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Ladies and gentlemen, good day and welcome to the Q1 FY '23 Earnings Conference Call of Zydus Wellness hosted by ICICI Securities. [Operator Instructions] Please note that this conference has been recorded.
I now hand the conference over to [ Mr. Aniket ] from ICICI Securities. Thank you, and over to you, sir.
Thanks. Hi, good evening, a warm welcome to you all on this call. And I said it's our absolute pleasure to host the call for Zydus Wellness. From the management, we have with us Dr. Sharvil Patel, Chairman; Mr. Tarun Arora, Chief Executive Officer; and Mr. Ganesh Nayak, Director; and Mr. Umesh Parikh, Chief Financial Officer. We'll start with opening comments from Tarun sir, post which we will open it for questions. Thank you, and hand over to you, sir.
Thank you. Good evening, and welcome to the post results teleconference of Zydus Wellness Limited for quarter 1 financial year 2022-23. We have with us Dr. Sharvil Patel, Chairman; and Mr. Umesh Parikh, CFO. Having been impacted by the pandemic for the 2 consecutive financial years during the peak of the summer season, the company this time around saw a normal quarter with timely arrival of summer.
On the back of the strong distribution and marketing efforts, the company could also re-recruit the consumers for the summer heavy brands like Glucon-D and Nycil. As a result, these brands witnessed resurgence in demand clocking the strong double-digit growth. Though the inflation had been a concern until last quarter, we saw green shoots on inflation easing out on palm oil and packing materials prices towards the end of the first quarter. If the similar trend continues, it may give some respite in the coming quarters.
On a consolidated basis, the company has registered a strong growth of 17.8% on net sales, which includes volume growth of 10.3% during the first quarter of financial year. E-commerce channel continued its growth momentum during the quarter and is now contributing 6.5% of sales, which was at 5.9% for similar comparable period last year. Our gross margin as a percentage to net sales has sequentially improved by 352 basis points on the back of price increase, cost improvement measures and product mix. However, on a year-on-year basis, the gross margins dipped by 70 basis points due to inflationary pressure.
As a part of our endeavor to mitigate the risk and ensure business continuity and unprecedented situation, the company revisited its manufacturing footprint that focused on redistributing the manufacturing of same products in different geographies. With the objective of having leaner operations, which are closer to the consumers, which was one of the key objectives of Transformation 2.0, the company has ceased the operations of Sitarganj plant.
The company has incurred one-off expenditure of INR 29 million on account of the same during the first quarter. The current and recurring savings and operational costs on account of separation of the Sitarganj plant will more than outweigh some more one-off expenses in the coming quarters. The quarter also saw some significant milestones with -- with overall availability of Zydus Wellness products crossing 2.5 million stores with equal split between urban and rural distribution.
Also, our largest brand, Glucon-D crossed 60% market share milestone for the first time in several years at an MAT level as reported by Nielsen. Let me take you through the highlights of the consolidated financial year or financial performance of the quarter 1 financial year 2022-23. During the first quarter of financial year 2022-23, our net sales grew by 17.8% to INR 6,930 million. Our total income from operations grew by 16.6% to INR 6,968 million.
EBITDA grew by 5.5% year-on-year to INR 1,481 million. PBT before exceptional items grew by 6.9% year-on-year to INR 1,399 million. Reported net profit was up by 4.7% year-on-year at INR 1,370 million. Adjusted net profit before exceptional items was up by 7.0% year-on-year at INR 1,399 million. With that, let me share some of the highlights of the operations for the quarter gone by. We continued our thrust on marketing initiatives to grow the categories and increase market share of our brands during the quarter.
To narrate a few, on the Glucon-D front, as a market demand led by on-the-go consumers opened up, which was absent during the last 2 consecutive summer season, the brand witnessed a resulting shift in the demand, which was supported with strong media coverage with concerned party as the endorser to drive daily relevance for energy drinks synergized with consumer activations. We also launched 20 grams sachet as a pilot in select cities, which were supported through digital campaign. We continue to drive the growth of ImmunoVolt through the launch of a popular consumer variant of Kaccha Mango towards the end of first quarter. Glucon-D has maintained its #1 position with a market share of 60.4% in the Glucose powder category, which is an increase of 203 basis points over the same period last year after MAT June 2022 report of Nielsen.
