Q1 2027 Berger Paints India Ltd Earnings Call

August 5, 2026

Speaker #3: Abhijit sir, can we start?

Speaker #2: Yes, we can. Go ahead.

Speaker #3: Okay, just— Hi, good evening everyone. This is Mohit Dureja from Loki Global. I would like to welcome all to the Berger Paints India Q1 FY27 result conference call.

Mohit Dureja: Hi, good evening, everyone. This is Mohit Dureja from Emkay Global. I would like to welcome all to the Berger Paints India Q1 FY27 Result Conference Call. 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, and Mr. Sayantan 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 the Q&A session. Over to you, sir.

[Company Representative] (Emkay Global): Hi, good evening, everyone. This is Mohit Dureja from Emkay Global. I would like to welcome all to the Berger Paints India Q1 FY27 Result Conference Call. 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, and Mr. Sayantan 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 the Q&A session. Over to you, sir.

Speaker #3: I thank Berger Paints management for allowing us to host. We have with us today Mr. Abhijit Roy, Managing Director and CEO, and Mr. Kaushik Ghosh, CFO.

Speaker #3: Mr. Sayanthan 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 the Q&A session.

Speaker #3: Over to you, sir.

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

Abhijit Roy: Thank you, Mohit, and good evening, all of you. Let me start with the presentation first. This is the Q1 result. Why is this not moving forward now? 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%. 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 the price increases were taken more towards the end of the quarter after a protracted battle in the field, and then it will come through more in Q2. The Decorative performance was supported by calibrated price increases implemented through the quarter. Gross margin moderated marginally, primarily due to delayed and partial pass-through of input cost increases in industrial business.

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 #2: The 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 the price increases were taken more towards the end of the quarter after a protracted battle in the field, and those will come through more in the second quarter.

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

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

Abhijit Roy: 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. Standalone and consolidated PAT 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%. HomeShield and wood coatings delivered strong growth. Exterior emulsions did well, while the newly launched Kolor Plus interior emulsion gained strong traction in the premium segment. Automotive coatings reported healthy double-digit value growth. Protective GI and powder, as I mentioned, the growth rates were relatively lower due to delayed price increases in these categories. Gross margin comparison, more or less in that band of 39% to 42%, and this time it was at 39.3%.

Speaker #2: Standalone and consolidated PAT 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 #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 in protective GI and powder, as I mentioned, the growth rates were relatively lower due to delayed price increases in these categories.

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—the increases were more towards the end of the quarter, and not all increases have been received there.

Abhijit Roy: 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 and 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: 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 #2: Operating profit margin, however, was a strong 17.4%. In that range—which we have always indicated as 15 to 17%—typically in Quarter 1, it goes higher because of the higher value sales.

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 Q1, financial year '25 or '26, '27—also at similar levels.

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

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 Kolor Plus continued to gain strong traction in the premium interior emulsion segment. Construction chemicals and waterproofing delivered robust volume and value growth. Roof Kool & 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. 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, we grew at 12.7%, PBDIT at 12.6%, and PAT at 25.5%. 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, with margin expansion. Exterior emulsions outperformed, while Color Plus continued to gain strong traction in the premium interior emulsion segment, and waterproofing delivered robust volume and value growth.

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 over 1,900 stores as of 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 #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.

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, but 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 #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 #2: 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, etc.

Speaker #2: 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 flattish growth, and therefore the growth got pulled down a bit, but they are back in action.

Speaker #2: In this quarter, in Q2, this will be fine. Operating profit increased by 15% on the console level, with consolidated PBDIT margin expanding by 40 basis points.

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 Jenson & Nicholson (Nepal) Pvt. Ltd. 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.

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 #2: BGN 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.

Speaker #2: UK operations remained subdued. 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 #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.

Abhijit Roy: 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. Of course, the revenue do not get added to our sales because this is a 49% JV for us and therefore, both Becker and BNPA sales do not get added to our or it's not included in our consolidated sales. Berger-Becker Coatings JV maintained its strong performance. Again, a very robust growth 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 FY27. 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: 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 don't get added to our, you know, it's not included in our consolidated sales.

Speaker #2: Berger Becker JV maintained its strong performance. Again, very robust growth has been registered, registering healthy revenue growth along with higher operating profits. The cash surplus has grown from ₹992 crore to ₹1,198 crore, and now to ₹1,424 crore as of end June, Financial Year ’27.

Speaker #2: 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: We had a very interesting campaign which we have just introduced, a corporate one, which is on Berger. It is the campaign which we have launched.

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 FY27. Double-digit revenue growth expected to sustain, supported by the full quarter impact of price increases in Q2.

Speaker #2: 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: 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...

Speaker #2: Good feedback from the marketplace. Business outlook for financial year '27: double-digit revenue growth expected to sustain, supported by the full quarter impact of price increases in Q2.

Speaker #2: So, we had delays, as I said. You know, in the industrial business line, the price increases were lagging. That full impact will come in this 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. Festive demand and distribution expansion should help in expanding sales 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.

Speaker #2: Plus, festive demand and distribution expansion should help in expanding sales, 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 mentioned.

Speaker #2: That is between 15% and 17%. This quarter, of course, was beyond 17% in the standalone and just short of 17% in the consolidated.

Speaker #2: our expectation is that in quarter two, the results will be good in, you know, possibly slightly better than quarter one. Well progressing monsoon may support rural sentiment.

Speaker #2: Market competitiveness, however, is expected to stay elevated, with sustained investments in brands, innovation, and retail activation to strengthen the consumer base. The macro environment remains dynamic, with crude oil, currency, and geopolitical developments being closely monitored.

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

Speaker #2: And we end with: on every wall, in every heart, Rang Banarhe. Thank you. We can go to the questions.

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

Mohit Dureja: 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 the name and unmute your line. The first question from the line of Agni Sriward. Please go ahead. Yes.

[Company Representative] (Emkay Global): 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 the name and unmute your line. The first question from the line of Abneesh Roy. Please go ahead. Yes.

Speaker #1: All right. 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 #1: We will announce the name and unmute your line. The first question is from Agneshwar. Please go ahead.

Speaker #3: Sure, thank you. And congrats on the decent numbers. My first question is on the Outlook slide. You have said that the monsoon is progressing well and you expect to benefit from that.

Agni Sriward: Sure. Thank you. 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 there is a deficit.

Abneesh Roy: Sure. Thank you. 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 there is a deficit.

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

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

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

Abhijit Roy: No, that is a fair question. I think the first part is where. 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. Because typically, if it rains very heavily, it becomes a problem. That is what we mean.

