Q1 2027 Berger Paints India Ltd Earnings Call

Speaker #1: Huh.

Speaker #2: No, আপনারা শোনা যাচ্ছে? We can hear you.

Speaker #1: শোনা যাচ্ছে। Can you see my screen?

Speaker #2: Sir, I can see your screen, yes.

Speaker #1: No, madam, it's some presentation visible.

Speaker #2: Sir, the presentation is visible, yes. You are on the first slide. The presentation is visible.

Speaker #1: So that I can't see my own slide.

Speaker #2: Okay.

Speaker #1: Now, now I can see.

Speaker #2: Okay.

Speaker #1: But I can't see the names and numbers, so I have to stop sharing only, then only I can start seeing how is this seen together.

Speaker #1: Doesn't matter. I don't have to see anything. I'll finish my presentation and then stop sharing, and then go back.

Speaker #2: Meeting ID, take by step.

Speaker #1: Yes. Sir, can you hear me?

Speaker #2: Yes, I can.

Speaker #1: yeah. Your screen is visible. It's perfect.

Speaker #2: Okay.

Speaker #1: It's coming this way.

Speaker #2: Madam, give that.

Speaker #1: No, this should be this should be opened up. I want to

Speaker #1: Q2, and this time it was at 39.3. It could have been higher, but largely due to the industrial business lines, as we said, the increases were more toward the end of the quarter and not all increases have been received there.

Speaker #2: Abhijit sir, can you start?

Speaker #1: Yes, we can. Go ahead.

Speaker #2: Okay, just.

Speaker #1: Hi, good evening, everyone. This is Mohit Dudeja from Loki Global. I would like to welcome all to the Berger Paints India 1Q FY27 result conference call.

Speaker #1: Some of it is happening in July, and some will happen further in August. So, it is always a little bit delayed in the industrial segment, which is why the gross margin is at that level.

Speaker #1: I thank Berger Paints management for allowing us to host. We have with us today Mr. Abhijit Roy, managing director and CEO. Mr. Kaushik Ghosh, CFO.

Speaker #1: Operating profit margin, however, was a strong 17.4%, in that range which we have always indicated of 15 to 17%. Typically, in Q1, it goes higher because of the higher value sales, so the operating margin tends to be slightly higher in the first quarter.

Speaker #1: Mr. Sayanthun Sarkar, GM, finance and accounts. I shall now hand over the call to the management for the opening remarks post, which we will proceed with a Q&A session.

Speaker #1: Over to you, sir.

Speaker #2: Thank you, Mohit, and good evening all of you. Let me start with the presentation first. This is the first quarter result. Why is this not moving forward now?

Speaker #1: That is true in every year. If you look at Q1, financial year '25 or '26, '27 also at similar levels, so that's how it is.

Speaker #2: Okay. The volume growth, that was there in the standalone results, was in high single digits. Value growth, as you have seen already, is at 12.7%.

Speaker #1: And it's sustained at those levels, even though there was a little slippage, as we saw, in the gross margin. Standalone, we grew at 12.7%, EBITDA at 12.6%, and PAT at 25.5%.

Speaker #2: Decorative business outperformed with nearly 13.5% value growth, and nearly 20% in terms of operating profit growth. The protective GI and powder coatings divisions recorded relatively lower growth, largely due to the fact that, you know, the price increases were taken more towards the end of the quarter after protracted battle in the field, and then it will come through more in the second quarter.

Speaker #1: The decorative business line saw the highest growth in the last 12 quarters, with Deco delivering 13.5% value growth and nearly 20% operating profit growth, along with margin expansion.

Speaker #1: Exterior emulsions outperformed, while Color Plus continued to gain strong traction in the premium interior emulsion segment. Construction chemicals and waterproofing delivered robust volume and value growth.

Speaker #2: The decorative performance was supported by calibrated price increases, implemented through the quarter. Gross margin moderated marginally, primarily due of input cost, increases in industrial business.

Speaker #1: Roof, pool, and seal continued to gain momentum. Wood coatings reported strong double-digit volume growth. Store footprint expanded, taking the total count to over 1,900 stores as of date.

Speaker #2: In decorative, the full price increases were effective only for part of the quarter, decorative business delivered nearly 20% growth in operating profit, and the consolidated PBDIT margin expanded by 40 basis points year on year.

Speaker #1: With the urban stores alone, around 900-plus and growing. Tinting machine installations crossed 2,100-plus for the quarter. Because of the price increase, there was a lot more attention there in terms of sales.

Speaker #2: Standalone and consolidated PACT increased by 26 and 29%, respectively. If we look at the figures, volume about 8.4, as I said, income from operations 12.7, PBDIT growth 12.6, and PAT growth 25.5.

Speaker #1: Otherwise, we could have done even better, but this is a good number in the first quarter. In Luxal Metallics, this was another range which we had introduced recently and is doing very well.

Speaker #1: These are the stores which we have set up across many markets. The consolidated revenue grew 12%, with slight moderation versus standalone performance, primarily due to the muted revenue growth in wholly-owned subsidiaries, Bolix and STP.

Speaker #2: Home shield and wood coatings delivered strong growth. Exterior emulsions did well, while the newly launched Color Plus interior emulsion gained strong traction in the premium segment.

Speaker #2: Automotive coatings reported healthy double-digit value growth, and protective GI and powder, as I mentioned, the growth rates were relatively lower due to delayed price increases in these categories.

Speaker #1: Bolix, because primarily it is a weak seasonal quarter—although this January-February-March, which gets consolidated in this period, is a weaker quarter there because of snow, etc.

Speaker #2: Gross margin comparison more or less in that band of 39 to 42, and this time it was at 39.3. It could have been higher, but largely due to the industrial business lines, as we said, you know, the increases were more towards the end of the quarter, and not full increases have been received there.

Speaker #1: And STP, because of the Jamshedpur plant, which has now come back to normalcy, but in the first quarter remained a little bit disturbed. So overall, these two had the flattest growth, and therefore the growth got pulled down a bit.

Speaker #1: But they are back in action in this quarter. In Q2, this will be fine. Operating profit increased by 15% at the console level, with consolidated PBT margin expanding by 40 basis points.

Speaker #2: Some of it is happening in July, some will happen further more in August. So it is always a little bit delayed in the industrial segment, which is why the gross margin is at that level.

Speaker #2: Operating profit margin, however, was a strong 17.4%, in that range which we have always indicated of 15 to 17. Typically in a quarter one, it goes higher because of the higher value sales.

Speaker #1: PVT and PAT grew by 18.1% and 28.6%, respectively. The joint ventures continued to deliver actually very strong growth in both revenue and profitability. This is the consolidated result: 12%, 15%, 16.1%, and then if you go all the way down to PAT at 28.6%.

Speaker #2: So the operating margin tends to be slightly higher in the first quarter. That is true in every year. If you look at quarter one, financial year 25 or 26, 27 also at similar levels.

Speaker #1: BGN Nepal registered double-digit value growth. Bolix reported the flattest revenue, as I mentioned, during the quarter due to seasonal factors. However, profitability improved, driven by gross margin expansion. UK operations remained subdued.

Speaker #2: So that's how it is. And it's sustained at those levels. Even though there was a little slippage, as we saw in the gross margin.

Speaker #2: Standalone, we grew at 12.7, PBDIT at 12.6, and PAT at 25.5%. The decorative business line highest growth in the last 12 quarters, with Deco delivering 13.5% value growth, nearly 20% operating profit growth, with margin expansion.

Speaker #1: STP delivered improved profitability, supported by a favorable product mix, calibrated price increases, and gross margin expansion. The BNPA joint venture posted robust growth in revenue and profits.

Speaker #1: Margins moderated slightly, as the full benefit of price increases is yet to offset higher input costs. But there was very strong performance as far as this JV was concerned.

Speaker #2: Exterior emulsions outperformed while Color Plus continued to gain strong traction in the premium interior emulsion segment. Construction chemicals and waterproofing delivered robust volume and value growth.

Speaker #1: Of course, the revenue doesn't get added to, you know, our sales because this is a 49% JV for us, and therefore both Becker and BNPA sales don't get added to our, or you know, it's not included in our consolidated sales.

Speaker #2: Roof pool and seal continued to gain momentum. Wood coatings reported strong double-digit volume growth. Store footprint expanded, taking the total count to 1,900 plus stores as on date.

Speaker #2: With the urban stores alone, around 900 plus, and growing. Tinting machine installations crossed 2,100 plus for the quarter. Because of the price increase, there was a lot more attention there in terms of sales.

Speaker #1: Berger Becker JV maintained its strong performance again. Very robust growth was registered, with healthy revenue growth along with higher operating profits. Growing cash surplus from ₹992 crores to ₹1,198 crores, and now to ₹1,424 crores as of end June, financial year '27.

Speaker #2: Otherwise, we could have done even better, but this is a good number in the first quarter. In Luxal Metallics, this was another range. Which we had introduced recently and is doing very well.

Speaker #1: A large part of it will, of course, be used for the two factories, which will be coming up—one in Panagarh and the other in Odisha near Bhubaneswar.

Speaker #2: These are the stores which we have set up across many markets. The consolidated revenue grew 12% with slight moderation versus standalone performance. Primarily due to the muted revenue growth in wholly owned subsidiaries, Bolix and STP.

Speaker #1: We had a very interesting campaign which we have just introduced, you know, a corporate one which is on Berger JCB Holding. 'Rang Banar' is the campaign which we have launched.

Speaker #1: It has received very positive feedback from the market, and this will be a major focus area and help us in building the Berger brand more strongly in the near future.

Speaker #2: Bolix because primarily it is a weak seasonal quarter, always Jan, Feb, March, which gets consolidated in this period, is a weaker quarter there because of snow etc.

Speaker #1: So this is something which we are very upbeat about, and it's a nice, interesting campaign. For those of you who haven't seen it, you can go to YouTube and see it for yourself. It's a campaign which has so far received good feedback from the marketplace.

Speaker #2: And STP because of the Jamsetpur plant which has now come back to normalcy, but in the first quarter remained a little bit disturbed. So overall, these two had flattest growth and therefore the growth got pulled down a bit, but they are back in action.

Speaker #1: Business outlook for financial year '27: double-digit revenue growth expected to sustain, supported by the full quarter impact of price increases in Q2. So we had delayed—as I said—you know, industrial business line, you know, the price increases were lagging.

Speaker #2: In this quarter, in quarter two, this will be fine. Operating profit increased by 15% on the console level. With consolidated PBDIT margin expanding by 40 basis points.

Speaker #2: PBT and PAT grew by 18.1% and 28.6%, respectively. The joint ventures continued to deliver actually very strong growth in both revenue and profitability. This is the consolidated result: 12%, 15%, 16.1, and then if you go all the way down to PAT at 28.6%.

Speaker #1: That full impact will come in this quarter. Plus, festive demand and distribution expansion should help in expanding sales as well as operating margin.

Speaker #1: From what it was last year, definitely. Operating margins are expected to remain within the guided range, which we have always said is between 15% and 17%.

Speaker #1: This quarter, of course, was beyond 17 in the standalone and just short of 17 in the consolidated. Our expectation is that in Q2, the results will be good, you know, possibly slightly better than Q1.

Speaker #2: BJ and Nepal registered double-digit value growth. Bolix reported flattest revenue, as I mentioned, during the quarter due to seasonal factors. However, profitability improved driven by gross margin expansion.

Speaker #2: UK operations remained subdued. STP delivered improved profitability, supported by favorable product mix. Calibrated price increases and gross margin expansion. BNPA joint venture posted robust growth in revenue and profits.

Speaker #1: Well-progressing monsoon may support rural sentiment. Market competitiveness, however, is expected to stay elevated. Sustained investments in brands, innovation, and retail activation will strengthen the consumer base.

Speaker #2: Margins moderated slightly as the full benefit of price increases is yet to offset higher input costs. But there was very strong performance as far as this JV was concerned.

Speaker #1: Macro environment remains dynamic, with crude oil, currency, and geopolitical developments being closely monitored. And we end with, on every wall, in every heart, Rang Banar.

Speaker #2: Of course, the revenue doesn't get added to, you know, our sales because this is a 49% JV for us, and therefore both Becker and BNPA sales doesn't get added to our or, you know, it's not included in our consolidated sales.

Speaker #1: Thank you. We can go to the questions.

Speaker #2: Thank you, Abhijit sir. We will start with the Q&A session now. Those of you who have questions can raise your hand.

Speaker #2: We will announce your name and unmute your line. The first question is from the line of Agnish. Please go ahead.

Speaker #2: Berger Becker JV maintained its strong performance again a very robust growth does register registering healthy revenue growth along with higher operating profits. Growing cash surplus from 992 to 1198 to now to 1424 crores as of end June financial year 27.

Speaker #3: Yeah, thank you, and congrats on the decent numbers. First question is on the outlook slide. You have said that the monsoon is progressing well and you expect a benefit out of that.

Speaker #3: I wanted to understand that, because this is an El Niño year and currently we are having around a 13% deficit, are you saying that more dry days, as in less rainfall, will lead to more painting opportunities?

Speaker #2: Large part of it will, of course, be used for the two factories which will be coming up, one in Panagar and the other in Orissa near Bhuvaneswar.

Speaker #3: Are you saying that with respect to that, or is it because this time Diwali is delayed, so you'll get enough time before the rain ends? I could not understand, because this time there is a deficit.

Speaker #2: We had a very interesting campaign which we have just introduced, you know, a corporate one which is on Berger जैसे भी हो दिन रंग बना रहे is the campaign which we have launched it has received very positive feedback from the market and this will be a major focus area and help us in building the brand Berger more strongly in the near future.

Speaker #2: No, that's a fair question. You know, I think the first part is where I would like to start, because yes, last year it had rained very heavily.

Speaker #2: From mid-May right up to October, and hence, you know, the painting season also was very short because Diwali was preponed. So both of these factors are relevant here.

Speaker #2: So this is something which we are very upbeat about and it's a nice interesting campaign for those of you who haven't seen it. You can go to YouTube and see it for yourself, but it's a campaign which has received so far good feedback from the marketplace.

Speaker #2: In this case, you know, since it has not rained as heavily and we have been seeing more dry days, the offtake therefore has been much better than last year.

Speaker #2: In terms of exterior paint, you know, which is one of the major segments, along with, you know, some of the other paint categories, because typically if it rains very heavily, it becomes a problem.

Speaker #2: Business outlook for financial year 27: double-digit revenue growth expected to sustain supported by the full quarter impact of price increases in quarter two. So we had delayed, as I said, you know, industrial business line you know the price increases were lagging that full impact will come in in this quarter plus festive demand and distribution expansion should help in expanding sales and as well as operating margin from what it was last year definitely operating margins are expected to remain within the guided range which we have always said that is between 15 and 17%.

Speaker #2: So that's what we mean.

Speaker #3: Understood. Second is the 2,100 tinting machines. So, what will be the annual number? And are you essentially entering areas where you had under-indexation—so, say, South India or Western India? Are the bulk of these machines going there? And a related question: the new player who entered around one and a half years back claimed that their tinting machine is smaller, talks to headquarters live, and is more modern looking, etc.

Speaker #3: How is now your latest tinting machine? When I compare with the new player?

Speaker #2: Right. You know, to answer the first question, you know, our aspiration is to try and touch 10,000 machines. For the year, last year we were very close to that figure.

Speaker #2: This quarter of course was beyond 17 in the standalone and within just short of 17 in the consolidated. Our expectation is that in quarter two the results will be good in you know possibly slightly better than quarter one.

Speaker #2: This year, we expect that we should be able to again touch 10,000 numbers. That's a number which will be equal to or more than the new entrant, even.

