Q1 2027 Kansai Nerolac Paints Ltd Earnings Call

Speaker #1: Ladies and gentlemen, good day and welcome to the Kansai Nerolac Q1 FY27 earnings conference call, hosted by ICICI Securities Limited. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes.

Operator 2: Ladies and gentlemen, good day, welcome to Kansai Nerolac Q1 FY27 earnings conference call hosted by ICICI Securities Limited. As a reminder, all participant lines will be in listen only mode, there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on a touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Nirav Joshi from ICICI Securities Limited. Thank you, over to you, sir.

Speaker #1: Should you need assistance during this conference call, please signal an operator by pressing star, then zero, on a touch-tone phone. Please note that this conference is being recorded.

Speaker #1: I now hand the conference over to Mr. Aniruddha Joshi from ICICI Securities Limited. Thank you, and over to you, sir.

Speaker #2: Yeah, thanks. Thanks, Nesia. On behalf of ICICI Securities, we welcome you all to the Q1 FY27 Results Conference Call of Kansai Nerolac Paints Limited.

Nirav Joshi: Yeah. Thanks, Nasia. On behalf of ICICI Securities, we welcome you all to Q1 FY27 results conference call of Kansai Nerolac Paints Limited. We have with us today senior management represented by Mr. Pravin Chaudhari, Managing Director, Mr. Yash Ahuja, Chief Financial Officer, and Mr. Jason Gonsalves, Director, Corporate Planning, IT, and Materials. Now, we hand over the call to the management for initial comments on the quarterly performance, then we will open the floor for question and answer session. Thanks, over to you, Pravin, sir.

Speaker #2: We have with us today senior management represented by Mr. Praveen Choudhary, Managing Director; Mr. Yash Ahuja, Chief Financial Officer; and Mr. Jason Gonsalves, Director – Corporate Planning, IT, and Materials.

Speaker #2: Now we hand over the call to the management for initial comments on the quarterly performance, and then we will open the floor for the question-and-answer session.

Speaker #2: Thanks. And over to you, Praveen sir.

Speaker #3: Yeah, I'll request Jason to walk you through the presentation.

Pravin Chaudhari: Yeah. I request Jason to walk you through presentation.

Speaker #4: Good evening and greetings to everyone, and thank you for joining us for this investor conference call. We appreciate the continued confidence of our shareholders, analysts, and stakeholders.

Jason Gonsalves: Good evening and greetings to everyone, thank you for joining us for this investor conference call. We appreciate the continued confidence of our shareholders, analysts, and stakeholders. Today, I will walk you through the key developments of the quarter. I'd like to begin by restating our vision and mission. Our purpose is to create environments for a healthy and beautiful future. Our vision is we design solutions that protect, inspire, and touch lives every day. Our ESG commitment, which is we are water positive, emission reduction, and green energy. Coming to our brand. For over a century now, Nerolac has established itself as a trusted heritage brand synonymous with excellence, innovation, and leadership in the paint industry. Our enduring success is anchored in strong research and development capabilities and strategic global technology partnerships.

Speaker #4: Today, I will walk you through the key developments of the quarter. I'd like to begin by restating our vision and mission. Our purpose is to create environments for a healthy and beautiful future.

Speaker #4: Our vision is: we design solutions that protect, inspire, and touch lives every day. And our ESG commitment is: we are water positive, focused on emission reduction, and green energy.

Speaker #4: Coming to our brand, for over a century now, Nerolac has established itself as a trusted heritage brand synonymous with excellence, innovation, and leadership in the paint industry.

Speaker #4: Our enduring success is anchored in strong research and development capabilities and strategic global technology partnerships. This is particularly evident in our industrial coatings business, where we deliver advanced, high-performance solutions across a wide range of applications.

Jason Gonsalves: This is particularly evident in our industrial coatings business, where we deliver advanced high-performance solutions across a wide range of applications. In an increasingly competitive marketplace, Nerolac continues to enjoy strong brand recall and consumer trust, consistently maintaining its position as the second most recognized paint brand in India in terms of top-of-mind awareness. One of Nerolac's most iconic brand assets is its timeless jingle, which has transcended generations and has remained deeply embedded in consumer memory for over three decades. This enduring cultural connect continues to strengthen our brand identity and foster lasting emotional resonance with consumers. Nerolac remains focused on shaping the future through breakthrough product innovation and technological advancement. Our portfolio of sustainable solutions reflects a steadfast commitment to responsibility, progress, and customer trust, ensuring that we not only address the needs of today, but also contribute to a better tomorrow.

Speaker #4: In an increasingly competitive marketplace, Nerolac continues to enjoy strong brand recall and consumer trust, consistently maintaining its position as the second most recognized paint brand in India in terms of top-of-mind awareness.

Speaker #4: One of Nerolac's most iconic brand assets is its timeless jingle, which has transcended generations and remained deeply embedded in consumer memory for over three decades.

Speaker #4: This enduring cultural connection continues to strengthen our brand identity and foster lasting emotional resonance with consumers. Nerolac remains focused on shaping the future through breakthrough product innovation and technological advancement.

Speaker #4: Our portfolio of sustainable solutions reflects a steadfast commitment to responsibility, progress, and customer trust, ensuring that we not only address the needs of today, but also contribute to a better tomorrow.

Speaker #4: Emotional connect builds long-term equity, and Nerolac continues to nurture this bond through meaningful consumer engagement and a consistent brand experience. Looking ahead, our technological expertise will play an increasingly significant role in strengthening our decorative paints business.

Jason Gonsalves: Emotional connect builds long-term equity, Nerolac continues to nurture this bond through meaningful consumer engagement and a consistent brand experience. Looking ahead, our technological expertise will play an increasing significant role in strengthening our decorative paints business. By leveraging innovation, we are well-positioned to introduce category-defining products that cater to a growing demand for premium and differentiated products. A notable example is our Paint+ range, an exclusive portfolio of pioneering solutions that has created new benchmarks in the decorative paints category, delivering distinctive value and superior experience to the Indian consumers. We have introduced our employee value proposition this year, it is, "Where our passion takes color," reflecting our belief that the passion of our workforce is central to everything we do. Through this proposition, we aim to foster a positive environment that encourages growth, ownership, continuous learning, and open communication across the organization.

Speaker #4: By leveraging innovation, we are well-positioned to introduce category-defining products that cater to the growing demand for premium and differentiated offerings. A notable example is our Paint Plus range—an exclusive portfolio of pioneering solutions that has set new benchmarks in the decorative paints category, delivering distinctive value and a superior experience to Indian consumers.

Speaker #4: We have introduced our employee value proposition this year, and it is where our passion takes color, reflecting our belief that the passion of our workforce is central to everything we do.

Speaker #4: Through this proposition, we aim to foster a positive environment that encourages growth, ownership, continuous learning, and open communication across the organization. Now, coming to the business environment that we saw in the first quarter— in the first quarter, we saw six significant things.

Jason Gonsalves: Now, coming to the business environment that we saw in Q1. In Q1, we saw six significant things. There was a significant oil price increase. The rupee depreciated sharply. There was a geopolitical challenge because of the West Asia crisis. We saw good demand in automotive and continued focus on infrastructure. Of course, there was a delayed offset of monsoon. Now, speaking about our decorative strategy, which is built on six pillars: new products, project business, construction chemicals, waterproofing and wood finish, branding and media spend, influencer program, and network expansion and focus geography. We are driving this six-pronged decorative strategy through strategic digital technologies like CRM, scheme management, integrated business planning, and distributor management software. Now, coming to the decorative highlights. Let's first focus on the retail side. Here, services is aiding the primary business with mid-single digit % contribution to the decorative business.