On the Complan front, the health to drink category saw a continued slowdown, which is further compounded by down-trading to LUPs and lower-priced pouch packs. For Complan key packs are holding segment share, we have taken focused interventions on increasing play in cash and pouches along with activations to drive distribution, which show over next couple of quarters. We continue to support the brand with a superiority campaign, Pack Palto, Farak Dekho. The brand through its campaign continued to build superiority of protein over competitors and urges mothers to turn the pack for having a tangible reason to buy. The campaign has witnessed positive response to persuasion and consideration goes overall. The brand market share stood at 4.8% in the health drink category as well as MAT June 2022 report of Nielsen.
So moving on to sweetener and with a focus on category development, we continue to promote the CBR-based Sugar Free Green variant through thematic communication of Fitness Ka Pehla Kadam with celebrity, Katrina Kaif along with various social media digital initiative for Sugar Free brand. The brand did not see growth during the first quarter due to high rate of Covid wave 2, which was led by high diabetic consumption. However, the brand witnessed healthy growth in distribution expanding to 497,000 BAC outlets, which is an increase of 26,000 outlets over a similar period. The Sugar Free brand continues to maintain its leadership with a market share of 95.5% as per the MAT June 2022 report of IQ -- On the back of Sugar Badlo, Health Badlo campaign and consumer offer initiatives, sugar-like then continue to do well during the quarter and drive double-digit growths.
Moving on to the personal care front. Everyuth brand witnessed yet another double -- strong double-digit growth during the quarter. The brand was supported by TV and digital campaigns during its -- across it's sub segments like face wash, scrubs and peel-offs. Everyuth Scrub has maintained its #1 position with a market share of 41.8% in the facial scrub category, which is an increase of 511 basis points over the same period last year. Everyuth peel-off has maintained its #1 position with a market share of 76% in the pee-off category. Everyuth Brand is at #5 position with a market share of 6.6% at the overall facial cleaning segment level. The availability of Everyuth increased to 6.8 lakh outlets from 6 lakhs for the same period in the previous year.
With a good onset of summer season Nycil brand has witnessed a strong comeback and registered our double-digit growth. The brand was supported with aggressive TV campaigns and on-ground activations to drive the demand. Nycil has maintained its #1 position with a market share of 34.2% in the prickly heat powder category with a volume market share of 37.6%. The availability improved by 16.5% to 1.67 million outlets.
On the dairy and spreads category front, Nutrilite brand has registered yet another strong double-digit growth during the quarter gone by on year-on-year basis. Nutrilite DoodhShakti dairy portfolio is also gaining good traction as we are expanding presence of Ghee in institutional channels through Nutrilite DoodhShakti Professional range. With a normal monsoon within most parts of the country, we are hopeful that demand situation may improve and we may -- and we will strive to support it on the back of efforts on the brand-led marketing initiatives, increased distribution reach and product innovation. Thank you, and we will now start the Q&A over to the coordinator for Q&A.
[Operator Instructions] The first question is from the line of Kapil Jagasia from Edelweiss Financial Services.
Sir, first of all, congratulations on a decent set of numbers are quite some time being a normal quarter. Sir, my first question is, could you provide some color on Everyuth facial scrub where you have been garnering a higher market share for quite some quarters now. So is there any change in strategy here or any legal launches which are growing higher than the category, sir?
On the facial scrubs, actually, we being the leader we have focused on category development, and I think that's our initiative across. We've been able to push the category growths to a higher level over last couple of years, specifically, despite the challenges of Covid when category actually came down. And 2 or 3 things that are working specifically for us is, I think our large communication, our latest communication, which focuses on the need of scrub over and above the face washes supported by our scrub distribution expansion brand has really helped us improve our shares.
So it is more of related to the new product development and launches because of which the market share has been in [ taking ] also the lotions would be coming under this or it would be under Nycil?
No, lotion -- body lotions are under Everyuth. They are reported separately. It's still an early stage for us to talk about it, but also the season will be in the following quarters when it becomes sizable in terms of product [indiscernible].
Sir, my next question is on the Sugar Free category. So over here, there has been kind of meter probably degrowth in this quarter. So is it because of some change in behavior after Covid towards Elkhart something else that might be happening in this category? So could you provide some color on this?