Speaker #2: So and most of these machines are getting installed in our under-indexed markets. We have, you know, a list of such indexed under-indexed pin code wise where we would like the machines to be installed.

Speaker #2: Well progressing monsoon may support rural sentiment. Market competitiveness however is expected to stay elevated sustained investments in brands you know and retail activation to strengthen consumer base macro environment remains dynamic with crude oil currency and geopolitical developments being closely monitored.

Speaker #2: So the vast majority of that is getting installed in those places. So, that's how it is as far as the second answer to your question, you know, regarding the size of the machine and all that.

Speaker #2: This has been there for most companies. Almost all companies, you know, I don't think those really mattered too much. The size, of course, you know, makes some difference, you know, in especially in congested city areas.

Speaker #2: And we end with on every wall in every heart रंग बना रहे. Thank you. We can go to the questions.

Speaker #1: This is thank you Abhijit sir. We will start with the Q&A session now. Those of you who have questions can raise your hand now.

Speaker #2: Upcountry, though, it makes almost no difference. But our size is pretty good—maybe a few inches here and there. It won't make too much of a difference anyway.

Speaker #1: We will announce your name and unmute your line. The first question from the line of Agnishwar please go ahead.

Speaker #2: And connectivity is established, you know, so we do get all the information from the machine into our office as well, you know, so that we know which are the products, what are the shades which are getting tinted.

Speaker #3: Yeah thank you and congrats on decent numbers first question is on the outlook slide you have said that the monsoon is progressing well and you expect benefit out of that I wanted to understand that because this is a El Nino year and currently we are having around 13% deficit so are you saying that because of more dry days as in the less rains will lead to more painting opportunity are you saying to that respect or because this time the Diwali is delayed so we'll get enough time before the rain ends I could not understand because this time no that's fair question you know I think the first part is where I would like you know because yes last year it had rained very heavily from mid-May to right up to October and hence you know the painting season also was very short because the Diwali was preponed so both of these factors are relevant here in this case you know since it has not rained as heavily and it has been seeing more dry days so the offtake therefore has been much better than last year in terms of exterior paint you know which is one of the major segments along with you know some of the other paint categories because typically if it rains very heavily it becomes a problem so that's what we mean.

Speaker #2: So, nothing new there as far as technology is concerned.

Speaker #3: And total universal paint shops is around 110,000. How much is the total universe now?

Speaker #2: Agnish, that depends, you know, how you look at paint shops, you know, because if—you know—it depends on the size of the paint shop. You know, it will be much more, actually.

Speaker #2: But those are very small ones which crop up, you know, seasonal ones. If you call them paint shops, they are paint shops, you know, but they also sell hardware, as is the case in many of the upcountry markets.

Speaker #2: They sell a lot of other products along with paint, so the total universe will be higher. But if you look at, you know, those which are meaningful paint shops, maybe 120 or 130 will be the meaningful ones.

Speaker #3: Yes. So, this 10,000 tinting machine is going into that 120, right? In terms of universe.

Speaker #2: Yes, mostly the objective is that. Yes.

Speaker #3: Last quick question: if you could talk about some of the non-paints—other paint companies are aggressively going into waterproofing, tile additives, construction chemicals. Any update on that?

Speaker #2: So we are there. You know, as you know, we have a pretty strong presence in the waterproofing construction chemical, and the growth has been quite robust there.

Speaker #1: Understood. Second is the 2100 tinting machine so what will be the annual number and are you essentially entering areas where you had under indexation so say South India or Western India or bulk of these machines going there and second related question is the new player who entered around one and a half years back they claimed that their tinting machine is small talks to the headquarter live and is more modern looking etc how is now your latest tinting machine when I compare with the new player

Speaker #2: And that will continue. You know, I think we have a fairly good presence. The products are well established now. The quality is good. We are, you know, I think the growth rate that we see is much higher than paint in these categories, and it will continue in that way.

Speaker #3: Even tile additives?

Speaker #2: Tile additives also, yeah, we sell, you know, a decent quantity. Not as much, but, you know, we would like to, you know, probably do more.

Speaker #3: Sure. Thank you. That's all from my side. Thank you.

Speaker #3: Right you know to answer the first question you know our aspiration is to try and touch 10,000 machines for the year last year we were very close to that figure this year we expect that we should be able to again touch 10,000 numbers that's a number which will be equal or more than the new entrant even so and most of these machines are getting installed in our under index markets we have you know a list of such index under index pin code wise where we would like the machines to be installed so the vast majority of that is getting installed in those places so that's how it is as far as the second answer to your question you know of the size of the machine and talking and all that this has been there for most companies almost all companies you know I don't think those really mattered too much the size of course you know makes some difference you know in especially in congested city areas up country though it makes no difference almost but our size is pretty good you know maybe a few inches here and there it won't make too much of a difference anyway and connectivity is established you know from we get do get all the information from the machine into our you know office as well you know so that we know which are the products what are the seats which are getting tinted so nothing new there as far as technology is concerned.

Speaker #2: Right.

Speaker #3: Thank you.

Speaker #1: The next question is from the line of Mahesha. Please go ahead.

Speaker #3: Hi sir, good evening. Thank you for taking my question, and congratulations on a good set of numbers. So firstly, on the demand front, I wanted to just check—the dealers would ideally have stocked up before the price increases that happened over the last couple of months.

Speaker #3: Which eventually should have some impact in July. Can you share how much the volume growth could be for July, or how it is shaping up? And where do you think we will land in terms of the second quarter?

Speaker #3: So that's my first

Speaker #2: Right. You know, so you're right. You know, there has been some amount of stocking up obviously, you know, but the secondary is also have been much better than last year.

Speaker #2: As I said, the rains have been less intense compared to last year, and therefore, secondary sales have moved quite well. July growth was reasonable.

Speaker #2: You know, so we would expect that the second quarter revenue growth might be slightly ahead of first quarter revenue growth. The volume growth will be somewhere around similar levels as well.

Speaker #2: Quarter one slightly below maybe, you know, so we were at eight and a half, maybe it will be seven and a half to eight percent approximately.

Speaker #2: And a price increase which is there of, you know, varying from seven and a half to eight and a half, nine percent.

Speaker #3: Okay. So this quarter the price increase was seven and a half?

Speaker #2: No, this quarter was about 5%.

Speaker #3: Okay.

Speaker #2: And it is going to increase to about, you know, seven and a half to eight percent, possibly.

Speaker #1: And total universal the paint shops is around 110,000 how much is the total universe now.

Speaker #3: Okay. And I thought the price increases were to the tune of closer to 12–13 percent. Was that?

Speaker #3: Agnish that depends you know how you look at paint shops you know because if you know it depends on the size of the paint shop you know it will be much more actually but those are very small ones which crop up you know seasonal ones if you call them paint shops also they are paint shops you know but they sell also hardware as is the case in many of the upcountry markets they sell a lot of other products along with paint so the total universe will be higher but if you look at you know those which are meaningful paint shops maybe 120 130 will be the meaningful ones

Speaker #2: That is the DPL increase, which was taken in stages, you know, so you only got part of the price increase in the first quarter.

Speaker #2: You know, so the net impact for us was that it also depends on the mix that we have, you know. So, on a typical mix, if you look at it, various companies will have different percentage increases, right?

Speaker #2: You know, if you sell certain kinds of products which have a lesser price increase, then you will obviously have an impact which is slightly lesser than some of the other products where the raw material prices would have gone up, and therefore the price increase has also happened to a proportionately much higher extent.

Speaker #1: Yes so this 10,000 tinting machine is going into that 120 right in terms of universe

Speaker #3: Yes mostly the objective is that yes

Speaker #1: Last quick question if you could talk about some of the non-paints other paint companies are aggressively going into waterproofing tile adhesives construction chemicals any update on that.

Speaker #3: Understood. And would you say the pricing growth of seven and a half, eight and a half that you indicated can increase in 3Q, 4Q as the mix changes?

Speaker #3: So we are there you know means as you know you know we have a pretty strong presence in the waterproofing construction chemical and the growth has been quite robust there and that will continue you know I think we have a fairly good presence the products are well established now the quality is good we are you know I think the growth rate that we see is much higher than paint in these categories and it will continue in that way

Speaker #3: Because Q2 will have a lower mix.

Speaker #2: It can or it can go down. It depends on the totally on the mix, as I said, you know. For example, just to give you an example, suppose, you know, in emulsions, the raw material prices had gone up slightly lower whereas in thinners and solvents, you know, it had gone up much more.

Speaker #2: So, the price increases in some of these products might be higher. In some of the other products, it might be lower, right? And therefore, if your mix changes more towards luxury emulsion, the overall impact in terms of revenue growth due to price increase might be lower.

Speaker #1: Even tile adhesives

Speaker #3: Tile adhesives also yeah we sell you know a decent quantity not as much but you know we would like to you know probably do more

Speaker #2: Whereas, you know, if you have a much higher concentration in those types of products where the price increases have been much higher, you might see more of an impact from the price increase.

Speaker #1: So thank you that's all from my side thank you.

Speaker #3: Right.

Speaker #1: Thank you.

Speaker #2: The next question is from the line of Mahesha. Please go ahead.

Speaker #3: Understood, sir. That is clear. So, secondly, I wanted to mention—you did indicate on the margins that it will be better, but when one looks at the margins in Q2 of last year, it had some impact.

Speaker #1: Hi sir. Good evening. Thank you for taking my question and congrats on a good set of numbers. So firstly on demand front wanted to just check the dealer's ideally would have stocked up before the price increases that happened over the last couple of months.

Speaker #3: So, on a normative level, what is the level of margin that one should think about for the second quarter of this year?

Speaker #1: Which eventually should have some impact in July. Can you share how much would be the volume growth for July or how is it shaping up and where do you think we will land in terms of the second quarter so that's my first question.

Speaker #2: Yeah. So, you know, as I said, there will be some improvement. Of course, the bases are in favor slightly because of the, as you said, that, you know, there were impacts there in the second quarter.

Speaker #2: But in spite of that, there will be some impact there. In terms of both advantages, one is the operating leverage, which will be there because the value sales are expected to be at a decent level.

Speaker #3: Right. You know so you're right. You know there has been some amount of stocking up obviously. You know but the secondary is also have been much better than last year as I said the range have been less intense compared to last year and quite well.

Speaker #2: And at the same time, you know, the mix will probably improve because demand has not been as intense. We will have possibly more sale of exterior emulsions.

Speaker #3: July growth was reasonable you know so we would expect that you know the second quarter revenue growth might be slightly ahead of first quarter revenue growth.

Speaker #2: This quarter, compared to what we had last year.

Speaker #3: Understood, understood. Sir, lastly, other expenses seem to be lower. Would you say that this is because of lower ad spends? And could you also comment on Sabu Coatings, if you can just share something?

Speaker #3: The volume growth will be somewhere around similar levels as quarter one slightly below maybe you know so we were at at eight and a half maybe it will be seven and a half to eight percent approximately and a price increase which is there of you know varying from seven and a half to eight and a half nine percent.

Speaker #2: Why Sabu Coatings? Anyway, first question is, you know, as far as other expenses are concerned, there has been no cut in the ad spends as such.

Speaker #1: Okay so this quarter the price increase was seven and a half.

Speaker #2: It hasn't gone up substantially, but there has been no cut. However, we have achieved certain savings in some areas, which we are working hard on.

Speaker #3: No this quarter was about five percent.

Speaker #1: Okay.

Speaker #3: And it is going to increase to about you know eight seven and a half to eight percent possible.

Speaker #1: Okay. And I thought the price increases were to the tune of closer to 12 13 percent. What was that.

Speaker #2: And that's something which will continue possibly going forward as well, you know. So, some areas of savings in the operational expenses that we have.

Speaker #3: That is the DPL increase which was taken in stages you know so you you what only part of the price increase in the first quarter.

Speaker #3: Understood. Understood. Got it, sir. Okay. Thank you, and wishing you all the very best.

Speaker #2: Thank you.

Speaker #1: Yeah.

Speaker #3: You know so the impact net impact for us was that it is also depends on the mix that we have you know so on a typical mix if you look at it you know various companies will have different percentage increases right you know if you sell certain kinds of products which have lesser price increase then you will have obviously an impact which is slightly lesser than some of the other products where the raw material prices would have gone up and therefore the price increase has also happened to proportionately much higher.

Speaker #3: Thank you. The next question is from the line of Farsi Panthake. Please go ahead.

Speaker #2: Hi. Am I audible? Yes. Yeah. Sir, I just wanted to understand the mix effect this quarter. Like, Asian Paints said that the mix for them is positive 3%.

Speaker #2: Which was, like, after many, many quarters, they have seen a positive mix effect. So, how much is our mix effect this quarter? Yeah. Because, you know, fortunately, one part of it is, of course, the price increases, you know.

Speaker #1: Understood. And would you say the the pricing growth of seven and a half eight and a half that you indicated can increase in the 3Q 4Q as the mix changes.

Speaker #1: Because 2Q will have lower mix.

Speaker #2: This has resulted in some amount of stocking up of, you know, good products which are more profitable, I would say.

Speaker #3: It can or it can go down. It depends on the totally on the mix as I said you know for example just to give you an example suppose you know in emulsions the raw material prices had gone up slightly lower whereas in thinners and solvents you know it had gone up much more so the price increases in some of these products might be higher in some of the other products it might be lower right and therefore if your mix changes more towards luxury emulsion the overall impact in terms of you know revenue growth due to price increase might be lower whereas you know if you have a much higher concentration in those type of products where the price increases have been much higher you might see a more impact of the price increase.

Speaker #2: The second is that, you know, overall, if you look at it, the mix has improved, you know, for the first quarter and is likely to improve even in the second quarter as well.

Speaker #3: Okay, so would it be in the similar region of 2–3% positive?

Speaker #2: Similar. I haven't read exactly what percentage it is, but it should be close to that—slightly.

Speaker #3: Fair enough. So if I, if I split up your overall 13 and a half percent deco growth, you said eight and a half percent is volume, right?

Speaker #1: Understood. Understood. That is clear sir. So secondly I wanted to you did indicate on the margins that it will be better but when when looks at the margins in 2Q of last year it had some impact so on a normative level what is the level of margin that one should think about for the second quarter for this year.

Speaker #2: Right.

Speaker #3: Then, let's say another 2.5% would be price. So that would bring it to 11. So that...

Speaker #2: Price is almost.

Speaker #3: Sorry, mix. Mix would be two and a half percent. So that would bring it to 11. So that means that the pure pricing impact is only two and a half percent.

Speaker #2: No, no, no, no, no. It is 8.4 percent volume growth. The total 5 percent is the price increase impact. The mix change is included.

Speaker #3: Yeah so you know as I said there will be some improvement of course the bases are in favor slightly because of the as you said that you know there were impacts there in the second quarter but in spite of that there will be some impact there in terms of both two advantages one is the operating leverage which will be there because the value sales is expected to be at a decent level and at the same time you know the mix will probably improve because the range have not been as intense and so we will have possibly more sale of exterior emulsions this quarter than what we had last year.

Speaker #2: In that, you know, overall volume growth, if you look at it, you know, possibly in normal circumstances, if you had gone and seen last year, it would have been much higher in terms of volume growth. Value growth was coming out lower, right?

Speaker #3: So that eight and a half percent includes mix effect. Because that eight and a half percent I thought is just the pure tonnage growth that we are recording.

Speaker #2: Pure tonnage growth, that's right. And in the price increase, that includes the mix change also, of about 5 percent, which has happened so far.

Speaker #3: Correct. So therefore, if that five percent is, let's say, a two to three percent mix, then the pure pricing change is only two to three percent, right?