Speaker #4: There was a significant oil price increase. The rupee depreciated sharply. There was a geopolitical challenge because of the West Asia crisis. We saw good demand in automotive, and continued focus on infrastructure.

Speaker #4: And of course, there was a delayed offset of monsoon. Now, speaking about our decorative strategy, which is built on six pillars: new products; project business; construction chemicals, waterproofing, and wood finish; branding and media spend; influencer program; and network capacity expansion and focus geography.

Speaker #4: We are driving this six-pronged decorative strategy through strategic digital technologies like CRM, scheme management, and distributor management software. Now, coming to the decorative highlights, let's first focus on the retail side.

Speaker #4: Our services are aiding the primary business with a mid-single-digit percentage contribution to the decorative business. Our products are now present in more than 250 cities.

Jason Gonsalves: Our Pass is present now in more than 250-plus cities. AID, our Architect and Interior Designer program, is present in 45-plus cities, and our Pragati program for painters now covers 65,000 painters in terms of participation in Q1. Coming to our project and institutional business, where we recorded a double-digit growth. Our geographical reach is today at 80-plus cities. We have a strong pipeline of project sites, and we have a complete range of products called Super Series for the projects business. In the network expansion, we added 1,700 dealers in this quarter, our distribution network continues to expand in low presence towns. Coming to construction chemicals, here we recorded a double-digit growth. We are exploring and executing international collaborations for launching technology-backed solutions, our focus market and focus product approach is continuing to yield good results. In the premium wood finish segment, we recorded high single-digit growth.

Speaker #4: AID, our architect and interior designer program, is present in 45-plus cities. And our Pragathi program for painters now covers 65,000 painters in terms of participation in Q1.

Speaker #4: Coming to our project and institutional business, where we recorded double-digit growth, our geographical reach is today at 80-plus cities. We have a strong pipeline of project sites, and we have a complete range of products called Super Series for the projects business.

Speaker #4: Our net in the network expansion, we added 1,700 dealers in this quarter. And our distribution network continues to expand in low presence towns. Coming to the coming to construction chemicals, here we recorded a double-digit growth.

Speaker #4: We are exploring and executing international collaborations for launching technology-backed solutions, and our focus market and focus product approach is continuing to yield good results.

Speaker #4: In the premium wood finish segment, we recorded high single-digit growth. Our focus here is on weighted contractor engagement to drive primary growth, and also the same focus market and focus product approach to drive growth.

Jason Gonsalves: Our focus here is on weighted contractors engagement to drive primary growth, also the same focus market and focus product approach to drive growth. Coming to our offline channel for retail, today we are at 186 stores in terms of next gen shopping. We are at 275 stores in our shop-in-shop model, and we are at 385 stores in our Nerolac Paint Plus zones. These are adding significant value to us. Coming to our product portfolio, we have a complete range of products in all the three segments of economy, premium, and super premium. In interiors, we have Impressions series in super premium and the Nerolac Beauty series in premium. In exterior emulsions, we have Excel Everlast 20, a new product, Excel Everlast Super Premium, Excel Mica Marble, Anti-Peel Premium, and Nerolac Suraksha Economy. In the waterproofing range, we have Perma No Heat, Nerolac Perma No Damp, and Soldier Rain Raksha.

Speaker #4: Coming to our offline channel for retail, today we are at 186 stores in terms of next-gen shopping. We are at 275 stores in our shop-in-shop model, and we are at 385 stores in our Nerolac Paint Plus zones.

Speaker #4: These are adding significant value to us. Coming to our product portfolio, we have a complete range of products in all three segments: economy, premium, and super premium.

Speaker #4: In interiors, we have the Impression series in super premium and the Beauty series in premium. In exterior emulsions, we have XL Everlast 20—a new product—XL Everlast Super Premium, Mica Marble, Anti-Peel Premium, and Suraksha Economy.

Speaker #4: In the woodproofing range, we have No Heat, No Damp, and Soldier Rain Raksha. In the tile adhesive range, we have Platinum Plus, Platinum, and Diamond Plus. And we have, in the other range, other Perma ranges.

Jason Gonsalves: In the tile adhesive range, we have Perma Tile Adhesive Platinum Plus, Perma Tile Adhesive Platinum, and Perma Tile Adhesive Diamond. We have in the other range, other Perma ranges. In the premium wood finish range, we have Wonderwood Gloria, and in the popular wood finish range, we have Wonderwood Clear Acrylic Lacquer, Wonderwood 1K PU, and Wonderwood NC Sanding Sealer. Coming to some of the new products that we have launched, Excel Everlast 20, India's first exterior paint with 20-year warranty, engineered with bulletproof nano silica technology for super durability, crack bridging up to 2 mm, and weather resistance. The second product is Excel Total Floor Coat. It is a superior premium water-based exterior emulsion that protects and beautifies floor tiles and cement surfaces with rich sheen, antifungal properties, and superior abrasion resistance. We have the third product, which is Perma No Damp NXT, which is a high-strength, fiber-reinforced elastomeric liquid-applied waterproofing coating.

Speaker #4: In the premium wood finish range, we have Gloria, and in the popular wood finish range, we have clear acrylic lacquers, 1K PU, and NC sanding sealer.

Speaker #4: Coming to some of the new products that we have launched, XL Everlast 20, India's first exterior paint with a 20-year warranty, engineered with bulletproof nano silica technology for superior durability, crack bridging up to 2 mm, and weather resistance.

Speaker #4: The second product is XL Total Floor Coat, which is a superior premium water-based exterior emulsion that protects and beautifies floor tiles and cement surfaces, with enhanced antifungal properties and superior abrasion resistance.

Speaker #4: And we have the third product, which is Perma No Damp NXT, which is a high-strength, fiber-reinforced, elastomeric, liquid-applied waterproofing coating. It is formulated with resilient acrylic copolymers and reinforcing fibers. Upon curing, it forms a thick, seamless, durable membrane that offers ultimate waterproofing.

Jason Gonsalves: It is formulated with resilient acrylic copolymers and reinforcing fibers. Upon curing, it forms a thick, seamless, durable membrane that offers ultimate waterproofing. In terms of media campaign, we ran two major campaigns. Excel Everlast, where the reach and engagement covered 550 million plus impressions across key geographies, 52 million views on YouTube, 30 million views on Reels, 110 million views on social media, 2 million clicks, and 1.2 million plus views on YouTube Shorts. In terms of Perma No Heat, in terms of reach and engagement, we had 210 million impressions in key geographies experiencing extreme heat. 20-plus million views on Meta, 15 million views on YouTube, and 2.5 lakh clicks. Coming to advertising and digital marketing, we had 160 out-of-home holdings across 27 cities.

Speaker #4: In terms of media campaigns, we ran two major campaigns. For XL Everlast, the reach and engagement covered 550 million-plus impressions across key geographies, 52 million views on YouTube, 30 million views on Reels, 110 million views on social media, 2 million clicks, and 1.2 million-plus views on YouTube Shorts.

Speaker #4: In terms of no heat, in terms of reach and engagement, we had 210 million impressions in key geographies experiencing extreme heat, 20-plus million views on Meta, 15 million views on YouTube, and 250,000 clicks.