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: 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: So that's what we mean.

Speaker #3: Understood. Second is the 2,100 tinting machine. So, what will be the annual number? And, are you essentially entering areas where you had under-indexation?

Agni Sriward: 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, 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?

Abneesh Roy: 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, 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: So, say, South India or Western India—are the bulk of these machines going there? And second, related question: the new player who entered around one and a half years back claimed that their tinting machine is small, talks to the headquarter live, and is more modern looking, etc.

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

Speaker #2: 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.

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-index markets. We have a list of such under-index, 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.

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 index under-indexed pin code wise where we would like the machines to be installed.

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, especially in congested city areas.

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 printed. Nothing new there as far as technology is concerned.

Speaker #2: Upcountry, though, it makes almost no difference. 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.

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 seats which are getting tinted.

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

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

Agni Sriward: Total universe of the paint shops is around 110,000. How much is the total universe now?

Abneesh Roy: Total universe of the paint shops is around 110,000. How much is the total universe now?

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

Abhijit Roy: Agni, that depends how you look at paint shops, because 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 upcountry markets, they sell a lot of other products along with paint. The total universe will be higher. If you look at those which are meaningful paint shops, maybe 120,000, 130,000 will be the meaningful ones.

Speaker #2: 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 also sell hardware.

Speaker #2: 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 #3: Yes. So this 10,000 tinting machines is going into that 120, right? In terms of universe.

Agni Sriward: Yeah. This 10,000 tinting machine is going into that 120,000, right? In terms of universe.

Abneesh Roy: Yeah. This 10,000 tinting machine is going into that 120,000, right? In terms of universe.

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

Abhijit Roy: 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 adhesives, construction chemicals. Any update on that?

Agni Sriward: 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?

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

Abhijit Roy: We are there. Agni, as you know, we have a pretty strong presence in the waterproofing construction chemical, 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 #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 adhesives?

Agni Sriward: Even tile adhesives?

Abneesh Roy: Even tile adhesives?

Speaker #2: Tile adhesives also—yeah, we sell, you know, a decent quantity. Not as much, but, you know, 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 #3: Sure. Thank you. That's all from my side. Thank you.

Agni Sriward: Sure. Thank you. That's all from my side. Thank you.

Abneesh Roy: Sure. Thank you. That's all from my side. Thank you.

Speaker #2: Right.

Abhijit Roy: Right.

Speaker #3: Thank you.

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

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

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 congrats on a good set of numbers. So firstly, on the demand front, just to check, the dealers ideally would have stocked up before the price increases that happened over the last couple of months.

Mihir Shah: 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? Where do you think we will land in terms of the Q2? That's my first question.

Speaker #3: which eventually should have some impact in July. Can you share how much the volume growth would 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 question.

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 as I said.

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, and 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 #2: The rains have been less intense compared to last year, and therefore the secondary sales have moved quite well. 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: The volume growth will be somewhere around similar levels as 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. Would that be fair?

Mihir Shah: Okay, this quarter the price increase was 7.5%, would it be fair?

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

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

Speaker #3: Okay.

Mihir Shah: Okay.

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

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

Speaker #3: Okay, and I thought the price increases were to the tune of closer to 12–13 percent. What was that?

Mihir Shah: Okay. I thought the price increases were to the tune of closer to 12%, 13%. Was that

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

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

Speaker #2: 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?

Mihir Shah: 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.

Speaker #2: You know, if you sell certain kinds of products, which have a 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.

Speaker #3: Understood. And would you say the pricing growth of 7.5 to 8.5 percent that you indicated can increase in Q3 and Q4 as the mix changes?

Mihir Shah: Understood. Would you say the pricing growth of 7.5%, 8.5% that you indicated can increase in Q3, Q4 as the mix changes?

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

Abhijit Roy: It can.

Mihir Shah: Q2 will have a lower mix.

Speaker #2: It can, or it can go down. It depends 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.

Abhijit Roy: It can or it can go down. It depends totally 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.

Speaker #2: So, the price increases in some of these products might be higher; in some of the other products, they 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 #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 impact of the price increase.

Speaker #3: Understood. Understood. That is clear, sir. So, secondly, I wanted to— 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.

Mihir Shah: Understood. That is clear, sir. Secondly, 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. On a normative level, what is the level of margin that one should think about for Q2 for this year?

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 #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.

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.

Speaker #2: 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 are expected to be at a decent level.

Speaker #2: And at the same time, you know, the mix will probably improve because the rains have not been as intense, and so we will possibly have more sales of exterior emulsions this quarter than what we had last year.

Speaker #3: Understood, sir. Lastly, other expenses seem 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?

Mihir Shah: 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.

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.

Abhijit Roy: Why Saboo Coatings? 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. We have saved. 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.

Speaker #2: 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 that's something which will continue possibly going forward as well, you know.

Speaker #2: So, some areas of savings in the operational expenses that we have.

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

Mihir Shah: Understood. Got it, sir. Okay, thank you, wishing you all the way best.

Speaker #2: Thank you.

Abhijit Roy: Thank you.

Mohit Dureja: Thank you. The next question is from the line of Purshi Pantakhi. Please go ahead.

[Company Representative] (Emkay Global): Thank you. The next question is from the line of Purshi Pantakhi. Please go ahead.

Speaker #1: Thank you. The next question is from the line of Farshid Panthaki. 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%.

Purshi Pantakhi: Hi, am I audible?

Percy Panthaki: Hi, am I audible?

Abhijit Roy: Yes.

Purshi Pantakhi: 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 like after many quarters they have seen a positive mix effect. How much is our mix effect this quarter?

Percy Panthaki: 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 like after many quarters they have seen a positive mix effect. How much is our mix effect this quarter?

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?

Speaker #1: 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 for more profitable, I would say.

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.

Speaker #1: 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 #2: Okay. So would it be in a similar region of 2% to 3% positive?

Purshi Pantakhi: Okay. Would it be in similar region of 2% to 3% positive?

Percy Panthaki: Okay. Would it be in similar region of 2% to 3% positive?

Speaker #1: Similar. You know, 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.

Speaker #2: 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?

Purshi Pantakhi: Fair enough. If I split up your overall 13.5% deco growth, you said 8.5% is volume, right?

Percy Panthaki: Fair enough. If I split up your overall 13.5% deco growth, you said 8.5% is volume, right?

Speaker #1: Right.

Abhijit Roy: Right.

Speaker #2: Then, let's say another two and a half percent would be price. So, that would bring it to 11. So, that...

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

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

Abhijit Roy: No. Price is almost.