Speaker #1: Understood. Understood. Sir lastly the other expenses seems to be lower would you say that this is lower because of lower ad spends and some comment on sabu coatings if you can just share.

Speaker #2: Mix doesn't improve by 2% to 3%. You know, I don't know what Asian Paints has told you. Normally, our mix change is about 0.4% to 0.5%.

Speaker #2: The improvement in mix.

Speaker #3: Why sabu coatings? Anyway first first question is you know as far as other expenses are concerned there has been no cut in the ad spends as such it hasn't gone up substantially but there has been no cut but we have saved certain savings have been there in some areas which we are working hard on and and that's something which will continue possibly going forward as well you know so some areas of savings in the operational expenses that we have understood.

Speaker #3: Okay, got it. Now, this 5% which has happened this quarter is because it is time-weighted, right?

Speaker #2: That is right. Yes, please.

Speaker #3: If I look at Q2.

Speaker #2: More of it is because the industrial business lines, where it is time-weighted, you know, more in because we got it more towards the end of the quarter.

Speaker #3: Okay, okay. But what do we expect this number—the pricing effect—to be in Q2, because it will be there for 100 percent of the quarter?

Speaker #3: So, will it be a double-digit number?

Speaker #2: No, it will, that's what I was saying. Around seven and a half to eight and a half percent probably seven and a half to eight point five depending on the mix that we have.

Speaker #1: Got it sir. Okay thank you and wishing you all the way best.

Speaker #3: Thank you.

Speaker #1: Thank you. The next question is from the lineup. Please go ahead.

Speaker #3: Okay. So sir, why is this so different? Because when we talk to dealers in three tranches, the actual price increase has been to the extent of 12 to 13 percent.

Speaker #3: Hi. Am I audible? Yes. Yeah. Sir I just wanted to understand the mix effect this quarter like Asian Paints said that the mix for them is positive three percent which was like after many many quarters they have seen a positive mix effect so how much is our mix effect this quarter.

Speaker #2: That's, that if you, take a straight, you know, product by product without any weightages to any product, that may be true, right? You know, but for different companies, different products have got different price increases.

Speaker #2: For example, in a luxury product category, we have had an increase of 6–6%. In the case of enamel, it might be 12%.

Speaker #2: In the case of some other product, it might be only three percent. In some other product, it might be 14 percent. So it depends on the mix that you are selling.

Speaker #3: Yeah because you know fortunately one part of it is of course you know of the price increases you know which which has been taken which has resulted in some amount of stocking up of you know good products which are more profitable I would say the second is that you know overall if you look at it the mix has improved you know for the first quarter and is likely to improve even in the second quarter as well okay so would it be in similar region of two to three percent positive similar you know I I haven't measured exactly what percentage it is but it is it should be close to that slightly fair enough so if I if I split up your overall 13 and a half percent deco growth you said eight and a half percent is volume right right then let's say another two and a half percent would be price so that would bring it to 11 so that price is almost sorry mix mix would be two and a half percent so that would bring it to 11 so that means that the pure pricing impact is only two and a half percent no no no no no it is eight point four percent is the volume growth five percent is the price increase impact the mix change is included in that you know overall volume growth if you look at it you know possibly normal circumstances if you had gone seen last year it would have been much higher in terms of volume growth value growth was coming out lower right this so that eight and a half percent includes mix effect is it because that eight and a half percent I thought is just the pure tonnage growth that we are reporting pure tonnage growth that's right and in the in the price increase that includes the mix change also of about five percentage which has happened so far correct so therefore if that five percent is let's say two to three percent mix then the pure pricing change is only two to three percent right mix doesn't improve by two percent to three percent you know I don't know what Asian Paints has told you or normally the mix changes is about point four to point five percent the improvement in mix okay got it now this five percent which has happened this quarter is because it is time weighted right if if I look at Q2 more of it is because of the industrial business lines where it is a time weighted you know more in because we got it more towards the end of the quarter okay okay but what do we expect this number to be the pricing effect to be in Q2 because it will be there for 100 percent of the quarter so will it be like a double digit number no it will that's what I was saying around seven and a half to eight and a half percent probably seven and a half to eight point five depending on the mix that we have okay so sir why is this so different because when we talk to dealers in three tranches the actual price increase has been to the extent of 12 to 13 percent that that if you take a straight you know product by product without any weightages to any product that may be true right you know but for different companies different products have got different price increases for example in a luxury product category we have had an increase of six percent in the case of enamel it might be twelve percent in the case of some other product it might be only three percent it in some other product it might be fourteen percent so it depends on the mix that you are selling so it is very difficult to tell exactly pinpoint that this is the mix percent and therefore this will be the percentage because every quarter depending on the seasonality product mix changes and therefore the impact of this revenue increase will be different understood very very clear sir just one last question so just wanted to understand I mean if any insight as to why our decorative growth this quarter is a little lower than what the industry leader has posted despite the tinting machine additions etc that's true you know so the explanation is simple because the base effect kicks in you know the industry leader had degrown you know in last year we had grown and therefore there was a 300 3.6 percent differential in terms of the you know value growth in the base itself and at the same time in the profit there was a 8.6 percent differential between industrial lever and us because they had degrown last year and you know therefore the base impact was there so that's the reason primarily very clear very clear and lastly sir on margins you mentioned Q2 margins can be better than Q1 assuming that crude sort of fluctuates in the mid 80s would you say that Q3 and Q4 margins would also be similar to what we see in Q2 so you know it all depends it's very difficult to say what margins will be it depends on Mr. Trump than anyone else because the wrong material prices you know keeps shifting up and down so but as far as we can say I can say with you know a degree of certainty as far as Q2 is concerned that the Q2 operating profit will be decent the growth will be good and you know we can expect a good top line and you know operating profit growth in Q2 okay sir okay that's all from me thanks and all the best thank you the next question is from the line of Avi Mehta please go ahead yeah hi sir this is Avi here from a query sir I just wanted to you know conceptually understand see for fourth quarter also on the secondary basis we saw high single digit volume now we also seen high single digit volume and what you're suggesting and if correct me if I'm wrong you said seven and a half to eight is what you could possibly do even in two q what I'm trying to appreciate is for the year as we see and as we go into the second half would it be fair that despite this high single digit pricing that is kind of flowing through we are able to maintain for the year also a high single digit volume growth or can it just and or is because pricing has or or will pricing have some do you see a risk on that volume growth so just wanted to get your thoughts on how should we look at volume impact because of pricing understood you know so I think we should be able to maintain that we have as we said you know we are taking many initiatives from our side as well to grow the volumes one is of course the expansion in network itself the second is the branding campaign which you know we hope that it will have also some energetic effect on the ground as well you know for the team as well as the consumers as well so overall you know some new product introductions a combination of all of these factors should help us to maintain the volumes you know that we are talking about and that's the objective you know along with their you know there is this price increase which should get absorbed therefore and we don't see a downside risk there in terms of volume growth got it sir very clear and sir secondly on this margin front now my my understanding is that we saw flattish margin YOY in one Q we are arguing for it should kind of expand you know we obviously don't know where crude is crude is volatile but assuming this current scenario continues would it be fair to argue that operating margin profile expansion is what we should be able to drive for the full year is that what it implies and is that reading accurate yes if it holds true at these prices the raw material and if the prices don't get dropped you know subsequently then you know in terms of selling price drops then of course yes you know the operating margin possibly will expand as that is why I am saying there are too many ifs and buts but in the second quarter I expect that the operating margin will grow at a decent pace so okay so what you're saying is contrary to what has been pricing inflationary scenarios actually helped because the impact on volumes has been limited is that correct reading sir is that so far it looks like that it has been absorbed that the volume growth has been more or less intact and yet you know the entire pricing price increase has been absorbed and you know therefore the value growth is coming at a decent level in double digits got it sir and last sir just a bit of understanding on bollocks which is a reasonable kind of share from an international business sir just wanted to understand you know what there has been you know for the last some quarters growth has been a little volatile because of factors what is the you know concern or is there a concern there is it just macro or something has to be changed any thoughts about this sir if you could share no concern as such you know as you know those parts of the world are not growing really fantastically well or something you know they're very moderate very muted growth rates there overall in the economy itself but we we are doing reasonably well you know we have product line which is slightly different which we which we see as a possible profit enhancer for us you know a certain line certain kinds of products specifically the bollicks panels there are certain panels which one of them which we are going to introduce in India as well those are you know doing well and is quite profitable so what you see currently is one is the economy itself which is why you know slightly on the slower side and the UK operations you know which have been there where we are taking some corrective measures which we took you know where less profitable businesses we have reduced so the top line is not growing but the bottom line is fairly growing got it sir but geography expansion now is no longer the principal at least from a Europe perspective because at some point of time you were considering that as well the focus now is essentially getting profitability on track is that a right that's right thank you very much sir

Speaker #2: So it's very difficult to pinpoint exactly that this is the mix percent and therefore this will be the percentage, because every quarter, depending on the seasonality, the product mix changes, and therefore the impact of this revenue increase will be different.

Speaker #3: Understood. Very, very clear, sir. Just one last question. I just wanted to understand if you have any insight as to why our decorative growth this quarter is a little lower than what the industry leader has posted.

Speaker #2: Yeah.

Speaker #3: Despite the tinting machine additions, etc.

Speaker #2: That's true. You know, so the explanation is simple because the base effect kicks in. You know, the industry leader had de-grown, you know, last year.

Speaker #2: We had grown, and therefore, there was a 300 basis points, or 3.6 percent, differential in terms of the, you know, value growth in the base itself. And at the same time, in the profit, there was an 8.6 percent differential between the industry leader and us.

Speaker #2: Because they had degrown last year and, you know, therefore the base impact was there. So that's the reason, primarily.

Speaker #3: Very clear, very clear. And lastly, sir, on margins—you mentioned Q2 margins can be better than Q1. Assuming that crude sort of fluctuates in the mid-80s, would you say that Q3 and Q4 margins would also be similar to what we see in Q2?

Speaker #2: So, you know, it all depends. It's very difficult to say what margins will be. It depends on Mr. Trump more than anyone else, because the raw material prices, you know, keep shifting up and down.

Speaker #2: So, as far as we can say, I can say with a degree of certainty, as far as Q2 is concerned, that the Q2 operating profit will be decent.

Speaker #2: The growth will be good, and, you know, we can expect a good top line and, you know, operating profit growth in Q2.

Speaker #3: Okay, sir. Okay, that's all from me. Thanks, and all the best.

Speaker #2: Thanks for listening.

Speaker #3: Thank you. The next question is from the line of Avi Mehta. Please go ahead.

Speaker #4: Yeah. Hi, sir. This is Avi here from Akureyri. Sir, I just wanted to, you know, conceptually understand. See, for the fourth quarter also, on a secondary basis, we saw high single-digit volume.

Speaker #4: Now, we have also seen high single-digit volume. And what you're suggesting, if I understand correctly, you said seven and a half to eight is what you could possibly do even in Q2.

Speaker #4: What I'm trying to appreciate is, for the year as we see and as we go into the second half, would it be fair that despite this high single-digit pricing that is kind of flowing through, we are able to maintain for the year also a high single-digit volume growth?

Speaker #4: Or can it just, and — or is it because pricing has — or will pricing have some— do you see a risk on that volume growth? So just wanted to get your thoughts on how should we look at volume impact because of pricing.

Speaker #2: Understood. You know, so I think we should be able to maintain that. We have, as we said, you know, we are taking many initiatives from our side as well to grow the volumes.

Speaker #2: One is of course the expansion in network itself. The second is the branding campaign which, you know, we hope that it will have also some energetic effect on the ground as well, you know, for the team as well as the consumers as well.

Speaker #2: So overall, you know, some new product introductions, a combination of all of these factors, should help us to maintain the volumes, you know, that we are talking about.

Speaker #2: And that's the objective. You know, along with that, there is this price increase, which should get absorbed, therefore, and we don't see a downside risk there in terms of volume growth.

Speaker #4: Got it, sir. Very clear. And sir, secondly, on this margin front, now my, my understanding is that we saw flattish margin YOY in one Q.

Speaker #4: It should kind of expand. You know, we obviously don't know where crude is—crude is volatile—but assuming this current scenario continues, would it be fair to argue that operating margin profile expansion is what we should be able to drive for the full year?

Speaker #4: Is that what it implies? And is the way we are arguing for reading accurate?

Speaker #2: Yes. If it holds true at these prices for the raw material, and if the prices don't drop, you know, subsequently—meaning in terms of selling price drops—then, of course, yes, you know, the operating margin possibly will expand.

Speaker #2: That is why I'm saying there are too many ifs and buts. But in the second quarter, I expect that the operating margin will grow at a decent pace.

Speaker #4: So, okay. So what you're saying is contrary to what has been pricing inflationary scenarios actually helped because the impact on volumes has been limited.

Speaker #4: Is that the correct reading, sir? Is that how I should see it?

Speaker #2: So far it looks like that it has been absorbed that the volume growth has been more or less intact. And yet, you know, the entire pricing price increase has been absorbed and, you know, therefore the value growth is coming.

Speaker #2: At a decent level, in double digits.

Speaker #4: Got it, sir. And last, sir, just a bit of understanding on BOLIX, which is a reasonable kind of share from an international business. Sir, just wanted to understand, you know, what there has been for the last some quarters growth has been a little volatile because of factors.

Speaker #4: What is the, you know, concern, or is there a concern there? Is it just macro, or does something have to be changed? Any thoughts about this, sir, if you could share?

Speaker #2: There is no concern as such. You know, as you know, those parts of the world are not growing really fantastically well or something, you know, very moderate very muted growth rates there overall in the economy itself.

Speaker #2: But we, we are doing reasonably well, you know, we have product line which different which we which we see as a possible profit enhancer for us, you know, certain lines, certain kinds of products.

Speaker #2: Specifically the BOLIX panels that certain panels which one of them which we are going to introduce in India as well. Those are, you know, doing well and is quite profitable.

Speaker #2: So what you see currently is one is the economy itself, which is why, you know, slightly on the slower side. And the UK operations, you know, which have been is slightly there, where we are taking some corrective measures which we took, you know, where less profitable businesses we have reduced so the top line is not growing but the bottom line is fairly growing.

Speaker #4: Got it, sir. But geography expansion now is no longer the principal at least from a Europe perspective because at some point of time you were considering that as well.

Speaker #4: The focus now is essentially getting profitability on track. Is that a right?

Speaker #2: Correct.

Speaker #4: Thank you very much, sir. That's all from my side. Thank you, sir.

Speaker #3: Just a reminder for management to be able to answer most questions. Request participants to limit the number of questions to two. The next question.

Speaker #3: The next question is on the line of. Please go ahead.

Speaker #4: Hello. Hi. Yeah. Thank you for taking my questions. This is Pratik Gothi from HSBC. I have one question, please. Excuse me.

Speaker #2: Yeah, go ahead.

Speaker #4: So on, on dealer inventories, you mentioned that there could be some dealer destocking in Q2. And Q2 is typically a seasonally weak quarter. I understand year on year the, the, the backdrop is better because of longer monsoons.

Speaker #4: But can you please elaborate on why on Q as well you will see better mix and better margins?

Speaker #2: See, you are right that, you know, there was some amount of stock up which has happened and typically that should have put a little bit lesser in July August September.

Speaker #2: But as I said, you know, much of it is also that the sellouts will be far better this year. We saw in July also that the sellout was much better than last year.

Speaker #2: And we expect that the August also should be on similar lines. Keeping these factors in mind that, you know, last year was a, you know, quite a prolonged rainfall had depressed the sales.

Speaker #2: This time that will be more than made up. Whatever little upstocking has happened, will be overcome by the extra sellout which happens in the marketplace.

Speaker #2: It's far healthier this year. Compared to last year.