Speaker #4: Coming to advertising and digital marketing, we had 160 out-of-home holdings across 27 cities. Nerolac remains committed to strengthening its brand through sustained investments across television, digital, and integrated media platforms, enhancing consumer engagement and reinforcing its position as an innovative and trusted leader in the paints industry.

Jason Gonsalves: Nerolac remains committed to strengthening its brand through sustained investments across television, digital, and integrated media platforms, enhancing consumer engagement, and reinforcing its position as an innovative and trusted leader in the paints industry. A key highlight has been the Out of the World campaign, which celebrates Nerolac's spirit of innovation and showcases pioneering solutions that go beyond conventional paint offerings. The campaign underscores the brand's focus on delivering differentiated products that address evolving consumer needs and elevate the paint experience. Complementing this, the No Heat campaign that has effectively highlighted the benefits of Nerolac's heat reflective coating solutions, demonstrating how advanced technology can help create cooler and more energy-efficient living spaces. Together, these initiatives strengthen Nerolac's relevance, deepens consumer connect, and reinforces its image as a forward-looking and consumer-centric brand. Coming to the industrial update.

Speaker #4: A key highlight has been the out-of-the-world campaign, which celebrates Nerolac's spirit of innovation and showcases pioneering solutions that go beyond conventional paint offerings. The campaign underscores the brand's focus on delivering differentiated products that address evolving consumer needs and elevate the paint experience.

Speaker #4: Complementing this, the No Heat campaign has effectively highlighted the benefits of Nerolac's heat-reflective coating solutions, demonstrating how advanced technology can help create cooler and more energy-efficient living spaces.

Speaker #4: Together, these initiatives strengthen Nerolac's relevance, deepen consumer connect, and reinforce its image as a forward-looking and consumer-centric brand. Now, coming to the industrial update—in automotive, we are accessible to, we have access to the latest global technology through our tie-up with Japan and other countries.

Jason Gonsalves: In automotive, we have access to the latest global technology through our tie-up with Japan and other countries. Our focus is on innovation, creating new and enhancing existing technologies. Water-based, high solids, and low-bake technologies, and introducing paints with superior and unique properties. Highly durable, superior finish, corrosion resistance, and workability. In new business, we have increased our presence in identified accounts and our thrust on electrical vehicles. In new segments, we continue to gain market share in seam sealer and underbody black, alloy wheels, pretreatment, and booth chemicals, which is a new area we have entered. In terms of business performance, auto segment witnessed strong growth with a focus on innovation and creating new technologies to increase the total addressable market. Coming to performance coating.

Speaker #4: Our focus is on innovation, creating new and enhancing existing technologies—water-based, high-solids, and low-VOC technologies—and introducing paints with superior and unique properties.

Speaker #4: Highly durable, superior finish, corrosion resistance, and workability. In new business, we have increased our presence in identified accounts and have a thrust on electrical vehicles.

Speaker #4: And in new segments, we continue to gain market share in seam sealer and underbody black, alloy wheels, pre-treatment, and booth chemicals, which is a new area we have entered.

Speaker #4: In terms of business performance, the auto segment witnessed strong growth, with a focus on innovation and creating new technologies to increase the total addressable market.

Speaker #4: Coming to performance coating, in the general industrial and high-performance coating areas, our growth strategy is centered around premiumization, new technologies, and dealer network expansion.

Jason Gonsalves: In the general industrial and the high-performance coating area, our growth strategy in these areas is centered around premiumization, new technologies, and dealer network expansion. Under premiumization, we are driving growth across high-value segments, including infrastructure, bridges, railways, construction, appliances, and electricals. Through new technologies, we continue to expand our portfolio with fluoropolymer coatings, anti-carbonation systems, high solid coatings, direct to metal solutions, low-bake systems, and water-based technologies. To strengthen market coverage, we are focused on dealer expansion and increasing our presence in untapped geographies. In terms of business performance coating liquid segment also witnessed very strong growth. This was led in areas such as construction equipment, drum and barrels, and the coil coating segment. Coming to powder coatings. Our powder coating business is again focused on premiumization, new technology development, and maintaining the high market share that we enjoy.

Speaker #4: Under premiumization, we are driving growth across high-value segments including infrastructure, bridges, railways, construction, appliances, and electricals. Through new technologies, we continue to expand our portfolio with fluoropolymer coatings, anti-carbonation systems, high solid coatings, direct-to-metal solutions, low-VOC systems, and water-based technologies.

Speaker #4: To strengthen market coverage, we are focused on dealer expansion and increasing our presence in untapped geographies. In terms of business performance, the performance coating liquid segment also witnessed very strong growth, and this was led in areas such as construction equipment, drums and barrels, and the coil coating segment.

Speaker #4: Coming to powder coatings, our powder coating business is again focused on premiumization, new technology development, and maintaining the high market share that we enjoy.

Speaker #4: Under premiumization, we are expanding our presence in rebar, construction, alloy wheels, super durable coatings, pipe coatings, and heat-resistant coatings. Through new technologies, we are driving innovation in low-bake fast cure systems, bonded metallic powders, anti-dirt pickup solutions, and thermoplastic coatings.

Jason Gonsalves: Under premiumization, we are expanding our presence in rebar, construction, alloy wheels, super durable coatings, pipe coatings, and heat-resistant coatings. Through new technologies, we are driving innovation in low-bake, fast cure systems, bonded metallic powders, anti-dirt pickup solutions, and thermoplastic coatings. To maintain our leadership position, we continue to focus on network expansion and securing new customer approvals. In terms of business performance in powder, we witnessed robust growth. Strong growth was witnessed in auto ancillaries, ACs, and electrical segments, and focused products like metallic powders witnessed healthy growth. Across both the liquid and powder coatings, our focus remains on premiumization, technology-led innovation, and market expansion, enabling us to deliver sustainable growth while strengthening our leadership across these key industrial segments. In auto refinish, our focus in premiumization is on increasing the sale of premium PU products.

Speaker #4: To maintain our leadership position, we continue to focus on network expansion and securing new customer approvals. In terms of business performance in powder, we witnessed robust growth; strong growth was witnessed in auto ancillaries, ACs, and electrical segments, and focus products like metallic powders witnessed healthy growth.

Speaker #4: Across both the liquid and powder coatings, our focus remains on premiumization, technology-led innovation, and market expansion, enabling us to deliver sustainable growth while strengthening our leadership across these key industrial segments.

Speaker #4: In auto refinish, our our focus in premiumization is on this increasing the sale of premium PU products in new technology we are focused on increasing the sale of premium PU products sorry to promote high solid paint systems and water waterborne coatings and under network expansion we are increasing the count of body shops and securing new approvals to further strengthen our market presence.

Jason Gonsalves: In new technology, we are focused on increasing the sale of premium PU products to promote high solid paint systems and waterborne coatings. Under network expansion, we are increasing the count of body shops and securing new approvals to further strengthen our market presence. In terms of business performance in auto refinish, our growth was flat. In the premium PU, we have notable body shop wins. The conversion from solid-borne to waterborne systems is transitioning as per plan. Among the new products that we have introduced in industrial, our focus has been on enhancing finishes and functionality, offering versatile applications and prioritizing environmental sustainability. In industrial coatings, driving innovation through sustainability, performance, and versatility through strong R&D capabilities and global technology partnerships. We are developing next generation coatings across automotive performance liquid and powder coating segments.

Speaker #4: In terms of business performance in auto refinish, our growth was flat. In the premium PU, we have notable body shop wins. The conversion from solid-borne to waterborne systems is transitioning as per plan.