So yes, I mean, Covid did see a disproportionate increase in consumption, especially during wave 1 and wave 2, where the numbers shot up substantially, and we built up a strong basis, especially for our pellets and Sugar Free Gold net business, which has a high usage amongst diabetics and some heavy users. I think that base has become a part of it, which we do see a certain meaning of consumption. We've also triangulated with the usage of tactic products being under pressure because of our pharma payment. Having said this, we are continuing to build our distribution. Like I mentioned, we have increased our distribution by almost 5%- 6% to 26,000 outlets and our journey continues. We are also seeing Sugar Free Green, which is a natural variant, which is very important to our growth strategy so that we overcome the fear of artificial sweeteners if anyone has. And that has been building up very well across channels. So we believe we will be able to overcome the current [ rate ] the brand is facing in the last couple of quarters.
So I think maybe if -- this is Sharvil, if I can add on to what Tarun said, right? I think the brand is still on a very strong fundamental. While we had a high increase in consumption because of COVID, we see certain decrease there, but more importantly, with the natural substitute of Sugar Free Green, we believe that this will create a great opportunity for the brand to significantly grow because it will remove many of the unwanted issues that generally people feel will substitutes. So I think our strategy is very much aligned towards building that and the Sugarlite brand as an adjacency, and we believe that would really expand our opportunity on the...
And how big the Sugarlite brand would be as a category?
So It's high single digits of the overall brand portfolio as a percentage of the overall brand portfolio.
And Okay. And sir, for this quarter's slowdown in Sugar Free, is it specific to domestic markets or even the international markets are seeing this...
So In the international markets, actually, we've launched a sugary extension Sugar Free Delight Cookies. And international market slowdown is more to do with some of the penalties, I mean challenges that we face, if at all, it's nothing to link to any brand like issue. So it's reasonably good in terms of our demand for Sugar Free.
[Operator Instructions] The next question is from the line of Tejash Shah from Spark Capital.
Maybe question the bequest on my side. So first, our portfolio is relatively very inflationary -- sorry, a very discrete nature, which usually takes a beating and inflationary environment. So from that perspective, what we have seen in last 6 months, the inflation scenario has been unprecedented, how has -- how would you read the current quarter performance? And then how would you actually estimate or forecast coming quarters from a consumer demand perspective?
For what we have seen, I think the consumer demand has been under pressure, and we have seen it over the last couple of quarters, and you're right. We continue to see these challenges. I think some of our investments in brand building and very importantly, on the distribution expansion has really helped us overcome some of these challenges in the last quarter, and we believe that's the best part to outcome these challenges because these will be temporary in nature and eventually, the consumption will go up as the supply side of this country improves due to investments.
So from that perspective, we may see some challenges continuing, but I think we believe, we should see some improvement. I'll just share since you asked specifically, last quarter has seen an because Glucon-D and Nycil have specifically a reasonable presence in rural, we've seen our rural growth being reasonably good as reported by Nielsen and our distribution also ramping up. So I think there may be some improvement, which can be expected, but very hard to guess. Maybe another quarter of being from an overall demand perspective, how will each of our categories play out, we still have time to see. But overall, I think the environment will stay a little bit sluggish market in my perspective, but category-to-category in [ preoutage. ]
Perfect. Sir, on Complan, there used to be some loss of market share and also position. So if you can throw some light on what other measures that we are doing to the regional market shares?
So if I were to break down Complan, and I think it's very important to -- for us, when we ourselves review this to deaverage the brand and from the spaces we operate, I think we are holding our segment share reasonably well in the large tax in the kids category, which is the bulk of --the core of the category. The shift that we have been slow to respond to has been the low-priced pouches, which is almost like a price war and the sachets where we've been a reluctant participant because of the margin. But having said that, I think we are doing interventions to participate in it. And with our focus on that, I think over the next 2 to 3 quarters, we should see some recovery there. And that's really the whole story. Otherwise, from a consumer perspective, our communications have been received well. The consumer scores in terms of consideration set is only getting stronger. So we just have to address the shift in the category around LUPs and price paybacks, which we're doing some interventions through our pack price architecture review so that our business model still remains...
Sir, but even with company's intervention, if I see market leaders growth also was not very heartening. So is it just that it is cannibalizing competition to lower price point? Or is it expanding category as well?