Speaker #4: Understood. Thank you.

Speaker #3: The next question is from the line of Aniruddha Joshi. Please go ahead.

Speaker #4: Yeah. Thanks for the opportunity. The two questions, generally you speak about market shares so if you can indicate how the market shares would have been in Q1, especially in eastern part of India.

Speaker #4: That is question one. And if you can elaborate a bit more on the market shares at top end of the market, as well as bottom end of the market, waterproofing whatever details you can share because I guess the mix is changing for most of the companies.

Speaker #4: So that will be better. Yeah. Yeah. Sorry, sir. Please.

Speaker #2: So, you know, detailing in whether in East or UP, you know, in the premium or luxury, what we have done—the figures are not available.

Speaker #2: So it's difficult to tell about the market share and whatever I say will be conjecture. But based on figures which are available today, you know, and which is what we when we talk about market share, we talk with figures.

Speaker #2: You know, there we would have gained market share in quarter one, once again. It will like, it will sound strange that, you know, the leader has actually grown faster and we haven't, you know, grown as much.

Speaker #2: But our, we will gain market share actually a little bit because our proportion of base of the first quarter is always much higher. So if you do mathematics, you will find that in quarter one, we would have gained a little bit of market share.

Speaker #2: And there will be other players who will declare AXO is coming in next in, you know, Kansai has already declared. So there is a little bit of a gain in market share for us in the first quarter.

Speaker #4: Okay, sure. That's great to hear. My second question is, we keep hearing that there is a possibility of price cuts post-Diwali, and a lot of dealers, etc., seem prepared for that.

Speaker #1: It's all from my side . Thank you

Speaker #2: Just a reminder for management to be able to answer most questions . Request participants to limit the number of questions to two and the next question the next question is from the line of Prateek .

Speaker #4: So, is that a possibility considering the revival or increase in crude prices again? And do we see a big, in a way, reduction in trade inventory if the price cuts happen at that time?

Speaker #2: Please go ahead .

Speaker #1: Hello Yes . Hi . Thank you for taking my questions . This is Pratik Kothari from HSBC I have one question . Please excuse me Yeah .

Speaker #2: So it all depends on the raw material prices as you rightly said just now. The prices that climbed back again a little bit you know so every time it goes down you know there is some statement from Mr. Trump saying that you know he won't bomb and the price is correct right and and then the raw material prices also move downwards a little bit.

Speaker #1: Go ahead So on on dealer inventories , you mentioned that there could be some dealer destocking in Q2 . And Q2 is typically a seasonally weak quarter .

Speaker #1: I understand . Year on year , the the the backdrop is better because of longer monsoons . But can you please elaborate on why Q on Q as well ?

Speaker #2: But again he starts bombing and again the whole thing gets confused and then the prices go up again. So you know it's very volatile and very difficult to comment at this stage depending on what the where the raw material prices if they do go down substantially and there is peace and finally there then of course you know one can look at that price cut you know going into the second half because then the margins would have gone up substantially and it won't make sense to then then there will be again discounting and price wars which is not desirable.

Speaker #1: You will see better mix and better margins

Speaker #2: So you are right that , you know , there was some amount of stock up which has happened . And typically that should have put a little bit pressure in July , August , September .

Speaker #2: But as I said , you know , much of it is also that the sellouts will be far better this year , which we saw in July .

Speaker #2: Also , the sellout was much better than last year And we expect that the August also should be on similar lines , keeping these factors in mind that you know , last year was a you know , quite a prolonged rainfall at depressed .

Speaker #2: So therefore there might be some sort of a drop in prices at that point of time. But as of now very very difficult to say and I don't think anyone should comment at this stage what will.

Speaker #2: The sales This time that will be more than made up . Whatever little up stocking has happened overcome by the extra sellout , which happens in the marketplace is far healthier this year compared to last year

Speaker #1: Understood . Thank you

Speaker #2: Thank you . The next question is from the line of Anirudh Joshi . Please go ahead

Speaker #3: Yeah . Thanks for the opportunity The two questions , generally you speak about market shares . So if you can indicate how the market shares would have been in Q1 , especially in eastern part of India , that is question one .

Speaker #3: And if you can elaborate a bit more on the market shares at top end of the market , as well as bottom end of the market waterproofing , what are your details ?

Speaker #3: You can share ? Because I guess the mix is changing for most of the companies . So that will be better . Yeah .

Speaker #3: Yeah . Sorry , sir

Speaker #2: So you know The detailing in weather in east or you know , in the premium luxury what we have done , the figures are not available .

Speaker #2: So it's difficult to tell about the markets . And whatever I say will be conjecture . But based on figures which are available today , you know , and which is what we when we talk about market share , we talk with figures .

Speaker #2: You know , there we would have gained market share in quarter one . Once again . It will it will sound strange that , you know , the leader has actually grown faster and we haven't , you know , grown as much .

Speaker #2: But we will gain market share actually a little bit because our proportion of base of the first quarter is always much higher . So if you do mathematics , you will find that in quarter one we would have gained a little bit of market share .

Speaker #2: And there will be other players who will declare is coming in next . And you no cancer has already declared . So there is a little bit of a gain in market share for us in the first quarter

Speaker #3: Okay . Sure . So . That's great to hear . And second question , we keep hearing that there is a possibility of price cuts post Diwali a lot of dealers etc.

Speaker #3: seem prepared for that . So is that a possibility considering the a revival or a increase in crude prices ? Again . And do we see a big in a way , reduction in trade inventory at .

Speaker #3: If the price cuts happen at that time .

Speaker #2: So it all depends on the raw material prices , as you rightly said just now , the prices have climbed back again , and it will be , you know , so every time it goes down , you know , there is some statement from Mr. Trump saying that , you know , he won't bomb .

Speaker #2: And the price is correct . Right . And and then the raw material prices also move downwards a little bit . But again , it starts bombing .

Speaker #2: And again , the whole thing gets confused . And then the prices go up again . So you know , it's very volatile .

Speaker #2: And very difficult to comment at this stage depending on what the where the raw material prices , if they do go down substantially and there is peace and finally there , then of course , you know , one can look at that price cut , you know , going into the second half because then the margins would have gone up substantially .

Speaker #2: And it won't make sense to then then there will be again , discounting and price wars , which is not desirable . So therefore , there might be some sort of a drop in prices at that point of time .

Speaker #2: But as of now , very , very difficult to say . And I don't think anyone should comment at this stage what will happen in the second half is too far off .

Speaker #3: Okay , sir . Last question from my side . Now backward integration . Most of the players seem to be doing Asian has already announced even concise doing some backward integration as far as regions are concerned .

Speaker #3: So will that be the next in a way important factor to look at profitability as most of the players get into backward integration .

Speaker #3: And what will be Birger strategy to and investments towards backward integration ? Yeah , that's it from my side . Many thanks .

Speaker #2: Thanks . And yes , you know , backward integration wherever possible and feasible and which makes economic sense for us . We definitely look at those , you know , like for example , in emulsions , the entire emulsions are made , you know , by us in our factories Similarly , most of the resins are made by us .

Speaker #2: There were some which were imported . Those were also now being made mostly by us like that . There are other products like thickeners , etc.

Speaker #2: , which we have started producing in our own factory recently . We had a tie up with Dow for one of the emulsions , which we were buying from them , and now we are going to manufacture the same in our unit in , in , in Lucknow .

Speaker #2: So like that , you know , there is always a look out for improving the profitability and efficiency and reducing the cost wherever it is feasible .

Speaker #2: And possible . And that is what we keep doing every time

Speaker #3: So many thanks .

Speaker #2: Thank you , thank you .

Speaker #3: The next question is from the line of Anurag Dayal . Please go ahead

Speaker #4: Yes . Hi . Thank you for the opportunity . I want quick clarification . First , that EBITDA margin , we are talking about , you know , likely to be better in second quarter .

Speaker #4: So it is sequential . We're expecting it to improve or why you why basis .

Speaker #2: No , no , not sequentially . Obviously . You know because second quarter the value sales will be on the lesser side . So the operating margins are typically on the lower side .

Speaker #2: Yes . So it is year on year that I am talking about .

Speaker #4: Yeah . Sure . Sure . That makes sense . A second on the you know , I just wanted to understand the regional demand trends you could share something because rainfall has also been uneven .

Speaker #4: You know , at different places . Is there a geographical variance ? We have observed in demand ? Particularly related to East India , where , you know , there's a competition plus there is an opportunity with the new government in .

Speaker #4: Have you started seeing , you know , some growth there ? Another link to this regional demand trend is the markets where we are under index , especially in the South market , where we are now growing aggressively .

Speaker #4: How substantial this business has become for us , and is it mostly the project business or we are getting , you know , retail demand as well ?

Speaker #4: So the three parts of the demand , right .

Speaker #2: So to answer the third question first , it mostly retail and project is similar . Project is slightly higher , not substantially higher one 2% higher than the retail growth rate .

Speaker #2: So it essentially much more of retail and also some project growth , which is coming . Second question in answer is , you know that overall , you know , the growth rate has been higher , possibly in the south and the north to some extent .

Speaker #1: Ninja brand is concerned; though they have raised their prices in dealer price list as in now equated to the industry at large, but the rebatting to some of the bigger dealers has gone up, and at the same time you know the 10%.

Abhijit Roy: This time it was at 39.3. It could have been higher, largely due to the industrial business lines, as we said. The increases were more towards the end of the quarter, not full increases have been received there. Some of it is happening in July, some will happen furthermore in August. It is always a little bit delayed in the industrial segment, which is why the gross margin is at that level. Operating profit margin, however, was a strong 17.4%. In that range, which we have always indicated of 15% to 17%. Typically, in a Q1, it goes higher because of the higher value sales, the operating margin tends to be slightly higher in the first quarter. That is true in every year. If you look at Q1 financial year 2025 or 2026, 2027 also at similar levels. That is how it is.

Abhijit Roy: This time it was at 39.3. It could have been higher, largely due to the industrial business lines, as we said. The increases were more towards the end of the quarter, not full increases have been received there. Some of it is happening in July, some will happen furthermore in August. It is always a little bit delayed in the industrial segment, which is why the gross margin is at that level. Operating profit margin, however, was a strong 17.4%. In that range, which we have always indicated of 15% to 17%. Typically, in a Q1, it goes higher because of the higher value sales, the operating margin tends to be slightly higher in the first quarter. That is true in every year. If you look at Q1 financial year 2025 or 2026, 2027 also at similar levels. That is how it is.

Speaker #2: West East has actually been a little bit muted . Northeast has been , as you know , floods . And , you know , a lot of issues there in Assam is in very bad shape .

Speaker #2: So it has been impacted to , to a large extent , there . We are a very strong player in northeast . You are clear leader in that market in northeast , and therefore , you know , it has impacted to some extent our sales there as far as West Bengal is concerned , there is a change in government .

Speaker #2: Things should become positive . But as of now , in transition period , it is always a little bit of confusion . The decision making has to happen .

Uh, and at the same time, you know, the 10% free material continues, uh, in most of the packs, other than the economic category of the lower end of the spectrum. So, uh, it remains intense and, uh, it means challenging in terms of the, uh,

Speaker #2: The government contracts has to start restart , you know , sort of , you know , so it takes some time . Three , four months of settling in time , typically before things start looking up .

Intensity of competition—except for the fact that, as I said, they have now, you know, there was a 5% gap between the dealer price list itself between them and us, and that has been neutralized. So the prices have gone up to that extent.

Speaker #2: So as of now , nothing , you know , substantial has happened . But we expect the market to grow faster . There .

Even in the case of printers, also, it does extraordinarily—my levels, which were there, have now been normalized.

Speaker #4: Okay . Very clear sir . And just one quick thing . See , earlier we used you used to share that volume growth breakup between , you know , pure decorative trends in terms of emulsions and etc.

To a level where, you know, it is quite comfortable for everyone. So, overall, therefore, the intent...

Abhijit Roy: It sustained at those levels, even though there was a little slippage as we saw in the gross margin. Standalone, we grew at 12.7, PBDIT at 12.6, and PAT at 25.5%. The decorative business line, highest growth in the last 12 quarters, with Deco delivering 13.5% value growth, nearly 20% operating profit growth with margin expansion. Exterior emulsions outperformed while Colour Plus continued to gain strong traction in the premium interior emulsion segment. Construction chemicals and waterproofing delivered robust volume and value growth. Roof Cool and Seal continued to gain momentum. Wood coatings reported strong double-digit volume growth. Store footprint expanded, taking the total count to 1,900 plus stores as on date, with the urban stores alone around 900 plus and growing. Printing machine installations crossed 2,100 plus for the quarter. Because of the price increase, there was a lot more attention there in terms of sales.

Abhijit Roy: It sustained at those levels, even though there was a little slippage as we saw in the gross margin. Standalone, we grew at 12.7, PBDIT at 12.6, and PAT at 25.5%. The decorative business line, highest growth in the last 12 quarters, with Deco delivering 13.5% value growth, nearly 20% operating profit growth with margin expansion. Exterior emulsions outperformed while Colour Plus continued to gain strong traction in the premium interior emulsion segment. Construction chemicals and waterproofing delivered robust volume and value growth. Roof Cool and Seal continued to gain momentum. Wood coatings reported strong double-digit volume growth. Store footprint expanded, taking the total count to 1,900 plus stores as on date, with the urban stores alone around 900 plus and growing. Printing machine installations crossed 2,100 plus for the quarter. Because of the price increase, there was a lot more attention there in terms of sales.

Speaker #4: versus the construction chemicals and the waterproofing segment , you know , so is there any , you know , breakup at this 8.4 or 8.5% growth , which has come the more contribution is still coming from the pure decorative or it's more from the construction chemicals and how large it has become as a share of , you know , decorative .

Okay. Thanks, 1 1, last question. Uh,

you know, if if you think about industry growth in the last 2 years we've had

You know, volume growth was middling, and then obviously, in the last two to three quarters, you've seen a sharp uptick.

Speaker #2: Yeah . So , you know , as far as paint is concerned for almost every company now , you know , the construction chemical because on a lower base , it will possibly register higher growth rate .

Speaker #2: Right ? You know , the , as far as the , you know , percentage is concerned , it is in now 10 to 12% level varies from month to month , quarter to quarter , but somewhere around that level of 1212 , what percentage and growing at a slightly higher pace or I would say significantly higher , you know , rate than the paint growth rate .

And even if you discount for us, that some of it could be dealer, inventory, build up on, on this demand recovery continuing because, you know, prices have gone up and generally 1 would assume that discretionary spends, uh, would come under pressure. So, I'm just trying to understand where this sort of recovery in demand, in in paints is coming through from thanks.

Yeah. So, you know, overall actually uh, earlier also the volume

There. But, you know, in those days, there were a price decrease which had happened and therefore the value growth used to be much lower.

Speaker #2: That's how it is

Speaker #4: Very clear . So thank you so much

Now, the situation has reversed. So you, you see a volume growth and there is a

Speaker #3: Just a reminder for the management to be able to answer most questions , request participants to limit the number of questions to two .

Abhijit Roy: Otherwise, we could have done even better. This is a good number in the first quarter. In Luxol Metallics, this was another range which we had introduced recently and is doing very well. These are the stores which we have set up across many markets. The consolidated revenue grew 12% with slight moderation versus standalone performance, primarily due to the muted revenue growth in wholly owned subsidiaries, Bolix and STP. Bolix because primarily it is a weak seasonal quarter. Always January, February, March, which gets consolidated, in this period is a weaker quarter there because of snow, et cetera. STP because of the Jamshedpur plant, which has now come back to normalcy. In the first quarter remained a little bit disturbed. Overall, these two had flattish growth and therefore the growth got pulled down a bit. They are back in action in this quarter.