Speaker #1: Price is almost.

Speaker #2: 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.

Purshi Pantakhi: Sorry, mix would be 2.5%, so that would bring it to 11. That means that the pure pricing impact is only 2.5%.

Percy Panthaki: Sorry, mix would be 2.5%, so that would bring it to 11. That means that the pure pricing impact is only 2.5%.

Speaker #1: No, no, no, no, no. It is 8.4 percent; it is the volume growth.

Abhijit Roy: No, it is 8.4% is the volume growth.

Abhijit Roy: No, it is 8.4% is the volume growth. Until 5% is the price increase impact.

Speaker #2: Uh-huh.

Speaker #1: Total 5% is the price increase impact. The mix change is included in that. You know, overall volume growth—if you look at it, possibly under normal circumstances, if you had gone by what we saw last year, volume growth would have been much higher. In terms of value growth, that was coming out lower, right?

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

Purshi Pantakhi: Yeah.

Percy Panthaki: Yeah.

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?

Speaker #2: 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.

Purshi Pantakhi: That 8.5% includes mix effect, is it? That 8.5% I thought is just the pure tonnage growth that we are recording.

Percy Panthaki: That 8.5% includes mix effect, is it? That 8.5% I thought is just the pure tonnage growth that we are recording.

Speaker #1: Pure tonnage growth. That's right. And in the price increase, that includes the mix change also, of about five percent, 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.

Speaker #2: 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?

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

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

Speaker #1: Mix doesn't improve by 2% to 3%. You know, I don't know what Asian Paints has told you. Normally, the mix changes are 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%.

Speaker #1: The improvement in mix.

Purshi Pantakhi: Okay.

Percy Panthaki: Okay.

Abhijit Roy: The improvement in mix.

Speaker #2: Okay, got it. Now, this five percent which has happened this quarter is because it is time-weighted, right?

Purshi Pantakhi: Okay. Got it.

Percy Panthaki: Okay. Got it.

Abhijit Roy: Yeah.

Purshi Pantakhi: This 5% which has happened this quarter is because it is time weighted, right?

Percy Panthaki: This 5% which has happened this quarter is because it is time weighted, right?

Speaker #1: That is right. Mostly. And more of it is because of the industrial business lines, where it is time-weighted, you know, more in because we got it more towards the end of the quarter.

Abhijit Roy: That is right. Mostly.

Purshi Pantakhi: If I look at Q2

Percy Panthaki: If I look at Q2

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

Speaker #2: 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.

Purshi Pantakhi: 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.

Percy Panthaki: 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.

Speaker #2: So will it be, like, a double-digit number?

Abhijit Roy: That is right.

Purshi Pantakhi: Will it be like a double-digit number?

Percy Panthaki: Will it be like a double-digit number?

Speaker #1: 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.

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.

Speaker #2: 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.

Purshi Pantakhi: Okay. Sir, why is this so different? When we talk to dealers in three tranches, the actual price increase has been to the extent of 12% to 13%.

Percy Panthaki: Okay. Sir, why is this so different? When we talk to dealers in three tranches, the actual price increase has been to the extent of 12% to 13%.

Speaker #1: 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.

Abhijit Roy: That if you take a straight product by product, without any weightages to any product, that may be true. For different companies, different products have got different price increases. For example, in a 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 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.

Speaker #1: For example, in the luxury product category, we have had an increase of 6–6%. In the case of enamel, it might be 12%.

Speaker #1: In the case of some other product, it might be only 3%. In some other product, it might be 14%. So, it depends on the mix that you are selling.

Speaker #1: So it's very difficult to exactly pinpoint 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 #2: Understood. Very, very clear, sir. Just one last question—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.

Purshi Pantakhi: 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.

Percy Panthaki: 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.

Speaker #2: Despite the tinting machine additions, etc.

Abhijit Roy: Yeah.

Purshi Pantakhi: Despite the tinting machine additions, et cetera.

Percy Panthaki: Despite the tinting machine additions, et cetera.

Speaker #1: 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.

Abhijit Roy: That's true. The explanation is simple, because the base effect kicks in. The industry leader had de-grown in 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 an 8.6% differential between the industry leader and us, because they had de-grown last year and therefore the base impact was there. That's the reason primarily.

Speaker #1: 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 an 8.6 percent differential between Industrial Lever and us.

Speaker #1: Because they had de-grown last year, and, you know, therefore the base impact was there. So that's the reason, primarily.

Speaker #2: 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?

Purshi Pantakhi: 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?

Percy Panthaki: 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?

Speaker #1: So, you know, it all depends. It's very difficult to say what margins will be. It depends more on raw material prices than anything else, because the raw material prices, you know, keep shifting up and down.

Abhijit Roy: 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 Q2.

Speaker #1: 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.

Speaker #1: The growth will be good, and, you know, we can expect a good top line and, you know, operating profit growth in Q2.

Speaker #2: Okay, sir. Okay. That's all from me. Thanks, and all the best.

Purshi Pantakhi: Okay, sir. That's all from me. Thanks and all the best.

Percy Panthaki: Okay, sir. That's all from me. Thanks and all the best.

Speaker #1: Thanks for.

Abhijit Roy: Thanks.

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

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

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

Speaker #3: Yeah. Hi, sir. This is Avi here from Aquary. Sir, I just wanted to, you know, conceptually understand. See, for the fourth quarter also, on a secondary basis, we saw high single digits.

Avi Mehta: Hi, sir, this is Avi here from Aquarian. Sir, I just wanted to conceptually understand. See, 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 will pricing have some? Do you see a risk on that volume growth? Just wanted to get your thoughts on how should we look at volume impact because of pricing.

Avi Mehta: Hi, sir, this is Avi here from Maquarie. Sir, I just wanted to conceptually understand. See, 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 will pricing have some? Do you see a risk on that volume growth? Just wanted to get your thoughts on how should we look at volume impact because of pricing.

Speaker #3: Volume. Now, we've also seen high single-digit volume. And what you're suggesting, and correct me if I'm wrong, is that seven and a half to eight percent is what you could possibly do, even in Q2.

Speaker #3: What I'm trying to understand is, for the year as we see it and as we go into the second half, would it be fair to say 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 #3: Or can it, just, and, or is it because pricing has—or, or will pricing have some—do you see a risk on that volume growth?

Speaker #3: So, just wanted to get your thoughts on how we should look at volume impact because of pricing.

Speaker #1: 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.

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, an 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. We don't see a downside risk there in terms of volume growth.

Speaker #1: One is, of course, the expansion in the network itself. The second is the branding campaign, which, you know, we hope will also have some energetic effect on the team as well as the consumers as well.