Speaker #4: Among the new products that we have introduced in industrial, our focus has been on enhancing finishes and functionality, offering versatile applications, and prioritizing environmental sustainability.

Speaker #4: In industrial coatings, driving innovation through sustainability, performance, and versatility, and with strong R&D capabilities and global technology partnerships, we are developing next-generation coatings across automotive, performance liquid, and powder coating segments.

Speaker #4: In Automotive, under environmental sustainability, we expanded the adoption of tin-free CD technology with higher solid contents across key customer accounts. We introduced premium clear coat solutions delivering matte and silky smooth finishes, enhanced aesthetics for premium two-wheeler applications, and dual-tone finish compatibility.

Jason Gonsalves: In automotive, under environmental sustainability, we expanded the adoption of tin-free CED technology with higher solid contents across key customer accounts. We introduced premium clear coat solutions, delivering matte and silky smooth finishes, enhanced aesthetics for premium two-wheeler applications, and dual-tone finish compatibility. We also developed highly durable topcoat systems for commercial vehicle applications, which delivers industry-leading performance with up to 1,200 QUV resistance hours. In performance coating liquid, under environmental sustainability, we increased the focus on water-based coating technologies, enabling low VOC applications. In finishes and functionality, we developed advanced anti-carbonation coating systems, specially designed for metro rail infrastructure and other link road structures. Among versatile applications, we developed high scratch resistance coatings for coil coatings for facade and appliance applications. In powder coatings, under environmental sustainability, we continued the transition from conventional liquid coatings to powder coating technologies supporting low VOC.

Speaker #4: We also developed highly durable top coat systems for commercial vehicle applications, which deliver industry-leading performance with up to 1,200 QOV resistance hours. In performance coating liquid, under environmental sustainability, we increased the focus on water-based coating technologies enabling low VOC applications. In finishes and functionality, we developed advanced anti-carbonation coating systems specially designed for metro rail infrastructure and other link road structures.

Speaker #4: And among versatile applications, we developed high scratch resistance coatings for coil coatings for facade and appliance applications. In powder coatings, under environmental sustainability, we continued the transition from conventional liquid coatings to powder coating technologies, supporting low VOC.

Speaker #4: In finishes and functionality, our powder primer systems we developed are compatible with liquid topcoats and have been successfully commercialized for alloy wheel applications.

Jason Gonsalves: In finishes and functionality, our powder primer systems we developed, which are compatible with liquid topcoats and successfully commercialized for alloy wheel applications. We introduced specialized heat-resistant powder coatings designed for direct flame and high-temperature environments, including furnaces and fire pits. Across all industrial coating businesses, our innovation efforts remain focused on delivering sustainable technologies, enhanced functionality, and application-specific solutions. These advancements not only strengthen our market leadership, but also help consumers and customers improve performance, efficiency, and environmental compliance while creating long-term value. We have given our diverse range of products in the performance coating segments, whether it is powder coating, general industrial, or high-performance coating. Among the accolades that we won this quarter, in manufacturing, we won the Golden Peacock Award for energy efficiency at Hosur plant. In Decorative, we won an ABBY Awards 2026 award, one Grand Prix, one gold, six silver, and three bronze.

Speaker #4: And we introduced specialized heat-resistant powder coatings designed for direct flame and high-temperature environments, including furnaces and fire pits. Across all industrial coating businesses, our innovation efforts remain focused on delivering sustainable technologies, enhanced functionality, and application-specific solutions.

Speaker #4: These advancements not only strengthen our market leadership but also help consumers and customers improve performance, efficiency, and environmental compliance while creating long-term value. As you know, we have a diverse range of products in the performance coating segments, whether it is powder coating, general industrial, or high-performance coating.

Speaker #4: Among the accolades that we won this quarter in manufacturing, we won the Golden Peacock Award for energy efficiency at our Hosur plant. For decorative, we won an ABBY 2026 award, won Grand Prix, won gold, six silver, and three bronze.

Speaker #4: In terms of capacity expansion, we are now expanding our capacity for automotive, powder coating, and resin at Sayka, Bawal, and Hosur, with a total capex outlay of ₹601 crores. This will result in a total capacity addition of 66,000 KL per year and a resin capacity of close to 10,000 metric tons per year.

Jason Gonsalves: In terms of capacity expansion, we are now expanding our capacity for automotive powder coating and resin at Sayakha, Bawal, and Hosur, with a total CapEx outlay of INR 601 crore, with a total capacity addition of 66,000 KL per year and a resin capacity of close to 10,000 metric tons per year. In ESG, KNPL has been awarded a bronze medal in EcoVadis in 2026 for the third consecutive year. The result places KNPL among the top 18% of companies assessed by EcoVadis. We are recognized in the strong category by Crisil ESG Ratings 2026, and we are rated in the top and ranked 16 out of 548 companies in chemical industry and have received a low risk rating, indicating lower risk in the CDP cycle. Coming to our financials. On a standalone basis, our net revenue growth for the quarter was 10.2%.

Speaker #4: In ESG, KNPL has been awarded a bronze medal by EcoVadis in 2026 for the third consecutive year. This result places KNPL among the top 18% of companies assessed by EcoVadis.

Speaker #4: We are recognized in the 'Strong' category by CRISL ESG Ratings 2026, and we are rated in the top rank and ranked 16th out of 548 companies in the chemical industry. We have also received a low-risk rating, indicating lower risk in the CDP cycle.

Speaker #4: Coming to our financials on a standalone basis, our net revenue growth for the quarter was 10.2%. Our PBDIT has grown by 7.7%, and our PBT has grown by 5.1%.

Jason Gonsalves: Our PBDIT has grown by 7.7%, and our PBT has grown by 5.1%. On a consolidated basis, our net revenue has grown by 9.8%, PBDIT by 8.3%, and PBT by 5.8%. Among the risks and outlook. Among the risks, geopolitical conflicts are leading to supply chain disruptions are one of the key risks, and arising out of that, high commodity prices due to high crude oil mix, the crude oil prices and raw material availability uncertainty, and import cost surge due to rupee depreciation. In terms of outlook, as per RBI, sustained demand will continue for infrastructure and construction sectors. Continuous monitoring of the market situation in view of the continued geopolitical disturbance. Automotive demand continues to be buoyant, driven by new launches and inventory buildup for the festive period. Consumer sentiment may get impacted due to the inflationary environment.

Speaker #4: On a consolidated basis, our net revenue has grown by 9.8%. PBT PBDIT by 8.3% and PBT by 5.8%. Among the risks and outlook among the risks geopolitical conflicts are are leading to supply chain disruptions one of the key risks and arising out of that high commodity prices due to high crude oil mix the crude oil prices and raw material availability uncertainty and import cost surge due to repeat depreciation.

Speaker #4: In terms of outlook, as per RBI, sustained demand will continue for infrastructure and construction sectors. There is continuous monitoring of the market situation in view of the continued geopolitical disturbance. Automotive demand continues to be buoyed, driven by new launches and inventory buildup for the festive period, and consumer sentiment may get impacted due to the inflationary environment.

Speaker #4: With this, I come to the end of the investor presentation.

Jason Gonsalves: With this, I come to the end of the investor presentation. Thank you. Over to you for the questions.

Speaker #1: Thank you.

Speaker #2: Over to you for the questions.

Speaker #1: Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone.