Abhijit Roy: Otherwise, we could have done even better. This is a good number in the first quarter. In Luxol Metallics, this was another range which we had introduced recently and is doing very well. These are the stores which we have set up across many markets. The consolidated revenue grew 12% with slight moderation versus standalone performance, primarily due to the muted revenue growth in wholly owned subsidiaries, Bolix and STP. Bolix because primarily it is a weak seasonal quarter. Always January, February, March, which gets consolidated, in this period is a weaker quarter there because of snow, et cetera. STP because of the Jamshedpur plant, which has now come back to normalcy. In the first quarter remained a little bit disturbed. Overall, these two had flattish growth and therefore the growth got pulled down a bit. They are back in action in this quarter.

Speaker #3: The next question is the next question from the line of Tucker . Please go ahead

Speaker #1: Yes . Sorry .

Speaker #5: Most of my questions have been answered . Just wanted to get your perspective on the competitive intensity . How has Challenger brands reacted to how the volatility in raw material ?

Much more stronger value increase happening because of the, I don't see a major change has happened. Of course, there has been some improvement over last year in the volume growth as well. Uh, and that volume growth Improvement is on the back of 2 factors. 1

this quarter and last quarter, you know, June, possibly last year, was an absolute disaster because of

Speaker #5: Have you seen discounts or dealer margins go down and when there are periods where crude comes off , have you seen some of that go up ?

Speaker #5: Just wanted to get your perspective over there . Thanks .

Speaker #2: So the competition remains intense . You know , as far as the challenger brand is concerned though , they have raised their prices in dealer price list as in now equated to the industry at large .

Speaker #2: But the Rebating to some of the bigger dealers have gone up . And at the same time , you know , the 10% free material continues in most of the packs other than the economic category or the lower end of the spectrum .

excessive rains, you know. So now that situation is not there that impacts painting, definitely, uh, and hence, you know, large part of the painting cycle was impacted last year. The other problem was that the Diwali was much earlier. Typically people tend to paint, uh, before Diwali and they got no opportunity to a very, very short Diwali. So, we expect this year that, uh, the sellouts will be much better and hence, uh, in all possibility, even though the prices have gone up and it should have impacted the volume growth. That impact will be more or less neutralized by this uh, favorable Energies.

Abhijit Roy: In Q2, this will be fine. Operating profit increased by 15% on the console level, with consolidated PBDIT margin expanding by 40 basis points. PBT and PAT grew by 18.1% and 28.6% respectively. The joint ventures continue to deliver actually very strong growth in both revenue and profitability. This is the consolidated result, 12%, 15%, 16.1, and then if you go all the way down to PAT at 28.6%. Berger Paints Nepal registered double-digit value growth. Bolix reported flattish revenue, as I mentioned, during the quarter due to seasonal factors. However, profitability improved, driven by gross margin expansion. UK operations remained subdued. STP delivered improved profitability supported by favorable product mix, calibrated price increases, and gross margin expansion. BNPA joint venture posted robust growth in revenue and profits. Margins moderated slightly as the full benefit of price increases is yet to offset higher input costs.

Abhijit Roy: In Q2, this will be fine. Operating profit increased by 15% on the console level, with consolidated PBDIT margin expanding by 40 basis points. PBT and PAT grew by 18.1% and 28.6% respectively. The joint ventures continue to deliver actually very strong growth in both revenue and profitability. This is the consolidated result, 12%, 15%, 16.1, and then if you go all the way down to PAT at 28.6%. Berger Paints Nepal registered double-digit value growth. Bolix reported flattish revenue, as I mentioned, during the quarter due to seasonal factors. However, profitability improved, driven by gross margin expansion. UK operations remained subdued. STP delivered improved profitability supported by favorable product mix, calibrated price increases, and gross margin expansion. BNPA joint venture posted robust growth in revenue and profits. Margins moderated slightly as the full benefit of price increases is yet to offset higher input costs.

Speaker #2: So it remains intense and it remains challenging in terms of the intensity of competition , except for that fact that , as I said , you know , they have now that there was a 5% gap between the dealer price list itself , between them and us .

Thank you, sir.

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

Hi sir.

Speaker #2: And that has been neutralized . So that prices have gone up to that extent , even in case of painters . Also , thus extraordinary spend levels , which was there , has now been normal normalized to a level where , you know , it is quite comfortable for everyone .

Um, so Asian Paints indicated that, uh, in Q1, they also partly got the advantage of low-cost inventory.

And, uh, some of that Advantage will not be, uh, coming in in second quarter.

Speaker #2: So overall , therefore , the intensity has reduced , but it still remains at an elevated level

But your commentary around margins appears to be a lot more optimistic. Uh uh wherein we are speaking about uh a year on your expansion second quarter as well.

Speaker #5: Okay . Thanks . One one last question . You know , if if you think about industry growth in the last two years , we've had , you know , volume growths , which were middling .

Speaker #5: And then obviously last 2 to 3 quarters , you've seen a sharp pick up . And even if you discount for the fact that some of it could be dealer inventory build up outside of that .

Understand, uh, and isn't it the case that higher cost, in which we will also start, uh, uh, will largely be offset by that higher cost inventory?

Speaker #5: Also underlying demand seems to have done well . What's your level of confidence on on this demand ? Recovering , continuing because , you know , prices have gone up and just more generally , one would assume that discretionary spends would come under pressure .

Abhijit Roy: There was very strong performance as far as this JV was concerned. Of course, the revenue doesn't get added to our sales because this is a 49% JV for us, and therefore, both Becker and BNPA sales doesn't get added to our or it's not included in our consolidated sales. Berger Becker JV maintained its strong performance. Again, a very robust growth was registered, registering healthy revenue growth along with higher operating profits. Growing cash surplus from INR 992 to INR 1,198 to now to INR 1,424 crores as of end June financial year 2027. Large part of it will, of course, be used for the two factories, which will be coming up, one in Panagarh and the other in Odisha near Bhubaneswar.

Abhijit Roy: There was very strong performance as far as this JV was concerned. Of course, the revenue doesn't get added to our sales because this is a 49% JV for us, and therefore, both Becker and BNPA sales doesn't get added to our or it's not included in our consolidated sales. Berger Becker JV maintained its strong performance. Again, a very robust growth was registered, registering healthy revenue growth along with higher operating profits. Growing cash surplus from INR 992 to INR 1,198 to now to INR 1,424 crores as of end June financial year 2027. Large part of it will, of course, be used for the two factories, which will be coming up, one in Panagarh and the other in Odisha near Bhubaneswar.

Speaker #5: So I'm just trying to understand where this sort of recovery and demand in paints is coming through from . Thanks .

Speaker #2: Yeah . So , you know , overall actually earlier also the volume growth was there . But you know , in those days , there was a price decrease which had happened .

Business lines, uh, and that will come into effect in the important quarter. So, that's an advantage which we, uh, should have in Q2, uh, compared to what the leader has told you in the commentary.

That speaks clear. Sir. Thank you so much.

Speaker #2: And therefore the value growth used to be much lower . Now the situation is reversed . So you see a volume growth and there is a much more stronger value increase happening because of the price increase happening .

Thank you. Thank you. Go ahead.

Yeah. Hi, sir. Thank you for the opportunity, and congrats on the good setup. I can't hear you.

Speaker #2: So I don't see a major change has happened . Of course , there has been some improvement over last year in the volume growth as well .

uh,

You can come close to the...

Speaker #2: And that volume growth improvement is on the back of two factors . One , this quarter and last quarter . You know , June possibly last year was a absolute disaster because of excessive rains .

Speaker #2: You know , so now that situation is not there that impacts painting . Definitely . And hence , you know , large part of the painting cycle was impacted last year .

Abhijit Roy: We had a very interesting campaign, which we have just introduced, a corporate one, which is on Berger Jaise Bhi Ho Din, Rang Bana Rahe is the campaign which we have launched. It has received very positive feedback from the market, and this will be a major focus area and help us in building the brand Berger more strongly in the near future. This is something which we are very upbeat about, and it's a nice interesting campaign. For those of you who haven't seen it, you can go to YouTube and see it for yourself. It's a campaign which has received, so far, good feedback from the marketplace. Business outlook for financial year 2027, double-digit revenue growth expected to sustain, supported by the full quarter impact of price increases in Q2.

Abhijit Roy: We had a very interesting campaign, which we have just introduced, a corporate one, which is on Berger Jaise Bhi Ho Din, Rang Bana Rahe is the campaign which we have launched. It has received very positive feedback from the market, and this will be a major focus area and help us in building the brand Berger more strongly in the near future. This is something which we are very upbeat about, and it's a nice interesting campaign. For those of you who haven't seen it, you can go to YouTube and see it for yourself. It's a campaign which has received, so far, good feedback from the marketplace. Business outlook for financial year 2027, double-digit revenue growth expected to sustain, supported by the full quarter impact of price increases in Q2.

Yeah, am I audible now sir? Yes, yes, yeah, yeah. So uh thanks for the opportunity and congrats, most of the questions are answered just on the subsidiary part. Uh you uh while the growth has been muted but the market you expect over the medium-term and even this year uh the uh, margin Improvement story should continue.

Speaker #2: The other problem was that the Diwali was much earlier . Typically , people tend to paint before Diwali , and they got no opportunity because it kept raining right through almost up to Diwali .

Speaker #2: So it was a very , very short Diwali . So we expect this year that the sellers will be much better and hence , in all possibility , even though the prices have gone up and it should have impacted the volume growth that impact will be more or less neutralized by this favorable weather conditions

Hello. Yeah, we can hear you carry on. Yeah. So, uh, uh, despite the uh, uh, or the increase in RM cost, uh, you don't think so that the subsidiary business, margins, could could come under pressure, uh, for this year or the for next 1 or 2.

No, I I think the margins will be pretty okay, you know, as far as the subsidiaries are concerned.

Uh, they have no.

Speaker #5: Okay . Thank you sir

Speaker #3: Thank you . The next question is from the line of Aditya Bhatia . Please go ahead

Speaker #1: Hi , sir . So Asian paints are indicated that in Q1 they also partly got the advantage of low cost inventory and some of that advantage will not be coming in in second quarter .

Abhijit Roy: We had delayed, as I said, in industrial business line, the price increases were lagging. That full impact will come in this quarter. Plus festive demand and distribution expansion should help in expanding sales and as well as operating margin from what it was last year, definitely. Operating margins are expected to remain within the guided range, which we have always said, that is between 15% and 17%. This quarter, of course, was beyond 17% in the standalone and just short of 17% in the consolidated. Our expectation is that in Q2, the results will be good and possibly slightly better than Q1. Well-progressing monsoon may support rural sentiment. Market competitiveness, however, is expected to stay elevated. Sustained investments in brands, innovation, and retail activation to strengthen consumer base. Macro environment remains dynamic with crude oil, currency, and geopolitical developments being closely monitored.

Abhijit Roy: We had delayed, as I said, in industrial business line, the price increases were lagging. That full impact will come in this quarter. Plus festive demand and distribution expansion should help in expanding sales and as well as operating margin from what it was last year, definitely. Operating margins are expected to remain within the guided range, which we have always said, that is between 15% and 17%. This quarter, of course, was beyond 17% in the standalone and just short of 17% in the consolidated. Our expectation is that in Q2, the results will be good and possibly slightly better than Q1. Well-progressing monsoon may support rural sentiment. Market competitiveness, however, is expected to stay elevated. Sustained investments in brands, innovation, and retail activation to strengthen consumer base. Macro environment remains dynamic with crude oil, currency, and geopolitical developments being closely monitored.

I think, you know, the businesses are now looking good. In fact, you know, we have taken some corrective measures, as I mentioned, correct. And I think, you know, it should yield very good results, you know, in this quarter and going forward in Q3. I can see only up to that; after that, you know, it will all depend on how the raw material prices behave and what happens.

Sure, thank you. Thanks.

Thank you. Next question is from the line of Cayo. Please go ahead.

Speaker #1: But your commentary around margins appears to be a lot more optimistic , wherein we are speaking about a year on year expansion in second quarter as well .

Speaker #1: So I just wanted to understand where where is the difference and isn't it the case that higher cost inventory will also start , will also start contributing ?

Since the current participant is not responding, uh,

Speaker #1: And in that context , the price increase that we have taken will , will largely be offset by that higher cost inventory .

Speaker #2: So so the essential difference is that we have a higher percentage of industrial business than them . It is almost 20% for us .

Speaker #2: And in that case it might be much lower . It's primarily a decorative play for them . So what happens therefore is that , you know , there was a significant delay in the price increases that we got on the industrial business lines .

We can go ahead with Misha, so please, uh, unmute him. I can. Hi, sir. Thank you for taking my follow-up. So, just one question on the mix between the volume and value pack gap—used to be, you know, minus 5 average. Which...

Speaker #2: And that will come into effect in the second quarter . So that's an advantage , which we should have in quarter two compared to what the leader has told you in the commentary .

Speaker #1: That's very clear . So thank you so much

Abhijit Roy: We end with On every wall, in every heart, Rang Bana Rahe. Thank you. We can go to the questions.

Is now reducing this, uh, you know, uh, in this quarter we also saw that for the, uh, market leader as well. Uh, should 1 thing that this year given the raw material prices are high. Uh, the mix. Probably will remain at a much lower level. The impact of mix will remain at lower level like a minus 2, uh, Zone. Like minus 1 2 zone or you think it can go back to minus 56 Zone, uh, in the coming quarters.

Abhijit Roy: We end with On every wall, in every heart, Rang Bana Rahe. Thank you. We can go to the questions.

Speaker #3: Thank you . The next question is from the line of Amit Purohit . Please go ahead

So, I didn't get it. You know, with the, you know, uh, if you look at the—

[Company Representative] (Berger Paints): Thank you, Abhijit sir. We will start with the Q&A session now. Those of you who have questions can raise your hand now. We will announce your name and unmute your line. The first question from the line of Agnishwar. Please go ahead. Yes, please.

Operator: Thank you, Abhijit sir. We will start with the Q&A session now. Those of you who have questions can raise your hand now. We will announce your name and unmute your line. The first question from the line of Agnishwar. Please go ahead. Yes, please.

Speaker #6: Yeah . Hi , sir . Thank you for the opportunity and congrats on .

Speaker #2: I can't hear you , Amit

Figures, you know, the volume growth used to be 8–9%, and the value used to be 3–4%, right? Correct? You are indicating correct. Correct. So the difference was minus 3–4%, not because—

Speaker #3: Hello . Come close to the headset and speak .

Because because of the price decreases that had happened. Now, if you look at

Speaker #6: Yeah . AM I audible now , sir ?

Speaker #2: Yes , yes .

Speaker #6: Yeah , yeah , sir . Thanks for the opportunity and congrats . Most of the questions are answered just on the subsidiary part .

[Company Representative] (Garuda Aerospace): Sure. Thank you, and congrats on the decent numbers. First question is on the outlook slide. You have said that the monsoon is progressing well and you expect benefit out of that. I wanted to understand that because this is an El Niño year, and currently we are having around 13% deficit. Are you saying that because of more dry days as in the less rains will lead to more painting opportunity? Are you saying to that respect or because this time the Diwali is delayed, so we will get enough time before the rain ends? I could not understand because this time-

Agnishwar Banerjee: Sure. Thank you, and congrats on the decent numbers. First question is on the outlook slide. You have said that the monsoon is progressing well and you expect benefit out of that. I wanted to understand that because this is an El Niño year, and currently we are having around 13% deficit. Are you saying that because of more dry days as in the less rains will lead to more painting opportunity? Are you saying to that respect or because this time the Diwali is delayed, so we will get enough time before the rain ends? I could not understand because this time-

Speaker #6: Are you ? While the growth has been muted but the margin expansion has been decent across most of the businesses , do you expect over the medium term ?