So at the overall level, if I look at last 6 months, that category has been declining. Last 3 months, actually, categories declined by 4%. And the growth is coming only in the sachets and the large packs are declining. So you're right in that sense. I mean, there are new people coming, but still the consumption levels are down. And I think at the overall level, the category -- the sachets have not been able to ignite category growth that one would have liked to see. So obviously, I think there are 2 routes to category expansion, it is my perspective. So -- but I'm only a small 5% player. A better way is to build the right reasons and invest behind nutrition rather pricing, but that's the route, which has been chosen. The results are still to be seen of category.
So I think, Tarun, if I can also add for the existing points I think as a strategy for Zydus Wellness, one thing that is very clear for us is that in Complan, we are not the market leaders, neither are we in the top 3 or 4 companies. So I think what we as a strategy for Complan will be is to make sure we maintain or protect our market share and then do the right things as the leaders are doing or changing, we need to make sure we remain competitive. I think the story for the organization has to be driven by the other brands where we are strong market leaders and where we see great opportunity in terms of also growth can lead to profitable growth. So I think that strategy will be that while we fall for Complan and Complan becomes an important product for us, the other businesses or brands will be the ones which will drive the value creation for the organization, and that's how we would focus our resources on.
Fair point. Well explained. But Dr. Sharvil just one question and then this is -- you answered that it's not the focus area. But if I just go back to our discussion 2 years back, there were many subsegments, white spaces, which were available in Complan and we with our group levels, both R&D capabilities and also the front-end distribution capabilities, there were white spaces which we wanted to plug in the portfolio. So any thoughts on that? Or as of now, Complan itself is not the priority to make those level of impact?
So your point is right, and that opportune go up. In fact, we did launch Complan Nutrigro in the toddler segment, which was a gap that we had, and that has been medically detailed through our pharmaceutical side of the business. And we do believe there is opportunity in the adult segment and we have segments where we are unpresent. And that we will slowly definitely build on.
So the adjacencies to this category of MSPs are definitely on pursue and build on. Obviously, in the last 2 years, because of Covid also, we didn't have so much traction because I mean, new product introductions have been very difficult because of less contact with the medical practitioners and less detailing and other things. But we are again starting to see strong momentum there.
So I think those things will definitely continue to be built in terms of adjacencies for this brand, how it can be further used. But as I said, overall, when we are looking at the business, we would still make our priorities, the other brands to drive the value growth and at the same time, protect Complan and continue to build on it. But that will be the 2 priorities.
Yes. And sir, now looking at the inflation, are we -- is the worst behind us in terms of peak inflation? Or are you still seeing the coming quarters, we'll see increased pressure on inflation? That's first and second, are we planning any more pricing intervention in this quarter or coming quarters to tackle this?
So as of now, other than most other products are either holding or probably seeing a little bit of dip. So we are quite hopeful that the weak inflation is behind us, but that's coming from today's perspective. Now things change last 1-1.5 years, we've seen things changing very dramatically at a very short time. So very hard to predict. But from -- if I get to speak for today, I think we -- the worst is behind us. And even if the environment holds, we will get better. At least sequentially, we'll get better. We still have things to work on. And therefore, we are not -- at the current prices, we are not planning any specific price interventions.
And sir, any sector peers any guidance you would like to work with for FY '23?
So if you're looking for operating margins, my limited view will be this that while we had -- we did discuss about a 20% journey there. But if you look at across all players, direct competitors or competitors in FMCG industry, everyone's lost 3 to 4 percentage points in their EBITDA margin. I think I would want to at least say that Zydus Wellness has done reasonably well to hold on to or almost being able to hold on to the operating margin. We are keen to improve our margins, operating margins, but it will be a function of how the environment plays out. I've been -- I had original 20%. I'm not sure if we get there, but we are certainly hopeful of improvement of our operating margins if the environment stabilizes.
And Sure. And sir, last bookkeeping question. You used to give the size of the categories also. So if you can give only 3 categories sizes trailing 12-month basis of Glucon-D, HFD and sugar substitute?
So for trailing 12 months, HFDs have done about INR 6,750 crores the glucose powder category has been about INR 900 crores and the third, what it was?
Sir, Sugar Free.
Will be about INR 325 crores.