Speaker #1: 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 #1: And that's the objective, you know, along with there, you know, there is this price increase, which should get absorbed and we don't see a downside risk therefore.

Speaker #1: And that's the objective, you know, along with there, you know, there is this price increase, which should get absorbed and we don't see a downside risk therefore. there in terms of volume growth.

Avi Mehta: Got it, sir. Very clear. Sir, secondly, on this margin front. My understanding is that we saw flattish margin Y-o-Y 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?

Speaker #3: margin front, now my, my understanding is that we saw flattish margin YOY in one 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 #3: Is that what it implies? And is that reading accurate?

Speaker #1: 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 saying there are too many ifs and buts.

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

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

Speaker #1: expand. That is why I'm But in the second quarter, I expect that the operating margin will grow at a decent pace.

Speaker #2: So, 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.

Avi Mehta: Okay. 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 a correct reading, sir?

Speaker #2: Is that, correct reading, sir? Is that how I should see?

Speaker #1: So far, 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.

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.

Speaker #1: At a decent level in

Speaker #1: double digits.

Speaker #2: Got it, sir. And last, sir, just a bit of understanding on Bollix, 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.

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.

Avi Mehta: Sir, just wanted to understand, 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? You could share that.

Speaker #2: You know, is there a concern there? Is it just macro, or what is it? Does something have to be changed? Any thoughts about this, sir, if you could share?

Speaker #1: There's 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.

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. 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

Speaker #1: 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.

Speaker #1: which we, which we see as, possible, profit enhancer for us, you know, a certain line, certain kinds of products. specifically the Bollix panels, there are certain panels which one of them which we are going to introduce in India as well.

Speaker #1: 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.

Avi Mehta: Yes, sir

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

Speaker #1: 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.

Speaker #1: So the top line is not growing, but the bottom line is fairly growing.

Speaker #2: 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.

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. The focus now is essentially getting profitability on track. Is that the right-

Speaker #2: The focus now is essentially getting profitability on track. Is that a right reading?

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

Speaker #1: Okay, sir.

Abhijit Roy: Correct.

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

Speaker #2: Thank you very much, sir. That's all from my side. Thank you, sir.

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

Mohit Dureja: 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 Gothid. Please go ahead.

[Company Representative] (Emkay Global): 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 Gothid. Please go ahead.

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

Speaker #2: Hello.

Pratik Gothid: Hello?

Pratik Gothi: Hello?

Speaker #1: Yes, please.

Abhijit Roy: Yes, please.

Speaker #2: Hi. Yeah. thank you for taking my questions. This is Pratik Kothi from HSBC. I have one question, please. Excuse me.

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

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

Speaker #1: Yeah, go ahead.

Abhijit Roy: Yeah, go ahead.

Speaker #2: 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.

Pratik Gothid: 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, can you please elaborate on why quarter-on-quarter as well you will see better mix and better margins?

Pratik Gothi: 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, can you please elaborate on why quarter-on-quarter as well you will see better mix and better margins?

Speaker #2: Because of longer monsoons. But, can you please elaborate on why Q on Q as well you will see better, mix and better margins?

Speaker #1: 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 pressure in July August September.

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, and September. As I said, much of it is also that the sell-outs will be far better this year, which we saw in July also, the sell-out 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, it depressed the sales. This time, that will be more than made up. Whatever little up stocking has happened will be overcome by the extra sell-out which happens in the marketplace. It's far healthier this year compared to last year.

Speaker #1: 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 also—the sellout was much better than last year.

Speaker #1: 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 #1: 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 #1: Is far healthier this year. Compared to last year.

Speaker #2: Understood. Thank you.

Pratik Gothid: Understood. Thank you.

Pratik Gothi: Understood. Thank you.

Abhijit Roy: Thank you.

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

Mohit Dureja: The next question is from the line of Aniruddha Joshi. Please go ahead.

[Company Representative] (Emkay Global): The next question is from the line of Aniruddha Joshi. Please go ahead.

Speaker #2: 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.

Aniruddha Joshi: Yeah, thanks for the opportunity. Sir, 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 #1: Yeah.

Speaker #2: 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, what are your details you can share?

Abhijit Roy: Yeah.

Aniruddha Joshi: 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. Please.

Speaker #2: Because I guess the mix is changing for most of the companies. So, that will be better. Yeah. Yeah. Sorry, sir. Please.

Speaker #1: So, you know, detailing in whether in east or up, you know, in the premium luxury, what we have done, the figures are not available.

Abhijit Roy: Detailing in whether in east or up, in the premium luxury what we have done, the figures are not available, so 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 first quarter 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.

Speaker #1: 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 #1: 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 #1: Market share actually increased a little bit because our proportion of base in the first quarter is always much higher. So if you do the mathematics, you will find that in Q1 we would have gained a little bit of market share.

Abhijit Roy: We will gain market share actually a little bit, because our proportion of base of the first quarter 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. There is a little bit of a gain in market share for us in Q1.

Speaker #1: and, there will be other players who will declare ABSO 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.

Abhijit Roy: Akzo is coming in next, Kansai has already declared. There is a little bit of a gain in market share for us in Q1.

Speaker #2: 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.

Aniruddha Joshi: Okay, sure sir. That's great to hear. Second question, we keep hearing that there is a possibility of price cuts post Diwali, 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, in a way, reduction in trade inventory if the price cuts happen at that time?

Speaker #2: 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 #1: 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.

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. Every time it goes down, there is some statement from Mr. Trump saying that he won't bomb, and the prices correct. Then the raw material prices also move downwards a little bit. Again, he 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.

Speaker #1: And the price is is correct, right? And, and then the raw material prices also move downwards a little bit. But again, he starts bombing and again the whole thing gets confused and then the prices go up again.

Speaker #1: 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.

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 in the H2, is too far off.

Speaker #1: 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.

Speaker #1: And I don't think anyone should comment at this stage what will happen in the second half is too far off.

Speaker #2: Okay. Sure, sir. Last question from my side. now backward integration, most of the players seem to be doing, Asian has already announced even Kansai is doing some backward integration as far as resins are concerned.

Aniruddha Joshi: Okay. Sure, sir. Last question from my side. Now, backward integration, most of the players seem to be doing. Asian has already announced. Even Kansai is doing some backward integration as far as resins are concerned. Will that be the next, in a way, important factor to look at profitability, as most of the players get into backward integration? What will be Berger's strategy and investments towards backward integration? Yeah, that's it from my side. Many thanks.