Operator 2: Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and One on the touchtone telephone. If you wish to remove yourself from the question queue, you may press Star and Two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while a question queue assembles. The first question is from the line of Abneesh Roy from Nuvama. Please go ahead.

Speaker #1: If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use a handset while asking a question.

Speaker #1: Ladies and gentlemen, please wait for a moment while the question queue assembles. The first question is from Avnish Roy from Nobama.

Speaker #1: Please go ahead.

Speaker #3: Yeah, thanks for the opportunity. I have two questions. So, first is on the decorative—you have given the six-pronged strategy. I wanted to understand versus the market if you could give us if your volume growth is now growing in line with the market, because the market leader's volume growth was around 9% and revenue growth was 16%.

Abneesh Roy: Yeah, thanks for the opportunity. I have two questions. First is on the Decorative you have given the six-prong strategy. I wanted to understand versus market, if your volume growth is now growing in line with the market, because market leaders volume growth was around 9% and revenue growth was 16%. If you could tell us how you have done in Q1. On the new player, are you seeing now competition across all three segments? If you could tell us if there is some reduction in competition or it remains on the higher side. That is my first question.

Speaker #3: So, if you could tell us how you have done in Q1, and on the new players, are you seeing more competition across all three segments? If you could tell us if there is some reduction in competition, or if it remains on the higher side.

Speaker #3: That is my first question.

Speaker #2: Thanks. Thank you, Avnish. About this decorative volume growth, it is not obviously lesser than what competition has shown. But that is with the reason that you know we are clearly prioritizing our premium mix and we are not participating greatly into low margin high volume items where it is not adding to my strategy.

Pravin Chaudhari: Thank you, Abneesh. That is the reason that we are clearly prioritizing our premium mix and we are not participating greatly into low margin, high volume items where it is not adding to my strategic expansion of the market. We are very focused on the markets and making choices in terms of which market we can gain traction using these levers and not unnecessarily pitching into these products. That is first. I think we are happy with underlying performance of our markets and the way our strategy is getting developed.

Speaker #2: A strategic expansion of the market. So we are very focused on the markets and making choices in terms of which markets we can gain traction, using these levers.

Speaker #2: And not unnecessarily pitching into these products. So that is first. But I think we are happy with the underlying performance of our markets and the way our strategy is getting developed. We have seen improvements in all the parameters of decorative, whether it is our business development team's efforts, whether it is our Paint as a Service project distribution, and also with our overall new dealer openings and the return of our dealers that we were concerned about.

Pravin Chaudhari: We have seen improvements in all the parameters of decorative, whether it is our business development team's efforts, whether it is our paint as a service, project distribution, and also about our overall new dealer opening and return of our dealers that we are concerned. I think underlying performance on all the growth drivers, I think is positive. I'm sure in the quarters to come, I think this should come to full fruition and we should see this good result as far as overall volume development is concerned. On the second part on competition intensity continues to remain intact. We are not seeing a much letdown there, and I think that is what we anticipate will continue because I think now as markets starting getting developed and we have reached overall equilibrium, so to say, in terms of new competition entrenching very well across the market.

Speaker #2: So I think underlying performance on all the growth drivers I think is positive. And I'm sure in the I think quarters to come I think this should come to full fruition and we should see the good result as far as overall volume development is concerned.

Speaker #2: On the second part, competition intensity continues to remain intact. We are not seeing much letdown there. And I think that is what we anticipate will continue, because I think now as the market is starting to get developed and we have reached overall equilibrium, so to say, in terms of new competition entrenching very well across the market and we have also formed the base. Now it's the time, you know, when it will be decided how much extraction from this particular network is coming. That is why I guess for this year at least, that intensity will remain and people will test the waters in terms of this new set equilibrium, and then time will tell us whether one succeeds and one fails and what will happen next year.

Pravin Chaudhari: We also form the base. Now it's the time where it will decide how much extraction from this particular network is coming. That is why, I guess for this year at least, that intensity will remain and people will test water in terms of this new set equilibrium. Then time will tell us whether one succeeds and one fails and what will happen next year.

Speaker #3: Thank you. One follow-up. So, if I see the market leader, it has seen good margin expansion, and you said you are focusing more on premium products.

Abneesh Roy: Thank you. One follow-up. If I see market leader, it has seen good margin expansion, and you said you are focusing more on premium products. In your case, margins are almost stable YOY. Why the focus on premium that is not visible on margins? Is that because you're investing more in terms of the A&P, the influencer program, the dealer expansion? If you could elaborate why the margin expansion is not visible.

Speaker #3: But in your case, margins are almost stable year-on-year. So why the focus on premium that is not visible on margins? Is that because you're investing more in terms of the ANP, the influencer program, the dealer expansion? Could you elaborate on why the margin expansion is not visible?

Speaker #2: Yeah. So, Avnish, for us, you know, the portfolio consists of both industrial and decorative. So I think, while decorative did fairly well, I think it is industrial which is lagging in terms of price increase. In industrial, it always follows, and it takes about a quarter or two to really get the full impact of the price increase.

Pravin Chaudhari: Yeah. Abneesh, for us the portfolio consists both industrial and decorative. I think while decorative did fairly well, I think it is industrial which is lagging in terms of price increase. In the industrial, it always follows, and it takes about a quarter or two to really get the full impact of price increase. That is still under discussion, and the way discussions are happening, I am sure this will come through as far as Q2 is concerned. It should see some positive impact subject to geopolitical situation not worsening and which happens every other week, we see situation changing. I believe in a steady state, I think we should see improvement going forward.

Speaker #2: So, that is still under discussion and, considering the way discussions are happening, I am sure this will come through as far as Q2 is concerned. It should see some positive impact, subject to the geopolitical situation not worsening— and, as we see, almost every other week the situation changes. So, if I believe in a steady state, I think we should see improvement going forward.

Speaker #2: Yeah.

Abneesh Roy: Yeah. The last question, you said competition is high, you also said that market has come to an equilibrium. If you could elaborate, what do you mean by both these statements? Because it seems competition is quite high, market share now seems to be stable. If you could tell us in terms of freebies, which the new player was giving in terms of, say, 10% extra grammage, et cetera. In your markets, is there any reduction by the new player?

Speaker #3: So, in the last question you said competition is high, but you also said that the market has come to an equilibrium. If you could elaborate on what you mean by both these statements, because it seems competition is quite high but market share now seems to be stable. Also, if you could tell us regarding rebates which the new player was giving—in terms of, say, 10% extra grammage, etc.—in your markets, is there any reduction by the new player?

Speaker #2: So first of all when I say equilibrium means you know this competition has formed this base now which is sufficient and which I guess having see having increased the distribution network having reached every corner of the country now possibly they have the base now the challenge is more than numeric reach I think it will be more extraction from the counter which is exactly what we have been doing and our network addition is to be to the next 10 of 5 to 10% every year.

Pravin Chaudhari: First of all, when I say equilibrium, means this competition has formed this base now, which is sufficient and which I guess having increased their distribution network, having reached every corner of the country, now possibly they have the base. The challenge is more than numeric reach. I think it will be more extraction from the counter, which is exactly what we have been doing. Our network addition is to be to the next 10 or 5% to 10% every year. I think that is where I call it a steady state. In the steady state obviously, if your value proposition is enough for dealer to give you more business or consumer having good traction in terms of buying, then obviously your intensity can be slightly lower. This seems to be not happening.