Sugar substitute category, just to call it out, I think there has been some corrections they are doing because the data base is handled between Nielsen and IQVIA. So there may be some corrections they are working on, but that's what we did.
[Operator Instructions] The next question is from the line of Alok Shah from AMBIT Capital.
Congrats on the good set of results. Sir, my first question is, when you look at the strategies to re-recruit consumers back in Glucon-D and Nycil after a gap of about 2 years. So is there a different plan that you are using now to re-recruit them versus what was the traditional route adopted previously? And also wanted to get a sense what will be the NPD pipeline that you plan to leverage specifically in Glucon-D and Nycil sort of gain more consumers in the can. That's my first question.
Sure. When we're looking at Glucon-D and Nycil, I think typically, and this is a good example to share. Typically, the way this category works, for example, Glucon-D is that most of the consumption happens between February and February or March to about July, August. And therefore, our numbers, our primary numbers, reported numbers are largely concentrated between January and June.
And in this period of consumption, we typically see a household buys 1.5 packs average per household, whoever is buying and -- and therefore, they -- and they exit the category and they have to be re-recruited. And therefore, 2 years of gap actually reduced substantially the penetration levels of Glucon-D and similar numbers would create for Nycil. Our focus has been on 2 plants. One, I think we've used Pankaj Tripathi as our brand ambassador. One of the things that we focused is that traditionally, we are focused only on the sun and summer-related heat and deprivation of energy.
We are saying that general tiredness and exhaustion also be included in this. And therefore, we used a mix of creative campaigns in terms of telling consumers that there are multiple parts, multiple reasons why you have -- get exhausted and Glucon-D is your partner in recovery. We've also supported very strongly with a lot of local activity in the Hindi heartland of UP, Bihar. And third, of course, something we have talked about is our direct distribution expansion that has happened over the last couple of years.
So those are -- if I were to say high level 3 things that have really worked for us or is something we have used similarly. And Nycil we've had a campaign which is focused on doctor -- clinically proven efficacy of Nycil and how it asks people to go outdoors. And that is a big theme for the kids these days, especially after COVID, and they are able to go outdoors and give them the confidence to overcome the prickly heat situation that they have with the increased distribution.
So that -- those are the ways that we have really focused ourselves. Strong online, TV and digital campaign supported by on-ground activation and an improved direct distribution. That's the mix that we used on both these times.
Got it. And just a follow-up to that, in terms of the market highs reduction that we would have seen versus 3-4 weeks. So we would be back to around anywhere around 85%-90% of the prepreg or still a little lower than that what would be the number be?
So my guess is the data will still come out in over the next 2 to 3 months. But my guess is we are between these 2 brands, we are almost in value terms similar level as the Covid of course, there is some value loss in the translation because of pricing, which I think will play out once we have the full data by end of this quarter in terms of the penetration in all levels. But value terms, we've recovered on all the 19 numbers.
Got it, got it. That is happy to know. My second question is on Everyuth brand. So we are seeing this brand equity improve year after year. What could be the adjacencies that you can look at? So while, of course, in the previous year, we have done little bit on the body lotion and Alvera part. But primarily each year, we see a lot of the B2C companies trying to do a bit more products on the face, sheets and few other things. Now of course, these categories are not prevalent in a couple of years back. So the sizes could be small, but any adjacencies that really interest you and can really help Everyuth as a brand move into those adjacencies?
So Alok, I think Everyuth is a brand which shows a very good promise, both from an equity point of view and the way consumers are lapping it up. I think our belief is to hold first within the spaces that we operate in, especially scrub, peel-off, I think there is a huge opportunity of growing the categories. And we have a single-minded focus on category development.
We have looked at a couple of adjacencies, which is the benefit segment of tan removal, body lotions and aloe vera gel, which we are building on, and I think we want -- there is enough room for them to grow. There are smaller segments like sheet masks and several other, BB cream, CC cream, et cetera which a lot of these companies are trying.
We have them all -- I mean, gulping these products is not such a big task, but the size of the price may be much smaller versus what we already have at hand and the momentum we've seen on the brand.
So we will -- we are studying if we can just keep them if we are -- if you're feeling the need to do that only on online space, et cetera. So some of those valuations we are doing, but otherwise, we have a very single-minded focus to grow sizable within this. And I think as a skin care play, this can be very profitable and sizable way for us.