Speaker #2: So, will that be the next, in a way, important factor to look at for profitability, as most of the players get into backward integration? And what will be Berger's strategy, in terms of investments towards backward integration?

Speaker #2: Yeah, that's it from my side. many thanks.

Speaker #1: Thanks, Aniruddha. And yes, you know, backward integration wherever possible and feasible, and where it makes economic sense for us, we definitely look at those. For example, in emulsions, the entire emulsions are made by us in our factories.

Abhijit Roy: Thanks, Aniruddha. Yes, backward integration wherever possible and feasible and which makes economical sense for us, we definitely look at those. Like for example, in emulsions. The entire emulsions are made by us in our factories. Similarly, most of the resins are made by us. There were some which were imported. Those are also now being made mostly by us. Like that, there are other products like thickeners, et cetera, 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 Sandila, in Lucknow. Like that, there is always a lookout for improving the profitability and efficiency and reducing the cost wherever it is feasible and possible, and that's what we keep doing every time.

Speaker #1: Similarly, most of the resins are made by us. There were some which were imported. Those were also now being made mostly by us. Like that, there are other products like thickeners et cetera, which we have started producing in our own factory recently.

Speaker #1: 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 Kandila in Lucknow.

Speaker #1: So like that, you know, there is always a lookout for, improving the profitability and efficiency and reducing the cost wherever it is feasible and possible.

Speaker #1: And that's what we keep doing every time.

Speaker #2: Yeah. Sure, sir. many thanks.

Aniruddha Joshi: Yeah, sure sir. Many thanks.

Speaker #1: Okay. Thank you.

Abhijit Roy: Okay, thank you.

Speaker #2: Thank you.

Mohit Dureja: Thank you. The next question is from the line of Anurag Dayal. Please go ahead.

[Company Representative] (Emkay Global): Thank you. The next question is from the line of Anurag Dayal. Please go ahead.

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

Speaker #2: Yeah. Hi, sir. Thank you for the opportunity. one quick clarification first, that EBITDA margin we are talking about, you know, likely to be better in second quarter.

Anurag Dayal: Yeah, hi sir. Thank you for the opportunity. One quick clarification first. That EBITDA margin we are talking about likely to be better in Q2, so it is sequential we are expecting this to improve or Y-o-Y basis, sir?

Speaker #2: So it is sequential. We're expecting it to improve. Or why why basis, sir?

Speaker #1: 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.

Abhijit Roy: No, not sequentially obviously, because Q2, the value sales will be on the lesser side. The operating margins are typically on the lower side.

Anurag Dayal: Yes

Anurag Dayal: Yes.

Abhijit Roy: relatively.

Anurag Dayal: Got it. Yeah.

Speaker #1: It is year-on-year that I am talking about.

Abhijit Roy: It is year-on-year that I am talking about.

Speaker #2: Yeah, sure, sure. That makes sense. second, on the, you know, I just wanted to understand the regional demand trend. Relatively. has also been uneven, you know, at different places.

Anurag Dayal: Yeah, sure. That makes sense. Second, I just wanted to understand the regional demand trend. If you could share something, because rainfall has also been uneven at different places. Is there any geographical variance we have observed in demand, particularly related to East India, where there is a competition plus now there is an opportunity with the new government in? Have you started seeing some growth there? Another link to this regional demand trend is the markets where we are under-indexed, especially in the South market, where we are now growing aggressively. How substantial that business has become for us, and is it mostly the project business or we are getting retail demand as well? That is three parts of the regional demand.

Speaker #2: Is there a geographical variance we have observed in demand? particularly, related to East India where, you know, there's a competition plus, you know, there's an opportunity

Speaker #2: Is there a geographical variance we have observed in demand, particularly related to East India where, you know, there's a competition plus, you know, there's an opportunity with the new government in? Have you started seeing, you know, some growth there?

Speaker #2: the markets where we are under index, especially in the South market, where we are Yeah. now growing aggressively. How substantial does business has become for us and is it mostly the project business or we are getting, you know, retail demand as well?

Speaker #2: So that's three parts of the demand.

Speaker #1: Right. So, to answer the third question first, it's mostly retail, and project is similar. Project is slightly higher, not substantially higher—1% or 2% higher than the retail growth rate.

Abhijit Roy: Right. To answer the third question first, it's mostly retail and project is similar. Project is slightly higher, not substantially higher, 1% to 2% higher than the retail growth rate. It's essentially much more of retail and also some project growth, which is coming through. Second question answer is that overall, the growth rate has been higher, possibly in the South and the North, to some extent West. East has actually been a little bit muted. Northeast has been, as you know, floods and a lot of issues there. Assam is in very bad shape. It has been impacted to a large extent there. We are a very strong player in Northeast. We are a clear leader in that market in Northeast. Therefore, it has impacted to some extent our sales there. As far as West Bengal is concerned, there is a change in government.

Speaker #1: So, it's essentially much more of retail. And also some project growth which is coming through. Second question in, answer is, you know, that, overall, you know, the growth rate has the North.

Speaker #1: been higher, possibly in the South and to some extent 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 #1: so it has been impacted to, to a large extent there. we are very strong player in Northeast. We are clear leader in that market in Northeast.

Speaker #1: 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 #1: 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. Things should become positive, but as of now, in the transition period, there is always a little bit of confusion.

Abhijit Roy: Things should become positive. As of now, in transition period, it is always a little bit of confusion. The decision-making has to happen. The government contracts has to restart. It takes some time, three, four months of settling in time typically, before things start looking up. As of now, nothing substantial has happened. We expect the market to grow faster there.

Speaker #1: the decision making has to happen 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.

Speaker #1: Substantial has happened, but we expect the market to grow faster there.

Speaker #2: 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 MLS et cetera.

Anurag Dayal: Okay. Very clear, sir. Just one quick thing. See, earlier you used to share that volume growth breakup between pure decorative paints in terms of emulsions, enamels, et cetera, versus the construction chemicals and the waterproofing segment. Is there any 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? How large it has become as a share of decoratives?

Speaker #2: 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?

Speaker #2: 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, decoratives?

Speaker #1: 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 a higher growth rate.

Abhijit Roy: Yeah. As far as paint is concerned, for almost every company now the construction chemical, because on a lower base it will possibly register higher growth rate, right? As far as the percentage is concerned, it is in now about 10% to 12% level. Varies from month to month, quarter to quarter. Somewhere around that level of 12 odd percentage. Growing at a slightly higher pace, or I would say significantly higher rate than the paint growth rate. That's how it is.