Speaker #2: So I think that is where I call it a steady state. Now, in the steady state, obviously, you know if your value proposition is enough for the dealer to give you more business or the consumer is having good traction in terms of buying, then obviously your intensity can be slightly lower.

Speaker #2: But this seems to not be happening. So one has to really push hard in terms of really getting more from the counter. And that's why I said, you know, that new entrants still maintain high competitive intensity.

Pravin Chaudhari: One has to really push hard in terms of really getting that more from the counter. That's why I said that new entrants still maintain high competitive intensity. Third one, coming to freebies. I think it is general trend. It is not specific to my focus counts. I think there has been some letup we saw in terms of economy, it's mixed. Somewhere we see that is happening, some markets we see that it is still continuing. Frankly, I don't know whether it is because of stock they have or it's a regional strategy. I think it's yet to be figured out. It is a mix in terms of the offering free products in the market.

Speaker #2: Third one, coming to freebies, I think it is a general trend; it is not specific to my focus towns. I think there has been some letup we saw in terms of the economy, but it's mixed. Somewhere we see that is happening, some markets we see that it is still continuing.

Speaker #2: Frankly, I don't know whether it is because of the stock they have or if it's a regional strategy. I think that is yet to be figured out.

Speaker #2: But it is a mix in terms of offering free products in the market.

Speaker #3: So, thank you. Very useful. Thank you. That's all from me.

Abneesh Roy: Sure. Thank you. Very useful. Thank you. That's all from me.

Speaker #2: Thank you Avnish.

Pravin Chaudhari: Thank you, Abneesh.

Speaker #1: Thank you. The next question is from the line of Aveen Mehta from Maxwell Capital. Please go ahead.

Operator 2: Thank you. The next question is from the line of Avi Mehta from Macquarie Capital. Please go ahead.

Speaker #2: Yeah. Hi team. Thanks a lot. Just two questions. First if you could kind of give us the value growth and decorative how is it is it in the mid single is it in the double digit levels or in the high single digit or kind of give us some clarity over there.

Avi Mehta: Yeah. Hi, team. Thanks a lot. Just two questions. First, if you could kind of give us the value growth in decorative, how is it? Is it in the mid-single digits? Is it in the double digit levels or in the high single digits? Kind of give us some clarity over there. Also, what do you say it has remained healthy? How is the momentum? The similar thing on industrial, which segment as well. If you could kind of start with that, please.

Speaker #2: And also, when you say it has remained healthy, how is the momentum in the similar segment on industrial? Which segment is where? If you could kind of start with that, please.

Speaker #3: Yeah. So in decorative, it is high single digit, either our growth, and as I said, you know, we cautiously planned that way. So that is one.

Pravin Chaudhari: Yeah. In Decorative it is high single digits is our growth. As I said, we cautiously planned that way. That is one. When I say Sorry, Avi, what is the second part? I missed it.

Speaker #3: And when I say water, for you Aveen, what is the second part?

Speaker #2: Industrial, it would then be double-digit. So, we have moved to double digits over there, and this is high single-digit. That's how it would be said.

Avi Mehta: Industrial, it would be double digits. We have moved to double digits over there.

Pravin Chaudhari: Yeah

Avi Mehta: will be high single digits. That's how it would be said.

Speaker #3: Right. Right. That's that's right. Correct. And what happens you know Aveen and what happens in the quarter by quarter mix also keeps changing. Because you know quarter one is heavy on decorative then quarter two is different.

Pravin Chaudhari: That's right. Correct.

Avi Mehta: You know.

Pravin Chaudhari: What happens, Avi, is that quarter by quarter our mix also keeps changing. Because Q1 is heavy on Decorative, Q2 is different, Q3 is different. That mix keeps changing. That's why I think our consolidated numbers also look different in each quarter.

Speaker #3: Quarter three is different, so that mix keeps changing. That's why I think our consolidated numbers also look different in each quarter.

Speaker #2: So the mix also had an impact, right? Logically, because your industrial is growing more, and hence that's how it will also have an impact on the margin profile.

Avi Mehta: The mix also had an impact, right? Logically, sir, because your Industrial is growing more. Hence that's how it will also have an impact on the margin profile. Is that understanding correct?

Speaker #2: Is that understanding correct?

Speaker #3: Yeah. That's right.

Pravin Chaudhari: Yeah. That's right. One more thing, Avi, is Industrial markets obviously have improved over the years. Now because of this price settlement that is happening and which is taking time, that's why you might see 1.3% reduction in gross contribution. I'm sure as price development will happen and price pass-through will happen, I'm sure you'll see the improvement there also.

Speaker #2: And one more thing, Aveen, is, you know, industrial margins obviously have improved over the years, and now, because of this price settlement that is happening and which is taking time, that's why you might see a 1.3-odd percent reduction in gross contribution.

Speaker #2: But I'm sure as price development will happen and price-cost, price pass-through will happen, I'm sure you'll see the improvement there also.

Speaker #3: Okay.

Avi Mehta: Okay. The margin guidance is retained. I just wanted to reconfirm that part. That was the only bit for FY27. How maybe you indicated.

Speaker #2: So, the margin guidance is retained, right? I just wanted to reconfirm that part. That was the only bit for FY27 you indicated.

Speaker #3: Yeah, it looks like what we have in our endeavor is to really maintain that. Yes.

Pravin Chaudhari: Yeah. Looks like. I think our endeavor is to really maintain that. Yes.

Speaker #2: Okay sir. Okay. So the second and the last bit was on the capex sir. If you could kind of just give us a sense on how does this what does this mean from an annual capex outlay perspective this 600 crores is this going to be more front ended and hence overall capex what we should kind of build in.

Avi Mehta: Okay, sir. Okay. The second and the last bit was on the CapEx, sir. If you could kind of just give us a sense on what does this mean from an annual CapEx outlay perspective, this INR 600 crore. Is this going to be more front-ended and hence overall CapEx, what we should kind of build in? That was the only bit. Last, sir, if I may, with your permission, if you could just spend some time explaining this employee engagement program details. If you could kind of help us understand what has been done, how much are we outlaying on this? Those are the two points. That's all from my side. Thank you.

Speaker #2: That was the only bit. And last, sir, if I may, with your permission, could you just spend some time explaining this employee engagement program—details, if you could kind of help us understand what has been done, how much are we outlaying on this over the two points?

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

Speaker #3: Yeah. So, on the capex front, our normal capex is about ₹150 to ₹200 crore. And this capex outlay of ₹600 crore will be over about two years, two plus years.

Pravin Chaudhari: Yeah. On CapEx front, our normal CapEx is about INR 150 to 200 crore. This CapEx outlay INR 600 crore will be over about two plus years. That is how it will be spread out. I don't see any significant impact on the annual CapEx that will happen. That is on first part. Second part, you talked about employee, right? Employee.

Speaker #3: So that is how it will be spread out. So I don't see any significant impact on the annual capex that will happen. So that is on the first part.

Speaker #3: And the second part, you talked about employee rights. Employee, yes.

Avi Mehta: Yes. You said in terms of engagement there has been increase in employee engagement programs. Was this existing employees you are essentially doing in-shops? Or you could just explain what does that meant in the Jason getting start?

Speaker #2: Engagement. You said there has been an increase in employee engagement programs. Was this for existing employees? Were you essentially doing ESOPs, or could you just explain what was meant by that? Jason Mehta, can you start?

Speaker #3: Okay. Okay. That is the employee value proposition. It is more to do, you know, with—I mean, why people should join Nerolac per se. Because I believe in the current, you know, talent race, it is really becoming difficult—one is to retain and attract talent.