Speaker #6: And even this year the margin improvement story should continue in spite .

it is reversed, you know, because we are getting an 89% volume growth but 13 to 16 145, 15% value. Growth largely because of the price increase, which is there, right? So the essential difference is in terms of the price increase of price, decrease, the more and less. So to do with the mixed percentage, change which has happened.

Speaker #1: Yeah .

Speaker #6: Hello ?

Speaker #2: Yeah , we can hear you . Carry on .

Understood, understood. Uh, okay. No, because if I'm referring to—so, there is a degree of mix.

Speaker #6: Yeah . So despite the volatility or the increase in cost , you don't think so that the subsidiary business margins would could come under pressure .

Speaker #6: For this year or the or next 1 or 2 years .

Abhijit Roy: No, that's a fair question. I think the first part is where I would like, because last year it had rained very heavily from mid-May to right up to October. Hence, the painting season also was very short because the Diwali was preponed. Both of these factors are relevant here. In this case, since it has not rained as heavily, and it has been seeing more dry days. The offtake, therefore, has been much better than last year in terms of exterior paint, which is one of the major segments, along with some of the other paint categories. Typically, if it rains very heavily, it becomes a problem. That's what we mean.

Abhijit Roy: No, that's a fair question. I think the first part is where I would like, because last year it had rained very heavily from mid-May to right up to October. Hence, the painting season also was very short because the Diwali was preponed. Both of these factors are relevant here. In this case, since it has not rained as heavily, and it has been seeing more dry days. The offtake, therefore, has been much better than last year in terms of exterior paint, which is one of the major segments, along with some of the other paint categories. Typically, if it rains very heavily, it becomes a problem. That's what we mean.

Speaker #2: No . I think the margins will be pretty okay . You know as far as the subsidiaries are concerned , they had you know I think , you know , the businesses are now looking good .

Speaker #2: In fact , you know , we have taken some corrective measures , as I mentioned , to correct the profitability angle of both bullocks and STP .

Which is changing me. You are right. That, you know, there's some amount of construction chemical products, we sell, and the growth of those categories are much higher than uh, say, you know, normal products, say add mixture or, you know, tile adhesive these are low value products, but high volume products. So they are growing at a faster pace. And hence, sometimes the volume growth is running ahead of the value growth. So, to that extent, there might be a differential of 2 3% but says, you know, in terms of almost like 3 4, 5 percent of price drop, which was happening regularly earlier.

Speaker #2: And I think , you know , it should yield very good results . You know , in this quarter and going forward in Q3 , I can see only up to that .

Speaker #2: After that , you know , it will all depend on how the raw material prices behave and what what happens

Speaker #6: Sure . Thank you . Thanks

[Company Representative] (Garuda Aerospace): Understood. Second is the 2,100 tinting machine. What will be the annual number? Are you essentially entering areas where you had an under-indexation, so say South India or Western India? Are bulk of these machines going there? Second related question is, the new player who entered around one and a half years back, they claim that their tinting machine is small, talks to the headquarter live, and is more modern looking, et cetera. How is now your latest tinting machine when I compare with the new player?

Agnishwar Banerjee: Understood. Second is the 2,100 tinting machine. What will be the annual number? Are you essentially entering areas where you had an under-indexation, so say South India or Western India? Are bulk of these machines going there? Second related question is, the new player who entered around one and a half years back, they claim that their tinting machine is small, talks to the headquarter live, and is more modern looking, et cetera. How is now your latest tinting machine when I compare with the new player?

Speaker #3: Thank you . The next question is from the line of code . Please go ahead Here . Please unmute your mic and go ahead Since the current is not responding , we can go ahead with please unmute your mic and ask the question .

With the price increase going up by, you know, 7 to 10 percent, a 10% price increase is eaten Away by the differential, should have been there for 10,000 in terms of our 8% say, in terms of, uh, the price increase which should have reflected, but it doesn't reflect fully because, you know, it depends on, you know, 2 factors 1 is this that you know, the mix is changing. And these are the type of products we sell, in which case instead of 8, it will show only 5 or 6 percentage. So, uh, that's the reason why you don't see the full extent of the volume value gap, which otherwise should have reflected, you know, with the type of price increase that has happened.

Speaker #7: Hi sir . Thank you for my follow up . So just one question on the mix that has changing this year versus if you see the historical years , the difference between the volume and value gap gap used to be , you know , minus five average , which is now reducing this , you know , in this quarter , we also saw that for the market leader as well , should one think that this year , given the raw metal prices are high , the mix probably will remain at a much lower level .

Understood got it, got it. And last question on the, uh, other income site, just just wanted to check, uh, uh, what has led to the, uh, sharp bump up in other income.

Abhijit Roy: Right. To answer the first question, our aspiration is to try and touch 10,000 machines for the year. Last year, we were very close to that figure. This year, we expect that we should be able to again touch 10,000 numbers. That's a number which will be equal or more than the new entrant even. Most of these machines are getting installed in our under-indexed markets. We have a list of such under-indexed, pin code-wise, where we would like the machines to be installed. The vast majority of that is getting installed in those places. That's how it is. As far as the second answer to your question, of the size of the machine and talking and all that, this has been there for most companies, almost all companies. I don't think those really matter too much.

Abhijit Roy: Right. To answer the first question, our aspiration is to try and touch 10,000 machines for the year. Last year, we were very close to that figure. This year, we expect that we should be able to again touch 10,000 numbers. That's a number which will be equal or more than the new entrant even. Most of these machines are getting installed in our under-indexed markets. We have a list of such under-indexed, pin code-wise, where we would like the machines to be installed. The vast majority of that is getting installed in those places. That's how it is. As far as the second answer to your question, of the size of the machine and talking and all that, this has been there for most companies, almost all companies. I don't think those really matter too much.

Uh, both on console and standalone, actually.

Yeah, you can mention, you know. Yeah yeah I I mean yeah. So this is largely on account of if you see our uh cash balances have gone up.

Right. Only that, right? And it's out of our treasury incomes.

Speaker #7: The impact of mix will remain at a lower level , like a minus two or zone like minus one to zone , or you think it can go back to minus five six zone in the coming quarters .

Okay, and Apex for the year, how should we think about that? I mean, the CICS roughly is that, I mean, we as we have predicted earlier, it's faced somewhere around because project will start at the end of this fiscal.

Speaker #2: So I didn't get it , you know , because you know , if you look at the earlier figures , you know , the volume growth used to be eight 9% and the current growth used to be three 4% .

Speaker #2: Right . That's it indicating correct .

So luckily it will be 600 to 800 rupees for for the year for the year. Got it sir. Okay. Thank you very much. Thank you. Wishing you all the best.

Speaker #7: So the difference was minus three four .

Speaker #2: 5% primarily not because of the mix but because of the price decreases that had happened . Now if you look at it , it is reversed .

Abhijit Roy: The size, of course, makes some difference, especially in congested city areas. Upcountry, though, it makes no difference almost. Our size is pretty good, maybe a few inches here and there, it won't make too much of a difference anyway. Connectivity is established. We do get all the information from the machine into our office as well, so that we know which are the products, what are the shades which are getting tinted. Nothing new there as far as technology is concerned.

Abhijit Roy: The size, of course, makes some difference, especially in congested city areas. Upcountry, though, it makes no difference almost. Our size is pretty good, maybe a few inches here and there, it won't make too much of a difference anyway. Connectivity is established. We do get all the information from the machine into our office as well, so that we know which are the products, what are the shades which are getting tinted. Nothing new there as far as technology is concerned.

Speaker #2: You know , because we are getting an eight 9% volume growth , but a 13 to 16 , 14 , 15% value growth , largely because of the price increase , which is there , right .

Speaker #2: So the essential difference is in terms of the price increase or price decrease , more and less . So to do with the mix percentage change which has happened .

Speaker #7: Understood understood Okay . No , because if I'm referring to .

Speaker #2: There is a degree of mix which is changing . You are right that you know , there is some amount of construction chemical products we sell and the growth of those categories are much higher than , say , you know , normal products .

I don't have any question. I just have a request, what is it possible for you to move to uvg? Instead of volumes, you know, Delight all other fmcg companies there, you know, disclose uvg which is valuated. And you know, if you, you know, if you can just explain its underlying volume growth, it's valuated. So, right now, you know, uh, the issue of mix that you explained earlier, that will be eliminated. So, uvg is basically price, uh, you know, Volume Plus make

Speaker #2: They add mixture or , you know , leadership . These are low value products , but high volume products . So they are growing at a faster pace .

[Company Representative] (Garuda Aerospace): Total universe of the paint shops is around 1 lakh 10,000. How much is the total universe now?

Agnishwar Banerjee: Total universe of the paint shops is around 1 lakh 10,000. How much is the total universe now?

Abhijit Roy: Amit, that depends how you look at paint shops. It depends on the size of the paint shop. It will be much more actually. Those are very small ones which crop up, seasonal ones. If you call them paint shops, also they are paint shops, but they sell also hardware. As is the case in many of the up-country markets, they sell a lot of other products along with paint. The total universe will be higher, but if you look at those which are meaningful paint shops, maybe 1 lakh 20, 1 lakh 30 will be the meaningful ones.

Abhijit Roy: Amit, that depends how you look at paint shops. It depends on the size of the paint shop. It will be much more actually. Those are very small ones which crop up, seasonal ones. If you call them paint shops, also they are paint shops, but they sell also hardware. As is the case in many of the up-country markets, they sell a lot of other products along with paint. The total universe will be higher, but if you look at those which are meaningful paint shops, maybe 1 lakh 20, 1 lakh 30 will be the meaningful ones.

Speaker #2: And hence sometimes the volume growth is running ahead of the value growth . So to that extent there might be a differential of two 3% .

I'll probably take it offline. But, you know, basically start explain to me, you know, we can do it, you know, that's not a problem. But you know, then everyone has to do the same thing. Then only you can compare 1 with the other. So I'm I'm hopeful that if you start others may also sort of, you know, yeah, I know we have no problems, you know, in explaining in that way. But let me know what this is.

Sure, sir. I'll write to you separately. Thank you so much.

Speaker #2: But the balance is , you know , in terms of almost like three , four , 5% of price drop , which was happening regularly earlier .

Speaker #2: Now that situation has reversed with the price increase going up by , you know , 7 to 10% , a 10% price increase is eaten away by the differential should have been therefore , 10% in terms of or 8% say in terms of the price increase , which should have reflected .

Thank you. In the interest of time, we will consider that as the last question for the day. I will now hand over the call to the management for the closing remarks.

So thank you, you know, for coming and attending this session, you know? Uh,

Hopefully, you know, we can have slightly better 4 to 2, you know, from the as well and all the best. Thank you. Thank you.

[Company Representative] (Garuda Aerospace): Yes. This 10,000 tinting machine is going into that 1,20,000, right? In terms of universe.

Agnishwar Banerjee: Yes. This 10,000 tinting machine is going into that 1,20,000, right? In terms of universe.

Speaker #2: But it doesn't reflect fully because you know , it depends on , you know , two factors . One is this that , you know , the mix is changing and these are the type of products we sell , in which case , instead of eight , it will show only 5 or 6 percentage .

Abhijit Roy: Yes, mostly the objective is that. Yes.

Abhijit Roy: Yes, mostly the objective is that. Yes.

Thank you on behalf of everything Global Financial Services, that concludes conference call. Thank you all for joining us.

[Company Representative] (Garuda Aerospace): Last quick question. If you could talk about some of the non-paints. The other paint companies are aggressively going into waterproofing, tile adhesives, construction chemicals. Any update on that?

Agnishwar Banerjee: Last quick question. If you could talk about some of the non-paints. The other paint companies are aggressively going into waterproofing, tile adhesives, construction chemicals. Any update on that?

Speaker #2: So that's the reason why you don't see the full extent of the volume value gap , which otherwise should have reflected , you know , with the type of price increase that has happened .

Abhijit Roy: We are there. Amit, as you know, we have a pretty strong presence in the waterproofing construction chemical, and the growth has been quite robust there. That will continue. I think we have a fairly good presence. The products are well-established now. The quality is good. I think the growth rate that we see is much higher than paint in these categories, and it will continue in that way.

Abhijit Roy: We are there. Amit, as you know, we have a pretty strong presence in the waterproofing construction chemical, and the growth has been quite robust there. That will continue. I think we have a fairly good presence. The products are well-established now. The quality is good. I think the growth rate that we see is much higher than paint in these categories, and it will continue in that way.

Speaker #7: Understood . Got it , got it . And last question on the other income side , just just wanted to check what has led to the sharp bump up in other income Both on console and standalone .

Speaker #7: Actually

Speaker #2: Yeah . You can mention that .

Speaker #7: Hi Kaushik

[Company Representative] (Garuda Aerospace): Even tile adhesives?

Agnishwar Banerjee: Even tile adhesives?

Speaker #2: Yeah . So this is largely on account of if you see our cash balances have gone up

Abhijit Roy: Tile adhesives also, yeah. We sell a decent quantity. Not as much, but we would like to probably do more.

Abhijit Roy: Tile adhesives also, yeah. We sell a decent quantity. Not as much, but we would like to probably do more.

Speaker #7: , right . Only that . Right . I and and .

Speaker #2: Then it's out of our treasury incomes .

[Company Representative] (Garuda Aerospace): Sure. Thank you. That's all from my side. Thank you.

Agnishwar Banerjee: Sure. Thank you. That's all from my side. Thank you.

Abhijit Roy: Right.

Abhijit Roy: Right.

Speaker #7: Okay . And CapEx for the year . How should we think about that ?

[Company Representative] (Berger Paints): Thank you. The next question is from the line of Misha. Please go ahead.

Operator: Thank you. The next question is from the line of Misha. Please go ahead.

Speaker #2: CapEx roughly is that I mean , it's as we had predicted earlier , it's somewhere around because our project will start at the end of this fiscal .

[Analyst]: Hi, sir. Good evening. Thank you for taking my question and congrats on a good set of numbers. Firstly, on demand front, wanted to just check the dealers ideally would have stocked up before the price increases that happened over the last couple of months, which eventually should have some impact in July. Can you share how much would be the volume growth for July, or how is it shaping up, and where do you think we will land in terms of the Q2? That's my first question.

[Analyst 1]: Hi, sir. Good evening. Thank you for taking my question and congrats on a good set of numbers. Firstly, on demand front, wanted to just check the dealers ideally would have stocked up before the price increases that happened over the last couple of months, which eventually should have some impact in July. Can you share how much would be the volume growth for July, or how is it shaping up, and where do you think we will land in terms of the Q2? That's my first question.

Speaker #2: So it will be 600 to ₹800 for for the year .

Speaker #7: For the year . Understood . Got it sir . Okay . Thank you very much . And thank you . Wishing you all the best .

Speaker #3: Thank you . The next question is from the line of Jay Doshi . Please go ahead

Speaker #2: Hi , Abhijit .

Speaker #3: So my . I don't have any question . I just have a request . Would it be possible for you to move to Uvgi instead of volumes ?

Abhijit Roy: Right. You're right, there has been some amount of stocking up, obviously. The secondaries also have been much better than last year. As I said, the rains have been less intense compared to last year, therefore, the secondary sales has moved quite well. July growth was reasonable. We would expect that the Q2 revenue growth might be slightly ahead of Q1 revenue growth. The volume growth will be somewhere around similar levels as Q1, slightly below maybe. We were at 8.5. Maybe it will be 7.5% to 8% approximately. A price increase, which is there of varying from 7.5% to 8.5%, 9%.