Speaker #1: Right? You know, the as far as the, you know, percentage is concerned, it is in now, about 10 to 12% level. varies from month to month, quarter to quarter, but somewhere around that, level of 12, 12 what percentage.

Speaker #1: And growing at a slightly higher pace or I would say significantly higher, you know, rate than, the paint growth rate. That's how it is.

Speaker #2: Okay. Very clear, sir. Thank you so much.

Anurag Dayal: Okay. Very clear, sir. Thank you so much.

Speaker #3: Just a reminder: for the management to be able to answer most questions, we request participants to limit the number of questions to two. The next question is from the line of Akshin Thakkar.

Mohit Dureja: Just a reminder. For the management to be able to answer most questions, I request participants to limit the number of questions to 2. The next question is from the line of Akshin Thakkar. Please go ahead.

[Company Representative] (Emkay Global): Just a reminder. For the management to be able to answer most questions, I request participants to limit the number of questions to 2. The next question is from the line of Akshin Thakkar. Please go ahead.

Speaker #3: Please go ahead.

Speaker #2: Yeah, sorry. Most of my questions have been answered. I just wanted to get your perspective on the competitive intensity. How have challenger brands reacted to the volatility in raw materials?

Akshin Thakkar: Sorry. Most of my questions have been answered. Just wanted to get your perspective on the competitive intensity. How have challenger brands reacted to how the volatility in raw material is? Have you seen discounts or dealer margins go down? When there are periods where crude comes off, have you seen some of that go up? Just wanted to get your perspective over that. Thanks.

Akshen Thakkar: Sorry. Most of my questions have been answered. Just wanted to get your perspective on the competitive intensity. How have challenger brands reacted to how the volatility in raw material is? Have you seen discounts or dealer margins go down? When there are periods where crude comes off, have you seen some of that go up? Just wanted to get your perspective over that. Thanks.

Speaker #2: 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 #2: You just wanted to get your perspective over there. Thanks.

Speaker #1: No, so the competition remains intense, you know, as far as the challenger brand is concerned. Though they have raised their prices in the dealer price list, as of now, it is equated to the industry at large.

Abhijit Roy: The competition remains intense as far as the challenger brand is concerned, though they have raised their prices in dealer price list has been now equated to the industry at large. The rebating to some of the bigger dealers has gone up, and at the same time, the 10% free material continues in most of the packs, other than the economy category or the lower end of the spectrum. It remains intense, and it remains challenging in terms of the intensity of competition. Except for that fact that, as I said, there was a 5% gap between the dealer price list itself, between them and us, and that has been neutralized. That prices have gone up to that extent.

Speaker #1: But the rebating to some of the bigger dealers has gone up. And at the same time, you know, the 10% free material continues in most of the packs, other than the economy category, the lower end of the spectrum.

Speaker #1: 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, there was a 5% gap between the dealer price list itself between them and us, and that has been neutralized, so that prices have gone up to that extent.

Speaker #1: Even in case of painters also, the extraordinary spend levels which was there has now been normal, normalized. To a level where, you know, it is quite comfortable for everyone.

Abhijit Roy: Even in case of painters also, the extraordinary spend levels which was there has now been normalized to a level where it is quite comfortable for everyone. Overall, therefore, the intensity has reduced, but it still remains at an elevated level.

Speaker #1: So, overall, therefore, the intensity has reduced, but it still remains at an elevated level.

Speaker #2: Okay. Thanks. One, one last question. you know, if, if we think about industry growth in the last two years, we've had, you know, volume growths which were middling and then obviously last two to three quarters, you've seen a sharp pickup.

Akshin Thakkar: Okay, thanks. One last question. If we think about industry growth in the last 2 years, we've had volume growths which were middling, and then obviously last two to three quarters, you've seen a sharp pickup. Even if you discount for the fact that some of it could be dealer inventory buildup. Outside of that also, underlying demand seems to have done well. What's your level of confidence on this demand recovery continuing? Because prices have gone up. Just more generally, one would assume that discretionary spends would come under pressure. I'm just trying to understand where this sort of recovery in demand in paints is coming through from. Thanks.

Akshen Thakkar: Okay, thanks. One last question. If we think about industry growth in the last 2 years, we've had volume growths which were middling, and then obviously last two to three quarters, you've seen a sharp pickup. Even if you discount for the fact that some of it could be dealer inventory buildup. Outside of that also, underlying demand seems to have done well. What's your level of confidence on this demand recovery continuing? Because prices have gone up. Just more generally, one would assume that discretionary spends would come under pressure. I'm just trying to understand where this sort of recovery in demand in paints is coming through from. Thanks.

Speaker #2: You know, even if you discount for the fact that some of it could be dealer inventory buildup, outside of that, the underlying demand also seems to have done well.

Speaker #2: 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.

Speaker #2: So I'm just trying to understand where this sort of recovery in demand in, in paint is coming through from. Thanks.

Speaker #1: 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 and therefore the value growth used to be much lower.

Abhijit Roy: Yeah. Overall, actually, earlier also the volume growth was there, but in those days there was a price decrease which had happened, and therefore the value growth used to be much lower. Now the situation has reversed. You see a volume growth and there is a much more stronger value increase happening because of the price increase happening. 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. That volume growth improvement is on the back of two factors. One, this quarter and last quarter, June, possibly last year was a absolute disaster because of excessive rains. Now that situation is not there. That impacts painting definitely. Hence, last part of the painting cycle was impacted. Last year, the other problem was that the Diwali was much earlier.

Speaker #1: Now the situation has reversed. So, you, you see a volume growth and there is a much more stronger value increase happening because of the price increase happening.

Speaker #1: 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.

Speaker #1: 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 an absolute disaster because of excessive rains, you know.

Speaker #1: So now that situation is not there. That impacts painting, definitely, and hence, you know, the last part of the painting cycle was impacted. Last year, the other problem was that Diwali was much earlier.

Speaker #1: Typically, people tend to paint, before Diwali and they got no opportunity because it kept raining right through almost up to Diwali. So it was a very, very short Diwali.

Abhijit Roy: Typically, people tend to paint before Diwali, and they got no opportunity because it kept raining right through almost up to Diwali. It was a very short Diwali. We expect this year that the sell-outs 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.

Speaker #1: So we expect this year that, the sellouts 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.

Speaker #2: Okay. Thank you, sir.

Akshin Thakkar: Okay. Thank you, sir.

Akshen Thakkar: Okay. Thank you, sir.

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

Mohit Dureja: Thank you. The next question is from the line of Aditya Bhartia. Please go ahead.

[Company Representative] (Emkay Global): Thank you. The next question is from the line of Aditya Bhartia. Please go ahead.