Pravin Chaudhari: Okay. That is employee value proposition. It is more to do with why people should join Nerolac per se. I believe in current, this talent race, it is really becoming difficult, one is to retain and attract talent. I think this is also part of a global HR program where every group level we are doing this activity. Hence this is one initiative from our side really to drive this complete change in the process, the way we interact, hire to retire kind of a life journey of an employee, what can be done. It is from that angle, and I'm sure with our higher engagement score, I'm sure we'll be able to sustain and improve it further as far as engagement is concerned.

Speaker #3: And I think this is also part of a global HR program, where at every group level we are doing this activity. And hence, this is one initiative from our side, really, to drive this complete change in the process—the way we interact, hire to retire, kind of a life journey of an employee, what can be done.

Speaker #3: So it is from that angle, and I'm sure that with our higher engagement score, we'll be able to sustain and improve it further as far as engagement is concerned.

Speaker #3: That was.

Avi Mehta: Got it, sir. Sorry, sir. Sir, just this INR 200 crore plus another INR 600 divided by two and a half years is how I should build the annual CapEx.

Speaker #2: Sorry, sorry, sorry, sorry. Sir, just this 200 crores plus another 600, divided by two and a half—two, two and a half years—is how I should build the annual capex.

Speaker #2: Is that what.

Speaker #3: Yeah, yeah. Correct. You're right. You're right. You're right. Correct.

Pravin Chaudhari: Yeah.

Avi Mehta: Understood.

Pravin Chaudhari: Correct. You're right. Correct.

Avi Mehta: Okay, sir. Thank you.

Speaker #2: Okay sir. Thank you.

Speaker #3: Thank you Aveen.

Pravin Chaudhari: Thank you, Avi.

Speaker #1: Thank you. The next question is from the line of Dasha from Sunetra Asset Managers. Please go ahead.

Operator 2: Thank you. The next question is on the line of Disha from Finacra Asset Managers. Please go ahead. Yes, ma'am. You're audible.

Speaker #4: Namaste.

Speaker #1: Yes ma'am you're audible.

Speaker #4: Yeah, so my first question was on the decorative and industrial coating side. How do you see the remainder of FY27 business, like which is the primary contributor to the incremental revenue growth that you see?

[Analyst] (Finacra Asset Managers): Yeah. My first question was on the decorative and industrial coating side. How do you see for the remainder of FY27 like, which is the primary contributor to the incremental revenue growth, I think?

Pravin Chaudhari: As I mentioned earlier, in terms of decorative and industrial both, I think the way we saw this market development since November, I think it has been continuously improving, and we see that trend going forward continuing. It's very difficult to put numbers and figures, but I think you'll see through this result this quarter, I'm sure you'll see quite positive figures coming back, and I'm sure that trend, we hope it continues. In addition, our Diwali this time is in the month of November. Hopefully our Q3, where October will be fully available for us to really deploy material and have that full painting cycle. We believe all in all, I think there has to be slightly better season going forward, is what our belief is. Industrial, as I said, I'm sure market will continue to expand.

Speaker #3: As I mentioned earlier, in terms of both decorative and industrial segments, I think the way we have seen this market develop since November, it has been continuously improving.

Speaker #3: And we see that trend going forward, continuing. So it's very difficult to put numbers and figures, but I think you see through this result, this quarter, I'm sure you'll see quite positive figures coming back.

Speaker #3: And I'm sure that trend—we hope it continues. In addition, you know, our Diwali this time is in the month of November. So hopefully our quarter three, where October will be fully available for us, we'll be able to really deploy material and have the full printing cycle.

Speaker #3: So, we believe, all in all, there has to be a slightly better season going forward—that is our belief. And industrial, as I said, I’m sure the market will continue to expand, but in addition to that, the way we are driving new segments and higher penetration through premium products and technology-driven solutions, I’m sure we hope to maintain good growth levels in industrial as well.

Pravin Chaudhari: In addition to that, the way we are driving new segments and higher penetration through premium products and technology-driven solutions, I'm sure we hope to maintain good growth levels in industrial as well.

Speaker #4: You got it sir. If you have a next question was on the dealer network side. How is the productivity per dealer evolved and are any recent dealers are like reaching the targeted sales level within the expected time frame?

[Analyst] (Finacra Asset Managers): Got it, sir. Sir, my next question was on the dealer network side. How has the productivity per dealer evolved? Are any recent dealers reaching the targeted sales levels within the expected time frame?

Speaker #3: Yeah. We have not measured it in terms of timeline like that, but I'm sure productivity has definitely gone up per dealer because of our focus on premium products.

Pravin Chaudhari: We have not measured in terms of timeline like that, I'm sure productivity definitely has gone up per dealer because of our focus on premium products. I think that is certainly up as far as productivity is concerned. Second, in terms of time, I don't think we have that metric in terms of when he reached that particular size or scale. Very difficult to say that.

Speaker #3: I think that is certainly up, as far as productivity is concerned. The second, in terms of time, I don't think we have that metric in terms of when he reached that particular size or scale.

Speaker #3: Very difficult to say that.

Speaker #4: Got it, sir. And just one last question on the medium-term strategy side. The decorative change industry is really competitive, with significant investments from both incumbents and new entrants, right?

[Analyst] (Finacra Asset Managers): Got it, sir. Just one last question on the medium-term strategy side. The Decorative paints industry is really competitive with significant investments from both incumbents and new entrants, right? Have you observed any changes in the pricing discipline or dealer intensity or competitive behavior during the Q1 compared with the previous years?

Speaker #4: So have you observed any changes in the pricing discipline or dealer incentives or competitive behavior during the quarter one compared with compared to the previous years?

Speaker #3: No, no change at all. I think the intensity continues in the market as it was—possibly like last year, even at the Q4 exit also, it is the same.

Pravin Chaudhari: No change at all. I think intensity continues in the market as it was possibly in last year or even Q4 exit also it is same. Both on the printer applicator or on scheme front, it is same.

Speaker #3: Both on the printer applicator or on the scheme front, it is the same.

Speaker #4: You got it. Thank you so much, sir. That's it from my side.

[Analyst] (Finacra Asset Managers): Got it. Thank you so much, sir. That's it from my side.

Speaker #1: Thank you. The next question is from the line of Aniruddha Joshi from ICICI Securities Limited. Please go ahead.

Operator 2: Thank you. The next question is from the line of Aniruddha Joshi from ICICI Securities Limited. Please go ahead.

Speaker #2: Yeah, so thanks for the disclosure. Like you have highlighted, the growth rates in Project, separately Construction Chemical, Waterproofing, as well as Premium Wood Finishes.

Nirav Joshi: Thanks for the disclosure. You have highlighted the growth rates in projects separately, construction chemical waterproofing, as well as premium wood finishes. If I can ask you more about what will be the growth in, let's say, value for money decorative paints as well as the premium decorative paints. Also, how are the price hikes in industrial coatings per se? Because generally we have seen the price hikes in industrial coatings lag at least one to two quarters the price hikes in decorative paints. Any view on the industrial price hike? That is question 2. Lastly, the capacity expansion is happening, but the way the market leader is also investing in backward integration. Any strategy like that, along with the CapEx that Kansai is doing, or whether the inner backward integration will not be looked at at this stage?

Speaker #2: If I can ask you more about what will be the growth in, let's say, value-for-money decorative paints as well as premium decorative paints.