Abhijit Roy: Right. You're right, there has been some amount of stocking up, obviously. The secondaries also have been much better than last year. As I said, the rains have been less intense compared to last year, therefore, the secondary sales has moved quite well. July growth was reasonable. We would expect that the Q2 revenue growth might be slightly ahead of Q1 revenue growth. The volume growth will be somewhere around similar levels as Q1, slightly below maybe. We were at 8.5. Maybe it will be 7.5% to 8% approximately. A price increase, which is there of varying from 7.5% to 8.5%, 9%.

Speaker #3: You know , pretty light . All other FMcG companies , they you know , disclose Uvgi , which is valuated . And , you know , if you .

Speaker #2: You know , if you can just explain .

Speaker #3: That .

Speaker #2: Concept .

Speaker #3: Underlying volume growth , it's Valuated . So right now , you know , the issue of mix that you explained earlier , that will be eliminated .

Speaker #3: So Uvgi is basically price , you know , volume plus mix . I'll probably take it offline .

Speaker #2: But yeah . basically explain to me , you know , we can do it , you know , that's not a problem . But you know , then everyone has to do the same thing .

Speaker #2: Then only you can compare one with the other .

Speaker #3: So I'm , I hopeful that if you start , others may also sort of , you .

Speaker #2: Know , follow problems know in explaining in that way , but let me know what this is all about . The concept . And we can do it .

[Analyst]: Okay. This quarter, the price increase was 7.5. Would it be fair?

[Analyst 1]: Okay. This quarter, the price increase was 7.5. Would it be fair?

Speaker #2: That's not a problem .

Speaker #3: Sure , sir . I'll write to you separately . Thank you so much Thank you In the interest of time , we consider that as the last , last question for the day .

Abhijit Roy: No, this quarter was about 5%.

Abhijit Roy: No, this quarter was about 5%.

[Analyst]: Okay.

[Analyst 1]: Okay.

Abhijit Roy: It is going to increase to about 7.5% to 8%, possibly.

Abhijit Roy: It is going to increase to about 7.5% to 8% possibly.

Speaker #3: I hand over the call to the management for the closing remarks .

[Analyst]: Okay. I thought the price increases were to the tune of closer to 12%, 13%. Was that?

[Analyst 1]: Okay. I thought the price increases were to the tune of closer to 12%, 13%. Was that?

Speaker #2: So thank you . For coming and attending this session . You know , hopefully , you know , we can have a slightly better quarter .

Abhijit Roy: That is the DPL increase, which was taken in stages. You got only part of the price increase in Q1.

Abhijit Roy: That is the DPL increase, which was taken in stages. You got only part of the price increase in Q1.

Speaker #2: Two , you know , from the current levels as well . And all the best . Thank you . Thank you .

[Analyst]: Yeah.

[Analyst 1]: Yeah.

Abhijit Roy: The net impact for us was that it also depends on the mix that we have. On a typical mix, if you look at it, various companies will have different percentage increases, right? If you sell certain kinds of products which have lesser price increase, then you will have, obviously, an impact which is slightly lesser than some of the other products where the raw material prices would have gone up, and therefore, the price increase has also happened proportionately much higher.

Abhijit Roy: The net impact for us was that it also depends on the mix that we have. On a typical mix, if you look at it, various companies will have different percentage increases, right? If you sell certain kinds of products which have lesser price increase, then you will have, obviously, an impact which is slightly lesser than some of the other products where the raw material prices would have gone up, and therefore, the price increase has also happened proportionately much higher.

[Analyst]: Understood. Would you say the pricing growth of seven and a half, eight and a half that you indicated can increase in Q3, Q4 as the mix changes?

[Analyst 1]: Understood. Would you say the pricing growth of seven and a half, eight and a half that you indicated can increase in Q3, Q4 as the mix changes?

Abhijit Roy: It can.

Abhijit Roy: It can.

[Analyst]: Q2 will have a lower mix.

[Analyst 1]: Q2 will have a lower mix.

Abhijit Roy: It can, or it can go down. It depends on the total, on the mix, as I said. For example, just to give you an example, suppose in emulsions, the raw material prices had gone up slightly lower, whereas in thinners and solvents, it had gone up much more. The price increases in some of these products might be higher. In some of the other products, it might be lower, right? Therefore, if your mix changes more towards luxury emulsion, the overall impact in terms of revenue growth due to price increase might be lower. Whereas, if you have a much higher concentration in those type of products where the price increases have been much higher, you might see a more impact of the price increase.

Abhijit Roy: It can, or it can go down. It depends on the total, on the mix, as I said. For example, just to give you an example, suppose in emulsions, the raw material prices had gone up slightly lower, whereas in thinners and solvents, it had gone up much more. The price increases in some of these products might be higher. In some of the other products, it might be lower, right? Therefore, if your mix changes more towards luxury emulsion, the overall impact in terms of revenue growth due to price increase might be lower. Whereas, if you have a much higher concentration in those type of products where the price increases have been much higher, you might see a more impact of the price increase.

[Analyst]: Understood. That is clear, sir. Secondly, You did indicate on the margins that it will be better, When one looks at the margins in Q2 of last year, it had some impact. On a normative level, what is the level of margin that one should think about for Q2 for this year?

[Analyst 1]: Understood. That is clear, sir. Secondly, You did indicate on the margins that it will be better, When one looks at the margins in Q2 of last year, it had some impact. On a normative level, what is the level of margin that one should think about for Q2 for this year?

Abhijit Roy: Yeah. As I said, there will be some improvement. Of course, the bases are in favor slightly because of the, as you said that there were impacts there in Q2. In spite of that, there will be some impact there in terms of both two advantages. One is the operating leverage, which will be there because value sales is expected to be at a decent level. At the same time, the mix will probably improve because the rains have not been as intense, we will have possibly more sale of exterior emulsions this quarter than what we had last year.

Abhijit Roy: Yeah. As I said, there will be some improvement. Of course, the bases are in favor slightly because of the, as you said that there were impacts there in Q2. In spite of that, there will be some impact there in terms of both two advantages. One is the operating leverage, which will be there because value sales is expected to be at a decent level. At the same time, the mix will probably improve because the rains have not been as intense, we will have possibly more sale of exterior emulsions this quarter than what we had last year.

[Analyst]: Understood. Sir, lastly, other expenses seems to be lower. Would you say that this is lower because of lower ad spends? Some comment on Saboo Coatings, if you can just share.

[Analyst 1]: Understood. Sir, lastly, other expenses seems to be lower. Would you say that this is lower because of lower ad spends? Some comment on Saboo Coatings, if you can just share.

Abhijit Roy: Why Saboo Coatings? Anyway, first question is, as far as other expenses are concerned, there has been no cut in the ad spends as such. It hasn't gone up substantially, there has been no cut. Certain savings have been there in some areas which we are working hard on, that's something which will continue possibly going forward as well. Some areas of savings in the operational expenses that we have.

Abhijit Roy: Why Saboo Coatings? Anyway, first question is, as far as other expenses are concerned, there has been no cut in the ad spends as such. It hasn't gone up substantially, there has been no cut. Certain savings have been there in some areas which we are working hard on, that's something which will continue possibly going forward as well. Some areas of savings in the operational expenses that we have.

[Analyst]: Understood. Got it, sir. Okay, thank you and wishing you all the way best.

[Analyst 1]: Understood. Got it, sir. Okay, thank you and wishing you all the way best.

Abhijit Roy: Thank you.

Abhijit Roy: Thank you.

[Company Representative] (Berger Paints): Thank you. The next question is from the line of Purushothaman Tharakon. Please go ahead.

Operator: Thank you. The next question is from the line of Purushothaman Tharakon. Please go ahead.

Purushothaman Tharakon: Hi, am I audible?

[Analyst 2]: Hi, am I audible?

Abhijit Roy: Yes.

Abhijit Roy: Yes.

Purushothaman Tharakon: Yeah. Sir, I just wanted to understand the mix effect this quarter. Like Asian Paints said that the mix for them is +3%, which was after many quarters they have seen a positive mix effect. How much is our mix effect this quarter?

[Analyst 2]: Yeah. Sir, I just wanted to understand the mix effect this quarter. Like Asian Paints said that the mix for them is +3%, which was after many quarters they have seen a positive mix effect. How much is our mix effect this quarter?

Abhijit Roy: Yeah, because fortunately, one part of it is, of course, the price increases which have been taken, which has resulted in some amount of stocking up of good products which are more profitable, I would say. The second is that, overall, if you look at it, the mix has improved for Q1 and is likely to improve even in Q2 as well.

Abhijit Roy: Yeah, because fortunately, one part of it is, of course, of the price increases which has been taken, which has resulted in some amount of stocking up of good products which are more profitable, I would say. The second is that, overall, if you look at it, the mix has improved for Q1 and is likely to improve even in Q2 as well.

Purushothaman Tharakon: Okay. Would it be in similar region of +2% to +3%?

[Analyst 2]: Okay. Would it be in similar region of +2% to +3%?

Abhijit Roy: Similar. I haven't measured exactly what percentage it is, but it should be close to that.

Abhijit Roy: Similar. I haven't measured exactly what percentage it is, but it should be close to that.

Purushothaman Tharakon: Fair enough. If I split up your overall 13.5% deco growth.

[Analyst 2]: Fair enough. If I split up your overall 13.5% deco growth.

Purushothaman Tharakon: you said 8.5% is volume, right?

[Analyst 2]: you said 8.5% is volume, right?

Abhijit Roy: Right.

Abhijit Roy: Right.

Purushothaman Tharakon: Let's say another 2.5% would be price, so that would bring it to 11.

[Analyst 2]: Let's say another 2.5% would be price, so that would bring it to 11.

Abhijit Roy: No. Price is almost.

Abhijit Roy: No. Price is almost.

Purushothaman Tharakon: Sorry, mix. Mix would be 2.5%, that would bring it to 11, that means that the pure pricing impact is only 2.5%.

[Analyst 2]: Sorry, mix. Mix would be 2.5%, that would bring it to 11, that means that the pure pricing impact is only 2.5%.

Abhijit Roy: No. It is 8.4% is the volume growth.

Abhijit Roy: No. It is 8.4% is the volume growth.

Abhijit Roy: Nearly 5% is the price increase impact.

Abhijit Roy: Nearly 5% is the price increase impact.

Purushothaman Tharakon: Yeah.

[Analyst 2]: Yeah.

Abhijit Roy: The mix change is included in that overall volume growth. If you look at it, possibly under normal circumstances, if you had gone and seen last year, it would have been much higher in terms of volume growth. Value growth was coming out lower, right?

Abhijit Roy: The mix change is included in that overall volume growth. If you look at it, possibly normal circumstances, if you had gone seen last year, it would have been much higher in terms of volume growth. Value growth was coming out lower, right?

Purushothaman Tharakon: That 8.5% includes mix effect, is it? That 8.5% I thought is just the pure tonnage growth that we are reporting.

[Analyst 2]: That 8.5% includes mix effect, is it? That 8.5% I thought is just the pure tonnage growth that we are reporting.

Abhijit Roy: Pure tonnage growth, that's right. In the price increase, that includes the mix change also of about 5%, which has happened so far.

Abhijit Roy: Pure tonnage growth, that's right. In the price increase, that includes the mix change also of about 5%, which has happened so far.

Purushothaman Tharakon: Correct. Therefore, if that 5% is, let's say 2% to 3% mix, then the pure pricing change is only 2% to 3%, right?

[Analyst 2]: Correct. Therefore, if that 5% is, let's say 2% to 3% mix, then the pure pricing change is only 2% to 3%, right?

Abhijit Roy: Mix doesn't improve by 2% to 3%. I don't know what Asian Paints has told you. Normally, the mix change is about 0.4% to 0.5%.

Abhijit Roy: Mix doesn't improve by 2% to 3%. I don't know what Asian Paints has told you. Normally, the mix changes is about 0.4% to 0.5%.

Purushothaman Tharakon: Okay.

[Analyst 2]: Okay.

Abhijit Roy: The improvement in mix.

Abhijit Roy: The improvement in mix.

Purushothaman Tharakon: Okay. Got it.

[Analyst 2]: Okay. Got it.

Abhijit Roy: Yeah.

Abhijit Roy: Yeah.

Purushothaman Tharakon: Now, this 5% which has happened this quarter is because it is time-weighted, right?

[Analyst 2]: Now, this 5% which has happened this quarter is because it is time-weighted, right?

Abhijit Roy: That is right, mostly.

Abhijit Roy: That is right, mostly.

Purushothaman Tharakon: I look at Q2.

[Analyst 2]: I look at Q2.

Abhijit Roy: More of it is because of the industrial business lines where it is a time-weighted, more in because we got it more towards the end of the quarter.

Abhijit Roy: More of it is because of the industrial business lines where it is a time-weighted, more in because we got it more towards the end of the quarter.

Purushothaman Tharakon: Okay. What do we expect this number to be, the pricing effect to be in Q2? Because it will be there for 100% of the quarter. Will it be like a double-digit number?

[Analyst 2]: Okay. What do we expect this number to be, the pricing effect to be in Q2? Because it will be there for 100% of the quarter. Will it be like a double-digit number?

Abhijit Roy: No. That's what I was saying, around 7.5% to 8.5%. Probably 7.5% to 8.5%, depending on the mix that we have.

Abhijit Roy: No. That's what I was saying, around 7.5% to 8.5%. Probably 7.5% to 8.5%, depending on the mix that we have.

Purushothaman Tharakon: Sir, why is this so different? Because when we talk to dealers in three tranches, the actual price increase has been to the extent of 12% to 13%.

[Analyst 2]: Sir, why is this so different? Because when we talk to dealers in three tranches, the actual price increase has been to the extent of 12% to 13%.

Abhijit Roy: If you take a straight product by product without any weightages to any product, that may be true, right? For different companies, different products have got different price increases. For example, in the luxury product category, we have had an increase of 6%. In the case of enamel, it might be 12%. In the case of some other product, it might be only 3%. In some other product, it might be 14%. It depends on the mix that you are selling. It's very difficult to tell exactly, pinpoint that this is the mix %, and therefore this will be the % because every quarter, depending on the seasonality, product mix changes, and therefore the impact of this revenue increase will be different.

Abhijit Roy: If you take a straight product by product without any weightages to any product, that may be true, right? For different companies, different products have got different price increases. For example, in the luxury product category, we have had an increase of 6%. In the case of enamel, it might be 12%. In the case of some other product, it might be only 3%. In some other product, it might be 14%. It depends on the mix that you are selling. It's very difficult to tell exactly, pinpoint that this is the mix %, and therefore this will be the % because every quarter, depending on the seasonality, product mix changes, and therefore the impact of this revenue increase will be different.

Purushothaman Tharakon: Understood. Very clear, sir. Just one last question—I just wanted to understand if you have any insight as to why our decorative growth this quarter is a little lower than what the industry leader has posted.

[Analyst 2]: Understood. Very clear, sir. Just one last question. Just wanted to understand, if any insight as to why our decorative growth this quarter is a little lower than what the industry leader has posted.

Abhijit Roy: Yeah.

Abhijit Roy: Yeah.

Purushothaman Tharakon: Despite the tinting machine additions, et cetera.

[Analyst 2]: Despite the tinting machine additions, et cetera.

Abhijit Roy: That's true. The explanation is simple because the base effect kicks in. The industry leader had de-grown. Last year, we had grown, and therefore there was a 3.6% differential in terms of the value growth in the base itself. At the same time, in the profit, there was a 8.6% differential between industry leader and us because they had de-grown last year, and therefore the base impact was there. That's the reason primarily.