Speaker #2: Hi, sir. sir, 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.

Aditya Bhartia: Hi, sir. Asian Paints had 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 Q2. Your commentary around margins appears to be a lot more optimistic, wherein we are speaking about a year-on-year expansion in Q2 as well. Just wanted to understand where is the difference, and isn't it the case that higher cost inventory will also start contributing? In that context, the price increase that we have taken will largely be offset by that higher cost inventory.

Speaker #2: 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 #2: So 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?

Speaker #2: And in that context, the price increase that we have taken will largely be offset by that higher-cost inventory.

Speaker #1: No, so the essential difference is that we have a, higher percentage of industrial business than them. it's almost 20% for us. And in their case, it might be much lower.

Abhijit Roy: No. The essential difference is that we have a higher percentage of industrial business than them. It's almost 20% for us, and in their case it might be much lower. It's primarily a decorative play for them. What happens therefore is that, there was a significant delay in the price increases that we got on the industrial business lines. That will come into effect in Q2. That's an advantage which we should have in Q2 compared to what the leader has told you in the commentary.

Speaker #1: It's primarily a decorative play for them. So what happens therefore is that, you know, there, there was a significant delay in the price increases that we got on the industrial business lines.

Speaker #1: 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 #2: That's very clear, sir. Thank you so much.

Aditya Bhartia: That's very clear, sir. Thank you so much.

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

Mohit Dureja: Thank you. The next question is from the line of Amit Purohit. Please go ahead.

[Company Representative] (Emkay Global): Thank you. The next question is from the line of Amit Purohit. Please go ahead.

Speaker #2: Yeah. Hi, sir. thank you for the opportunity and, congrats on good.

Amit Purohit: Yeah. Hi, sir. Thank you for the opportunity and congrats on.

Speaker #1: I can't hear you, Amit.

Abhijit Roy: I can't hear you, Amit.

Amit Purohit: Hello.

Speaker #2: hello.

Speaker #3: Amit, can you come close to the headset and speak?

Abhijit Roy: Can you come close to the headset and speak?

Speaker #2: Yeah. Am I audible now, sir? Yeah. Yeah. Sir, thanks for the opportunity and congrats. Most of the questions are answered. Just on the subsidiary part, you, while the growth has been muted, but the margin expansion has been, decent, across most of the businesses.

Amit Purohit: Yeah. Am I audible now, sir?

Abhijit Roy: Yes.

Amit Purohit: Yeah. Sir, thanks for the opportunity and congrats. Most of the questions are answered. Just on the subsidiary part, 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 and even this year, the margin improvement story should continue.

Speaker #2: do you expect over medium term and even this year, the, margin improvement story should continue in spite of hello?

Abhijit Roy: Yeah. We join, yeah.

Speaker #1: Yeah, we can hear you. Carry on, please.

Amit Purohit: Hello.

Abhijit Roy: Yeah, we can hear you. Carry on, please.

Speaker #2: Yeah. So, despite the volatility, or the increase in RM cost, you don't think that the subsidiary business margins could come under pressure for this year, or the next one or two years?

Amit Purohit: Yeah. Despite the volatility or the increase in RM cost, you don't think so that the subsidiary business margins could come under pressure for this year or next one or two years?

Speaker #1: No, I, I think the margins will be pretty okay. You know, as far as the subsidiaries are concerned, they had, you know, I, I think, you know, the businesses are now looking good.

Abhijit Roy: No, I think the margins will be pretty okay as far as the subsidiaries are concerned. I think the businesses are now looking good. In fact, we have taken some corrective measure, as I mentioned, to correct the profitability angle of both Bolix and STP. I think it should yield very good results in this quarter and going forward in Q3. I can see only up to that. After that, it will all depend on how the raw material prices behave and what happens.

Speaker #1: In fact, you know, we have taken some corrective measures, as I mentioned, to correct the profitability angle of both Bolix and STP. And I think, you know, it should yield very good results in this quarter and going forward in Q3.

Speaker #1: I can see only up to that. After that, you know, it'll all depend on how the raw material prices behave and what happens.

Speaker #2: Sure. Thank you, sir. Thanks.

Amit Purohit: Sure. Thank you, sir. Thanks.

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

Mohit Dureja: Thank you. The next question is from the line of Keyur. Please go ahead. Keyur, please unmute your mic and go ahead. Since the current participant is not responding, we can go ahead with Mihir Shah. Please unmute your mic and.

[Company Representative] (Emkay Global): Thank you. The next question is from the line of Keyur. Please go ahead. Keyur, please unmute your mic and go ahead. Since the current participant is not responding, we can go ahead with Mihir Shah. Please unmute your mic and.

Speaker #3: But please, unmute your mic and, as they go.

Speaker #2: 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 used to be, you know, minus 5 average which is now reducing this, you know, in this quarter, we also saw that for the, market leader as well.

Mihir Shah: Hi, sir. Thank you for my follow-up. Just one question on the mix that is changing this year versus if you see the historical years, the difference between the volume and value gap used to be minus five average, which is now reducing in this quarter. We also saw that for the market leader as well. Should one think that this year, given the raw material prices are high, the mix probably will remain at a much lower level, the impact of mix will remain at a lower level, like a minus one, two zone, or you think it can go back to minus five, six zone in the coming quarters?

Speaker #2: Should one think that this year, given the raw material prices are high, the mix probably will remain at a much lower level? The impact of mix will remain at a lower level, like a minus 1 or 2 zone, or do you think it can go back to a minus 5 or 6 zone in the coming quarters?

Speaker #1: 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 8, 9% and the current growth used to be 3, 4%, right?

Abhijit Roy: No, I didn't get it. If you look at the earlier figures, the volume growth used to be 8%, 9%.

Mihir Shah: Correct

Abhijit Roy: The value growth used to be 3%, 4%, right?

Speaker #1: So you are indicating.

Mihir Shah: Correct.

Speaker #2: Correct. So the difference was minus 3%, 4%, 5%.

Abhijit Roy: That's what you are indicating.

Mihir Shah: Correct. The difference was a -3%, 4%, 5%.

Speaker #1: But primarily not because of the mix, but because of the price decreases that had happened. Now if you look at it, it has reversed, you know, because we are getting an 8, 9% volume growth, but a 13 to 16, 14, 15% value growth, largely because of the price increase which is there, right?

Abhijit Roy: That was primarily not because of the mix, but because of the price decreases that had happened. If you look at it has reversed because we are getting an 8%, 9% volume growth, but a 13% to 16%, 14%, 15% value growth, largely because of the price increase which is there. Right? 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 #1: 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 #2: Understood. Understood. okay. No, because if I'm referring to.

