands and it becomes difficult to sell those products in that category? So just trying to understand, is it that the competition is impacting us or is it that the customer has not been actually able to purchase soaps at the cost of fabric care?

M.R. Jyothy — Managing Director

Hello. So the thing is, the number of brands in personal care, that is the soaps category, is way too many. And we have a single brand there, Margo. While [Technical Issues] for us in detergents, we have multiple brands and we have pockets of strength when you map India, we have different brands doing different — doing well in different pockets of the country. So it’s a summation of that, that’s working for us.

Unidentified Participant — — Analyst

Okay. All right. That helps. Thank you so much.

M.R. Jyothy — Managing Director

Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Harit Kapoor from Investec. Please go ahead.

Bhakti Thacker — Investec — Analyst

Hi. This is Bhakti Thacker. Am I audible?

Operator

Yes. You’re audible.

M.R. Jyothy — Managing Director

Yes.

Bhakti Thacker — Investec — Analyst

Yeah. Thank you for giving me the opportunity. In Dishwash, you’ve seen some lower growth versus the past few quarter trends that we’ve seen. Is the volume growth positive here? And any specific reason for this lower growth versus historical levels?

M.R. Jyothy — Managing Director

Yeah. So for us, generally, the JFM [Phonetic] quarter is the biggest quarter. And last year, we had a heavy base on it. While we talk about our dishwash, we have gained market shares as well. So there is — it’s a temporary this thing. The brand is — both the brands are doing really well.

Bhakti Thacker — Investec — Analyst

Okay. Great. And my second question was on tax rate. So what would be our tax rate for this year and the next year?

Sanjay Agarwal — Chief Financial Officer

So we can do around 16% to 17% on an annualized basis.

Bhakti Thacker — Investec — Analyst

Okay. And last, a bookkeeping question. So for us how big would be Ujala Supreme contribution to our detergent segment?

Sanjay Agarwal — Chief Financial Officer

Which one ma’am?

Bhakti Thacker — Investec — Analyst

Ujala Supreme, what will be our contribution [Speech Overlap].

Sanjay Agarwal — Chief Financial Officer

We don’t give any [Speech Overlap] brand wise numbers ma’am. So we’ll leave it at that.

Bhakti Thacker — Investec — Analyst

I’m not asking for the growth for this quarter. I’m just asking the sales contribution from this brand to our overall sales or even detergent sales?

Sanjay Agarwal — Chief Financial Officer

So overall, as a company-wide basis, Ujala Supreme will be around 10%-odd [Phonetic].

Bhakti Thacker — Investec — Analyst

Got it. Okay. Thank you so much.

Operator

Thank you. [Operator Instructions] Ladies and gentlemen, that would be our last question for today. I now hand the conference back to the management for their closing remarks. Thank you, and over to you.

Sanjay Agarwal — Chief Financial Officer

Sure. Thank you very much. And if there are any questions, please reach out to us or to ISEC team and we’ll be more than happy to answer any questions you guys have, and thank you once again. Goodbye. See you next time.

Operator

[Operator Closing Remarks]