Got it. Perfect. And just a [indiscernible] on -- now that the Sitarganj plant has been ceased, any changes on the potential tax rate that we can see going into FY '24 or '25? Anything to call out specifically?
No, no, Sitarganj was already under the normal type design, and we don't see any change in the tax rate going forward. Our guidance given to you earlier continues, that we'll be having a taxable income in the year 24-25.
[Operator Instructions] The next question is from the line of [ Anand Venugopal from BMS Capital. ]
Just want to ask, so just one seasonal about, which we see in order per se...
Sorry, not able to hear. Mr. Venugopal, we are unable to hear you. Can you speak a bit louder come close to this...
Yes. Sure. Is it better? Hello.
Yes, sir. Can you come a bit closer to the mic?
Yes. So I was just wanting to know in regards to this nonseasonal revenue which you have in quarter 2 and quarter 3 FY '21, '22, quarter 2, quarter 3 revenues were around INR 724 crores and INR 772 crores in FY '21, '22. So in -- is there any plan to... INR 1,000 crores how go...
Is there any plan to?
Is there any plan to achieve that? And so for example, if non-seasonal products, are we trying to launch any more non-seasonal products as such to lead growth assets?
So all our brands basically compliant sugar penetrate would play a much larger role because quarter 4, quarter 1 is led by more Glucon-D and Nycil will get added. But within these, there are clearly plans to build on this. We've already launched, for example, under Nutrilite, Nutrilite DoodhShakti, under Everyuth body lotions, Complan and Sugar Free have their own agenda like Sugar Free Green has a specific agenda of growth. So we have specific strategies to build on growth to drive for quarter 2, quarter 3.
[Operator Instructions] The next question is from the line of Akash from UTI Mutual Fund.
May I kindly ask you what is the volume CAGR over the last 3 years -- I mean, Q1 FY '20 to Q1 FY '23?
So we have our overall growth of about 4%, 4.5% over 3 years. And I think my estimate is about 3%, 3.5% would be volume rate because initially first 1 or 2 years, we do not have any substantial value increase.
Sure. Thank you very much Sir. And so in FY '23 or maybe FY '24, any -- I mean, which categories are expected to see new product launches or let's say, which categories would be given higher allocation towards advertisement spend or, let's say, new product launches?
So FY '23, I think each of the brands have their own agendas in terms of investments. So Glucon-D and Nycil typically get advertised mostly in the peak season, while brands like Everyuth scrub or Sugar Free Green or Complan have all 4 quarters of more consistent advertising as we follow. Nutrilite spends the lowest because it has a larger institutional exposure, and therefore, the more of the action happens on the ground from that perspective.
Yes. Sir, and in terms of new product launches, any categories that you wish to call out?
So for the future, it is hard to give any guidance at this stage. But of course, we want to strengthen from the recent launches. We want to strengthen body lotions, Nutrilite DoodhShakti as Sugar Free Green to build up to a sizable level as we move forward. Even Sugarlite has the opportunity to continue build up.
[Operator Instructions] The next question is from the line of Tejash Shah from Spark Capital.
A couple of follow-ups. Sir, just wanted your insights on one of the building blocks that you have pulled out this leading route to market, so basically distribution expansion. Now this observation pertains not only to us, but also for industry that I'm not sure that demonetization has anything to do with it. But post demonetization, the distribution expansion is actually not resulting in the revenue or the pre-demonetization thumb rule used to be from industry veterans that 10% increase in distribution used to lead to at least 3% increase in sales. Now since last 4, 5 years, we are not seeing this equation holding on to even for industry that, even for us, -- so any -- because -- and parallelly, there are many more disruptions happening with the go-to-market strategy and then now B2B businesses, Udaan and Ajio. So just wanted to understand, does the -- is there still a merit left in expanding distribution, direct distribution because it is not [ resulting ] there are many more agencies or engines which are actually doing the same for us as a brand owner.
So Tejash, it's a fair question, not just conceptual but business impact. I think, yes, you're right. It does not have a very linear relation when Dan is to see, certainly is not existing. We have seen it in our business. I've seen it in several other businesses. The biggest benefit of direct distribution that we have seen is being able to drive the agenda of distribution that we believe.