Mihir Shah: Understood. Okay. If I'm referring to-

Speaker #1: So there is a degree of mix which is changing here. 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, say, you know, normal products, say ad mixture or, you know, tile adhesive, these are low value products, but high volume products.

Abhijit Roy: There is a degree of mix which is changing, you are right that there are some amount of construction chemical products we sell, and the growth of those categories are much higher than, say, normal products, say, admixture or tile adhesive. These are low-value products but high volume products. They are growing at a faster pace, and hence, sometimes the volume growth is running ahead of the value growth. To that extent, there might be a differential of 2%, 3%. The balance is in terms of almost 3%, 4%, 5% of price drop, which was happening regularly earlier. Now that situation has reversed with the price increase going up by 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.

Speaker #1: 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 the balance is, you know, in terms of almost like 3–5% of price drop, which was happening regularly earlier.

Speaker #1: 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—it should have been therefore 10% or 8%, say, in terms of the price increase which should have been reflected.

Speaker #1: 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 8, it will show only 5 or 6 percentage.

Abhijit Roy: It doesn't reflect fully because it depends on two factors. One is this, that 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%. That's the reason why you don't see the full extent of the volume-value gap, which otherwise should have reflected with the type of price increase that has happened.

Speaker #1: 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.

Speaker #2: Understood. Got it, got it. And last question on the other income side—just wanted to check what has led to the sharp bump-up in other income.

Mihir Shah: Understood. Got it, sir. Last question on the other income side. Just wanted to check what has led to the sharp bump up in other income, both on consolidated and standalone actually.

Speaker #2: both on consolidation standalone actually.

Speaker #1: Yeah, you can mention, you know, that here.

Abhijit Roy: Yeah, you can mention.

Kaushik Ghosh: Yeah. Hi, that's Kaushik.

Kaushik Ghosh: Hi, Manish. Kaushik here.

Speaker #2: Hi, Kaushik sir.

Speaker #1: Yeah. So this is largely on account of if you see our, cash balances have gone up.

Mihir Shah: Hi, Kaushik, sir.

Abhijit Roy: Yeah. This is largely on account of, if you see our cash balances have gone up.

Speaker #2: Right. Only that, right? And, and it's out, it's out of our, treasury

Mihir Shah: Right. Only that, right?

Abhijit Roy: It's out of our treasury incomes.

Speaker #1: incomes.

Speaker #2: Okay. And capex for the year, how should we think about that?

Mihir Shah: Okay. CapEx for the year, how should we think about that?

Speaker #1: I mean, the capex roughly is at—I mean, it's as we had predicted earlier. It's phased somewhere around, because our Panagot project will start at the end of this fiscal.

Abhijit Roy: CapEx roughly is at, as we had predicted earlier, it's phased somewhere around, because our Panagarh project will start at the end of this fiscal.

Speaker #2: Right.

Speaker #1: So roughly, it will be ₹600 to ₹800 for the year.

Mihir Shah: Right.

Abhijit Roy: roughly it will be INR 600 to 800 for the year.

Speaker #2: For the year. Understood. Got it, sir. Okay. Thank you very much and thank you for wishing you all the best.

Mihir Shah: For the year. Understood. Got it, sir. Okay. Thank you very much.

Abhijit Roy: Thank you.

Mihir Shah: Thank you. Wishing you all the best.

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

Mohit Dureja: Thank you. The next question is from the line of Jay Doshi. Please go ahead.

[Company Representative] (Emkay Global): Thank you. The next question is from the line of Jay Doshi. Please go ahead.

Speaker #4: Hi, Abhijit. so my, I don't have any question. I just have a request. Would it be possible for you to move to UVG instead of volumes, you know, Pidilite, all other FMCG companies there, you know, disclose UVG which is value weighted and, you know, if you.

Jay Doshi: Hi, Abhijit.

Abhijit Roy: Hi.

Jay Doshi: I don't have any question. I just have a request.

Abhijit Roy: Yeah.

Jay Doshi: Would it be possible for you to move to UVG instead of volumes? Pidilite, all other FMCG companies disclose UVG, which is value weighted.

Speaker #1: Or UVG, you know, if you can just explain the concept.

Abhijit Roy: What is UVG? If you can just explain the concept.

Speaker #4: It's underlying volume growth. It's value weighted. So right now, you know, the issue of mix that you explained earlier, that will be eliminated. So UVG is basically price, you know, volume plus mix.

Jay Doshi: It's underlying volume growth. It's value weighted. Right now, the issue of mix that you explained earlier, that will be eliminated. UVG is basically price, volume plus mix. I'll probably take it offline.

Speaker #4: I'll probably take it offline, but you know, if you basically start.

Abhijit Roy: Yeah, okay.

Speaker #1: Yeah, just 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.

Jay Doshi: if you basically start-

Abhijit Roy: Just explain to me, we can do it, that's not a problem. Everyone has to do the same thing, then only you can compare one with the other.

Speaker #1: Then only you can compare one with the other.

Speaker #4: Sir, sir, I'm, I'm hopeful that if you start, others may also sort of, you know.

Jay Doshi: Sir, I'm hopeful that if you start, others may also sort of follow.

Speaker #1: Sure. You know, we have no problems, you know, in explaining in that way. But let me know what this is all about, the concept, and we can do it.

Abhijit Roy: Sure. We have no problems in explaining in that way. Let me know what this is all about, the concept, we can do it. That's not a problem.

Speaker #1: That's not a problem.

Speaker #4: Sure, sir. I'll write to you separately. Thank you so much.

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

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

[Company Representative] (Emkay Global): Thank you. In the interest of time, we consider that as the last question for the day. I hand over the call to the management for the closing remarks.

Speaker #3: Thank you. In the interest of time, we will consider that as the last question for the day. I now hand over the call to the management for their closing remarks.

Speaker #1: So thank you, you know, for coming and attending this session. You know, hopefully, you know, we can have a slightly better quarter two, you know, from the current levels as well.

Abhijit Roy: Thank you for coming and attending this session. Hopefully, we can have a slightly better Q2 from the current levels as well. All the best. Thank you.

Speaker #1: And all the best. Thank you.

Speaker #5: Thank you.

Mohit Dureja: Thank you. On behalf of Emkay Global Financial Services, that concludes this conference call. Thank you all for joining us.

[Company Representative] (Emkay Global): Thank you. On behalf of Emkay Global Financial Services, that concludes this conference call. Thank you all for joining us.

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