Abhijit Roy: That's true. The explanation is simple because the base effect kicks in. The industry leader had de-grown. Last year, we had grown, and therefore there was a 3.6% differential in terms of the value growth in the base itself. At the same time, in the profit, there was a 8.6% differential between industry leader and us because they had de-grown last year, and therefore the base impact was there. That's the reason primarily.

Purushothaman Tharakon: Very clear. Lastly, sir, on margins, you mentioned Q2 margins can be better than Q1. Assuming that crude sort of fluctuates in the mid-80s, would you say that Q3 and Q4 margins would also be similar to what we see in Q2?

[Analyst 2]: Very clear. Lastly, sir, on margins, you mentioned Q2 margins can be better than Q1. Assuming that crude sort of fluctuates in the mid-80s, would you say that Q3 and Q4 margins would also be similar to what we see in Q2?

Abhijit Roy: Well, it all depends. It's very difficult to say what margins will be. It depends on Mr. Trump than anyone else because the raw material prices keeps shifting up and down. As far as we can say, I can say with a degree of certainty as far as Q2 is concerned, that the Q2 operating profit will be decent, the growth will be good, and we can expect a good top line and operating profit growth in Q3.

Abhijit Roy: Well, it all depends. It's very difficult to say what margins will be. It depends on Mr. Trump than anyone else because the raw material prices keeps shifting up and down. As far as we can say, I can say with a degree of certainty as far as Q2 is concerned, that the Q2 operating profit will be decent, the growth will be good, and we can expect a good top line and operating profit growth in Q3.

Purushothaman Tharakon: Okay, sir. Okay. That's all from me. Thanks, and all the best.

[Analyst 2]: Okay, sir. Okay. That's all from me. Thanks, and all the best.

Abhijit Roy: Thanks.

Abhijit Roy: Thanks.

[Company Representative] (Berger Paints): Thank you. The next question is from the line of Avi Mehta. Please go ahead.

Operator: Thank you. The next question is from the line of Avi Mehta. Please go ahead.

Avi Mehta: Yeah. Hi, sir. This is Avi here from Macquarie. Sir, I just wanted to conceptually understand. For Q4 also on a secondary basis, we saw high single digit volume. Now we also seen high single digit volume and what you're suggesting, and correct me if I'm wrong, you said 7.5 to 8 is what you could possibly do even in Q2. What I'm trying to appreciate is for the year as we see and as we go into the H2, would it be fair that despite this high single digit pricing that is kind of flowing through, we are able to maintain for the year also a high single digit volume growth or can it just end? Do you see a risk on that volume growth?

Avi Mehta: Yeah. Hi, sir. This is Avi here from Macquarie. Sir, I just wanted to conceptually understand. For Q4 also on a secondary basis, we saw high single digit volume. Now we also seen high single digit volume and what you're suggesting, and correct me if I'm wrong, you said 7.5 to 8 is what you could possibly do even in Q2. What I'm trying to appreciate is for the year as we see and as we go into the H2, would it be fair that despite this high single digit pricing that is kind of flowing through, we are able to maintain for the year also a high single digit volume growth or can it just end? Do you see a risk on that volume growth?

Avi Mehta: Just wanted to get your thoughts on how should we look at volume impact because of pricing.

Avi Mehta: Just wanted to get your thoughts on how should we look at volume impact because of pricing.

Abhijit Roy: Understood. I think we should be able to maintain that. As we said, we are taking many initiatives from our side as well to grow the volumes. One is, of course, the expansion in network itself. The second is the branding campaign, which, we hope that it will have also some energetic effect on the ground as well, for the team, as well as the consumers as well. Overall, some new product introductions, a combination of all of these factors should help us to maintain the volumes that we are talking about, and that's the objective. Along with there is this price increase which should get absorbed therefore, and we don't see a downside risk there in terms of volume growth.

Abhijit Roy: Understood. I think we should be able to maintain that. As we said, we are taking many initiatives from our side as well to grow the volumes. One is, of course, the expansion in network itself. The second is the branding campaign, which, we hope that it will have also some energetic effect on the ground as well, for the team, as well as the consumers as well. Overall, some new product introductions, a combination of all of these factors should help us to maintain the volumes that we are talking about, and that's the objective. Along with there is this price increase which should get absorbed therefore, and we don't see a downside risk there in terms of volume growth.

Avi Mehta: Got it, sir. Very clear. Sir, secondly, on this margin front now, my understanding is that we saw flattish margin YOY in Q1. We are arguing for it should kind of expand. We obviously don't know where crude is. Crude is volatile, but assuming this current scenario continues, would it be fair to argue that operating margin profile expansion is what we should be able to drive for the full year? Is that what it implies and is that reading accurate?

Avi Mehta: Got it, sir. Very clear. Sir, secondly, on this margin front now, my understanding is that we saw flattish margin YOY in Q1. We are arguing for it should kind of expand. We obviously don't know where crude is. Crude is volatile, but assuming this current scenario continues, would it be fair to argue that operating margin profile expansion is what we should be able to drive for the full year? Is that what it implies and is that reading accurate?

Abhijit Roy: Yes, if it holds true at these prices—the raw material—and if the prices don't get dropped subsequently…

Abhijit Roy: Yes. If it holds true at these prices, the raw material, and if the prices don't get dropped subsequently-

Abhijit Roy: In terms of selling price drops, then of course, yes, the operating margin possibly will expand. That is why I'm saying there are too many ifs and buts. In Q2, I expect that the operating margin will grow at a decent pace.

Abhijit Roy: In terms of selling price drops, then of course, yes, the operating margin possibly will expand. That is why I'm saying there are too many ifs and buts. In Q2, I expect that the operating margin will grow at a decent pace.

Avi Mehta: Okay. What you're saying is contrary to what has been pricing inflationary scenarios actually helped because the impact on volume has been limited. Is that a correct reading, sir? Or how should we-

Avi Mehta: Okay. What you're saying is contrary to what has been pricing inflationary scenarios actually helped because the impact on volume has been limited. Is that a correct reading, sir? Or how should we-

Abhijit Roy: Far it looks like that it has been absorbed, that the volume growth has been more or less intact, and yet, the entire price increase has been absorbed and therefore the value growth is coming at a decent level in double digits.

Abhijit Roy: Far it looks like that it has been absorbed, that the volume growth has been more or less intact, and yet, the entire price increase has been absorbed and therefore the value growth is coming at a decent level in double digits.

Avi Mehta: Got it, sir. Last, sir, just a bit of understanding on Bolix, which is a reasonable kind of share from an international business.

Avi Mehta: Got it, sir. Last, sir, just a bit of understanding on Bolix, which is a reasonable kind of share from an international business.

Abhijit Roy: Yeah.

Abhijit Roy: Yeah.

Avi Mehta: Sir, just wanted to understand what there has been. For the last some quarters, growth has been a little volatile because of factors. What is the concern or is there a concern there? Is it just macro or something has to be changed? Any thoughts about this, sir, if you could share that.

Avi Mehta: Sir, just wanted to understand what there has been. For the last some quarters, growth has been a little volatile because of factors. What is the concern or is there a concern there? Is it just macro or something has to be changed? Any thoughts about this, sir, if you could share that.

Abhijit Roy: No, there's no concern as such. As you know, those parts of the world are not growing really fantastically well or something. They have very moderate, very muted growth rates there overall in the economy itself. We are doing reasonably well. We have a product line which is slightly different, which we see as a possible profit enhancer for us. Certain lines, certain kinds of products. Specifically, the Bolix panels, there are certain panels, one of them which we are going to introduce in India as well. Those are doing well and is quite profitable. What you see currently is one is the economy itself, which is why slightly is on the slower side. The UK operations which have been there, where we are taking some corrective measures, which we took, where less profitable businesses we have reduced.

Abhijit Roy: No, there's no concern as such. As you know, those parts of the world are not growing really fantastically well or something. They have very moderate, very muted growth rates there overall in the economy itself. We are doing reasonably well. We have a product line which is slightly different, which we see as a possible profit enhancer for us. Certain lines, certain kinds of products. Specifically, the Bolix panels, there are certain panels, one of them which we are going to introduce in India as well. Those are doing well and is quite profitable. What you see currently is one is the economy itself, which is why slightly is on the slower side. The UK operations which have been there, where we are taking some corrective measures, which we took, where less profitable businesses we have reduced.

Abhijit Roy: The top line is not growing, but the bottom line is fairly growing.

Abhijit Roy: The top line is not growing, but the bottom line is fairly growing.

Avi Mehta: Got it, sir. Geography expansion now is no longer the principle, at least from a Europe perspective, because at some point of time you were considering that as well.

Avi Mehta: Got it, sir. Geography expansion now is no longer the principle, at least from a Europe perspective, because at some point of time you were considering that as well.

Avi Mehta: The focus now is essentially getting profitability on track. Is that right?

Avi Mehta: The focus now is essentially getting profitability on track. Is that right?

Abhijit Roy: Correct.

Abhijit Roy: Correct.

Avi Mehta: Okay. Thank you very much, sir. That's all from my side. Thank you, sir.

Avi Mehta: Okay. Thank you very much, sir. That's all from my side. Thank you, sir.

[Company Representative] (Berger Paints): Just a reminder: for management to be able to answer most questions, I request participants to limit the number of questions to two. The next question is from Pratik Kothari. Please go ahead.

Operator: Just a reminder. For management to be able to answer most questions, I request participants to limit the number of questions to two. The next question is on the line of Pratik Kothari. Please go ahead.

Pratik Kothari: Hello?

Pratik Kothari: Hello?

Abhijit Roy: Yes.

Abhijit Roy: Yes.

Pratik Kothari: Hi. Thank you for taking my questions. This is Pratik Kothari from HSBC. I have one question, please. Excuse me.

Pratik Kothari: Hi. Thank you for taking my questions. This is Pratik Kothari from HSBC. I have one question, please. Excuse me.

Abhijit Roy: Yeah, go ahead.

Abhijit Roy: Yeah, go ahead.

Pratik Kothari: On dealer inventories, you mentioned that there could be some dealer destocking in Q2, and Q2 is typically a seasonally weak quarter. I understand that year-on-year the backdrop is better because of longer monsoons, but can you please elaborate on why in Q1 and Q2 as well, you will see a better mix and better margins?

Pratik Kothari: On dealer inventories, you mentioned that there could be some dealer destocking in Q2, and Q2 is typically a seasonally weak quarter. I understand year-on-year the backdrop is better because of longer monsoons, but can you please elaborate on why Q1, Q2 as well you will see better mix and better margins?

Abhijit Roy: You are right that there was some amount of stock-up which has happened, and typically that should have put a little bit pressure in July, August, September. As I said, much of it is also that the sellouts will be far better this year, which we saw in July also, the sellout was much better than last year. We expect that August also should be on similar lines. Keeping these factors in mind that last year was quite a prolonged rainfall had depressed the sales. This time that will be more than made up. Whatever little upstocking has happened will be overcome by the extra sellout which happens in the marketplace. It's far healthier this year compared to last year.

Abhijit Roy: You are right that there was some amount of stock-up which has happened, and typically that should have put a little bit pressure in July, August, September. As I said, much of it is also that the sellouts will be far better this year, which we saw in July also, the sellout was much better than last year. We expect that August also should be on similar lines. Keeping these factors in mind that last year was quite a prolonged rainfall had depressed the sales. This time that will be more than made up. Whatever little upstocking has happened will be overcome by the extra sellout which happens in the marketplace. It's far healthier this year compared to last year.

Pratik Kothari: Understood. Thank you.

Pratik Kothari: Understood. Thank you.

Abhijit Roy: No, it's okay. Thank you.

Abhijit Roy: No, it's okay. Thank you.

[Company Representative] (Berger Paints): The next question is from the line of Anirudh Joshi. Please go ahead.

Operator: The next question is from the line of Anirudh Joshi. Please go ahead.

Anirudh Joshi: Yeah. Thanks for the opportunity. Sir, two questions. Generally you speak about market shares. If you can indicate how the market shares would have been in Q1, especially in eastern part of India. That is question one. If you can elaborate a bit more on the market shares at top end of the market, as well as bottom end of the market, waterproofing. Whatever details you can share, because I guess the mix is changing for most of the companies. That will be better. Yeah. Sorry, sir. Please go on.

Anirudh Joshi: Yeah. Thanks for the opportunity. Sir, two questions. Generally you speak about market shares. If you can indicate how the market shares would have been in Q1, especially in eastern part of India. That is question one. If you can elaborate a bit more on the market shares at top end of the market, as well as bottom end of the market, waterproofing. Whatever details you can share, because I guess the mix is changing for most of the companies. That will be better. Yeah. Sorry, sir. Please go on.

Abhijit Roy: Detailing whether in east or in the premium or luxury what we have done, the figures are not available, it's difficult to tell about the market share and whatever I say will be conjecture. Based on figures which are available today, which is what when we talk about market share, we talk with figures. There we would have gained market share in Q1 once again. It will sound strange that the leader has actually grown faster and we haven't grown as much. We will gain market share actually a little bit because our proportion of base of the Q1 is always much higher. If you do mathematics, you will find that in Q1, we would have gained a little bit of market share. There will be other players who will declare, Akzo is coming in next, Kansai has already declared.

Abhijit Roy: Detailing whether in east or in the premium or luxury what we have done, the figures are not available, it's difficult to tell about the market share and whatever I say will be conjecture. Based on figures which are available today, which is what when we talk about market share, we talk with figures. There we would have gained market share in Q1 once again. It will sound strange that the leader has actually grown faster and we haven't grown as much. We will gain market share actually a little bit because our proportion of base of the Q1 is always much higher. If you do mathematics, you will find that in Q1, we would have gained a little bit of market share. There will be other players who will declare, Akzo is coming in next, Kansai has already declared.

Abhijit Roy: There is a little bit of a gain in market share for us in Q1.

Abhijit Roy: There is a little bit of a gain in market share for us in Q1.

Anirudh Joshi: Okay, sure. That's great to hear. Second question: we keep hearing that there is a possibility of price cuts post-Diwali, and a lot of dealers, etc., seem prepared for that. Is that a possibility, considering the revival or increase in crude prices again? Do we see a big reduction in trade inventory if the price cuts happen at that time?

Anirudh Joshi: Okay, sure. That's great to hear. Second question, we keep hearing that there is a possibility of price cuts post-Diwali, and a lot of dealers, et cetera, seem prepared for that. Is that a possibility considering the revival or increase in crude prices again? Do we see a big reduction in trade inventory if the price cuts happen at that time?

Abhijit Roy: It all depends on the raw material prices, as you rightly said just now. The prices have climbed back again a little bit. Again, Mr. Trump starts bombing and again, the whole thing gets confused, and then the prices go up again. It's very volatile and very difficult to comment at this stage. Depending on where the raw material prices, if they do go down substantially and there is peace finally there, then of course, one can look at that price cut going into the H2. Because then the margins would have gone up substantially and it won't make sense to.

Abhijit Roy: It all depends on the raw material prices, as you rightly said just now. The prices have climbed back again a little bit. Again, Mr. Trump starts bombing and again, the whole thing gets confused, and then the prices go up again. It's very volatile and very difficult to comment at this stage. Depending on where the raw material prices, if they do go down substantially and there is peace finally there, then of course, one can look at that price cut going into the H2. Because then the margins would have gone up substantially and it won't make sense to.

Abhijit Roy: There will be again discounting and price wars, which is not desirable. Therefore, there might be some sort of a drop in prices at that point of time. As of now, very difficult to say. I don't think anyone should comment at this stage what will happen.

Abhijit Roy: There will be again discounting and price wars, which is not desirable. Therefore, there might be some sort of a drop in prices at that point of time. As of now, very difficult to say. I don't think anyone should comment at this stage what will happen.

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