I think one of the biggest changes, even in the last 5 to 10 years and has nothing to do with just demonetization alone is the fact that clutter on the stocks -- on the shelves of the retail. I think the number of SKUs have coniferated to 2 to 3x levels for a similar retailer like-for-like at a base minimum level in terms of number of SPs that are coming in both. And therefore, your ability to push through your new products, your critical products, which typically are small, but you want them to become bigger, is that much harder and you can't rely on wholesale to do that job.
Wholesale is a democratic channel. It will sell what is in and selling already faster. But my Sugar Free Green, I need to build it through my direct distribution efforts, just putting more money on our wholesale and doing wholesale activation will not play that role. So that's one reason why I need direct distribution. Also, the per dealer throughput at a global level, if I were to say, simplistically, book because there is continued expansion of overall number of outlets.
So per dealer throughput for each brand or each category is also reducing because organized trade, which used to be for me about 3 years back, about 12%, 13% has become 17%, 18%. So my share of generally has shrunk, but I still have to reach more outlets to do justice to it. So it becomes more like an imperative to strategically build my business and therefore, I do not have an alternative but want to have the right future. But the 10:3 obviously doesn't exist. And therefore, it is something that we'll continue to build. But obviously, it's not that linear in terms of business outcomes. -- at least in short term -- more medium term, yes.
Yes. No, this is clarified. Sir second, you have also called out interestingly in organic pay gap for filling. So are we still on record or we would like to actually settle down with what we have done so far on acquisition before we make a move or we are ready in your opinion to absorb more brands?
Simplistic report, we have our high goal. We are focused very, very clearly focused on growth. If you look at most of our brands have a huge growth opportunity, whether it's Glucon-D or Nycil or a Sugar Free or Everyuth or Nutralite, even Complan, we have a job to do, so really speaking in international market.
So if you ask me, we're not in the need that I was, say, 4 years back, 5 years back that we needed to scale up using an acquisition. The role of acquisitions has substantially changed from then and now. Here, we're looking at bolt-on which will take me a longer time with a gap filling, which fit in into my current 5 broad spaces that we define. And they will help me move faster. They need not be large there, but they can be sized not too small to take a disproportionate time, but they are good gap-filling ones. Or something in international markets, top 5, 6, 8 markets, which help me move at a faster way. For example, Bangladesh, we have strong plans.
So if I get something, it will help me move faster. So these are more gap billing, more sharper specific M&A agenda that we'll run. It will not be just for scale, which was a different need for me at that point of time. So that's how we're looking at it.
And sir, most of the initiatives that you spoke about is that they are employed even so building a team building will be required. So should we budget higher employee cost as a percentage of sales as we go along? Or do you believe that at the current run rate can actually make us achieve the objective?
So we have taken out a substantial portion of cost at an employee level. I think from now on, it will be more like my guess, the increase as a market and a small percentage increase for any expansion that we may need. So that's how the fixed cost of employees will move, in my view. Right now, we've been taking out substantial costs, but that will kind of seize from now is how I would look at it. It may give me operating leverage, if I can achieve my double-digit growth as we have, and I think it's somewhat a time that should continue to grow at faster than that line. That's how we would plan to that we can build your models...
[Operator Instructions] The next question is from the line of Ruchitaa Maheshwari from BOB Caps.
Congratulations on a good set of numbers. My question pertains to Complan. So just would like to know, we had a 5.6% kind of a market share and which has now come down to 4.8%. The last 2 quarters, we saw the category also declined. Now if you go through the history of Zydus, we used to have a brand called Actilife and which used to deal to the adult drinks, but we couldn't scale up and we had to call off that brand. So how strong we are convinced that we will be able to scale up Complan brand going forward?
Ruchitaa, I think there are 2 different situations and I do believe -- I mean at that point of time, it was a much smaller plate. And we were probably a bit ahead of time at that point in time to participate in the adult nutrition, which was actually much, much smaller. Having said this, Complan is a far bigger far more powerful brand with its own strong following. And therefore, we are quite convinced that there is a big opportunity for this.
We are not losing momentum on this brand on the big packs. There is a structural shift in this category, led by larger players. I think we have taken our time to respond to that, and we'll be able to do that. Having said this, we are quite confident of having a larger nutrition play over the next 2 to 3 years, where we will be able to hold share in more the medium term and build on that as well by participating in other spaces where the brand has traditionally not played.
We also must recognize the legacy that we bought that we had almost 5 or 6 years of continuous market share drop in this brand from a mid-double to our mid-singles. So I think we are reasonably confident we'll be able to hold and build on it.
Okay.
By far much more powerful brand than Actilife that we had that time.
Okay. In Q4, we did launch some smaller packs in Complan. So how was the customer response on this in? And are we planning to make that smaller unit pack available across India? Or how is it like -- or it will be only available in the Hindi-belt region?
So we had launched the pouch packs 450-gram pouch pack, mainly in West Bengal in quarter 4. We've got a fairly decent response on that. We are hopeful to in this quarter launch, the pouch pack in our main variant which is chocolate, which should help us compete better as we move along. So those are specifically -- so therefore, we will be scaling up our pouch pack 450-gram pouch pack to a national level as we speak. And that should help us...
And apart from Nutrigro, are you also planning to address some white spaces, which is available in the Complan brand going forward?
Yes, we are looking at it, but we will share once we are ready for that.
And the Nutrigro now, Covid has been passed off. So you have been, I'm sure, approaching to the MR for order or building your brands and recommending to the customers. So what kind of a growth are you seeing that Nutrigro will register maybe in a year or maybe in 2 years' time?
So I think we expect to get -- start getting a fair share in the Start-up Phase. 2 to 6 years is estimated to be about 10% to 11% of the overall HFD market. We do not have such a representation there and we believe with this Complan Nutrigro, at least we will start getting a fair share of 6% to 8%, at least in the next couple of years if we are able to get it right.
Okay. And just coming to, if we see across your brands, we are a market leader in 5 out of 6 of our brands, but we do not have that much liberty in taking a price hike. Earlier, we were a bit slower in taking a price hike and even the price hikes were not enough to cover all your cost of inflation. Can you specify what's the reason for us not taking a liberal price hike when our peers have been taking those kind of price hikes despite, we being a market leader in many of the brands?
So I think it's a function of each of the brands and the categories they are. For Glucon-D and Nycil the price hike has to be taken pre-season because -- and we can take it in between, but we had to take, I mean, a substantial 85%, 90% of these businesses. These banks have so between quarter 4 and quarter 1. And we did take the price hike at the right time for these brands. For Sugar Free also, whatever we had to act once the prices went up, we did it. On Nutrilite, as and when palm oil has gone up for the institutional, we have been able to respond. I think the only brand where we have been more reluctant in taking price increases has been Complan, which is more led by the fact that competition is actually taking prices down. And therefore, we have had to be holding back our actions. Everyuth has also taken price increases effectively and there has been a good response to it without losing any momentum on the branch. So it's only Complan we've been reluctant as that's the competition.
We have to understand as the company for all of other than Complan, I think they have been very good at being able to take the right price increases. Obviously, the strategy for the organization is to grow by volume and not by price. So that has to be the fundamental in terms of how we run our business because the Indian consumers are price conscious. So there is a limit to what we can do. But in terms of margins, we have done fairly well in terms of taking price increase and be premium in our category. With Complan, I think it's a very different strategy because you can't do it because while there have been inflation and price increases, the leader brands are actually reducing price which is contrary to all logical thinking. So we have to defend that as the way the market behaves. But by and lack other than that, we have been very responsible in terms of price increases.
Okay. Sir, have you taken any price hike in Q1?
No. Those prices were effective already in Q4, and therefore, we didn't have to take anything specific. Over last year, Q1, there is a price increase, but we didn't have to do any specific actions in Q1.
Okay. So I believe, sir, you have taken some 7.5% of price increase, of which 5.3% has been implemented. Am I correct on this?
No.
I know... Everything is implemented -- there has been no shifts because of mixes, but product mixes, but all of it is implemented. There's nothing in the pipeline.
Okay. And just one last question from my side. The bill which we have in our books. So have you thought of amortizing it and how it will be going forward, whether it will be in phases or it will be in one go? Or what's your thought process on this?
So goodwill is not amortizable in the books of account as per the Ind AS. But when we do some combination business combination, that time we'll think of restructuring it. But currently, it is not amortizable by Ind AS.
Thank you. That was the last question. I would now like to hand the conference over to the management for closing comments.
Thank you, everyone, and we'll see you next quarter.
Thank you. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.