Speaker #2: And also, how are the price hikes in industrial coatings per se? Because generally, we have seen the price hikes in industrial coatings lag at least one to two quarters behind the price hikes in decorative paints.

Speaker #2: So, any view on the industrial price hike? That is question number two. And lastly, the capacity expansion is happening, but the way the market leader is also investing in backward integration—so, any strategy like that along with the capex that Kansai is doing?

Speaker #2: Or whether, in a way, backward integration will not be looked at at this stage. Yeah. These are the readings. Thank you.

Nirav Joshi: Yeah, these are the three things. Thank you.

Speaker #3: Okay. So you know, economy and super premium is the first question. I think economy grew mid single digit, whereas super premium grew double digit, is what I can say as far as overall product portfolio is concerned.

Pravin Chaudhari: Okay. Economy and super premium is the first question. I think economy grew mid-single digits, whereas super premium grew double digits is what I can say as far as overall product portfolio is concerned. In terms of industrial price hike, I think it is very difficult to put that number because it is all at customer level. If I were to put a number to it, I think it will be about 5% all you can say. That is what the numbers we have got so far. There are a lot of discussions happening, which will obviously be adding further in Q2. Other thing to note is also when we ask for price increase, it is always with effective date. Obviously our ask is from 1st April. It depends on what our negotiation levels are and how much leverage we get.

Speaker #3: And in terms of industrial price hike, I think it is very difficult to put that number because, you know, it's all at the customer level.

Speaker #3: But if you have to put a number to it, I think it will be about five percent, all you can say. That's what the numbers we have got so far.

Speaker #3: And there are a lot of discussions happening, which will obviously be adding further in Q2. Another thing to note is that when we ask for a price increase, it is always with an effective date.

Speaker #3: So you know, obviously, I ask, is it from the first of April? It depends on what our negotiation levels are and how much leverage we get.

Speaker #3: So I think, all in all, we are pretty satisfied with the progress so far. And I think we hope to get more as far as Q2 is concerned.

Pravin Chaudhari: I think all in all, we are pretty satisfied with progress so far, and I think we hope to get more as far as Q2 is concerned. That is on industrial part. Third part was on capacity. Our capacity increase is definitely considering backward integration. If you note there is a resin which is mentioned. That resin is nothing but backward integration for automotive paint. In fact, I think we are the only one in India who manufacture full range of resins intermediate that are required for automotive, right from CED to metallic to top coat to clear coat. I think that is always our endeavor. However, we are not getting into backward integration of a raw material. That is not yet on the card. In future, I don't know. Whether if we find it worthwhile, definitely we will have to discuss that.

Speaker #3: That is on the industrial part. And the third part was on capacity. So, our capacity increase is definitely considering backward integrations. If you note, there is a regime which is mentioned; that regime is nothing but backward integration for automotive paint.

Speaker #3: In fact, I think we are the only ones in India who manufacture the full range of regime intermediates that are required for automotive, right from CD to metallic to top coat to clear coats.

Speaker #3: So I think that is always our endeavor. However, we are not getting into backward integration of our raw material. That is not yet on the cards.

Speaker #3: In future, I don't know whether, if we find it worthwhile, definitely we'll have to discuss that. Another advantage which we have is, I think, as a Kansai group, we have operations in more than thirty-odd countries.

Pravin Chaudhari: Another advantage which we have is, I think as a Kansai Group, we have operation in more than 30 odd countries, where we have many assets which produce variety of products, right from high-end intermediates to economy kind of intermediates. I think as per the need, we can always source depending on that kind of item is required. As a group, I think we are well equipped to handle a lot of backward integration which possibly we may not have. That can be always sourced from the group.

Speaker #3: Where we have many assets which produce variety of products right from you know high end intermediates to you know economy kind of intermediates. So I think as as per the need we can always source depending on that kind of item if required.

Speaker #3: So, as a group, I think we are well equipped to handle a lot of backward integration, which possibly we may not have. So, that can always be sourced from the group.

Speaker #2: Okay. Sure sir. Just one last question. It seems that now Kansai is investing more so is there any with the aggressive strategy it seems is there any target that you can share on market share let's say in three years or four years five years that the company is looking at and is there any additional spend in terms of ad spend or trade spends et cetera which you can quantify?

Nirav Joshi: Okay. Sure, sir. Just one last question. It seems that now Kansai is investing more. With the aggressive strategy, it seems, is there any target that you can share on market share, let's say in three years or four years, five years, that the company is looking at? Is there any additional spend in terms of ad spend or trade spends, et cetera, which you can quantify? Yeah. Thanks.

Speaker #2: Yeah. Thanks.

Speaker #3: Yeah, yeah, right. And this, our capacity expansion, obviously is happening in automotive and industrial side and powder coating, where obviously we are leaders, and in industrial also, I think we are in a very strong position, growing higher than the market.

Pravin Chaudhari: Yeah. Right. Our capacity expansion obviously is happening in automotive and industrial side and powder coating, where obviously we are leaders, and in industrial also, I think we are in a very strong position growing higher than the market. There obviously we would like to be number one as far as industrial, even non-auto business is concerned. That's our endeavor. I think in next year or so, or sorry, next two years, our endeavor is to reach there. That is one. On Decorative front, obviously, competition intensity, and I think when we elaborated our strategy, it was very clear that we would like to maintain our position, if not improve. That is what we are really investing in, to have that market position maintained.

Speaker #3: So, there obviously, we would like to be number one as far as industrial and even non-auto business is concerned. That's our endeavor. And we, I think in the next year or so—sorry, in the next two years—our endeavor is to reach there.

Speaker #3: That is one. On the decorative front, obviously, competition intensity—and I think when we elaborated the strategy, it was very clear that we would like to maintain our position, if not increase, if not improve.

Speaker #3: So that is what we are really investing in—to have that market position maintained. And once, I think, this dust settles—and I'm sure there'll be a time when Nerolac brand, which is the number two brand recognized in the country—I'm sure we'll have our chance to grow further, aggressively, and expand the market.

Pravin Chaudhari: Once, I think this dust settles, and I'm sure there'll be time when Nerolac brand, which is number two brand recognized in the country, I'm sure we'll have our chance to grow further aggressively and expand the market. That is what I would, in short term, I think that is what we would like to really say about this growth strategies.

Speaker #3: So, that is what I would, in short term, I think, that is what we would like to really say about these growth strategies.

Speaker #2: Sure. And sir, about any incremental costs that the company is looking to incur—any impact on, let's say, margins, or even in Q1, if there was any?

Nirav Joshi: Sure. Sir, about any incremental costs that the company is looking to incur, any impact on, let's say, margins or even in Q1 if there was any?

Speaker #3: No. So Aniruddha, as I mentioned, you know, our ad spend actually increased in Q1. And given our mix, actually, we could sustain our margins.

Pravin Chaudhari: No, Anirudh, as I mentioned, our ad spend actually increased in Q1, and given our mix, actually, we could sustain our margins. I think it is suffice to say that our investment will be commensurate with the mix that we are trying to drive in the market. I'm sure it has to be very productive investment. I think for Nerolac, awareness is not a concern. I think our awareness is 95 plus, so I think people know Nerolac brand, people know everything. I think it is availability, distribution reach, and then obviously getting conversion, I think is our priority. For which we are investing in the market. Digital is our main spend, where we are actually targeting these towns now. We saw very good success when we target the market rather than just being on the television and trying to sprinkle everything everywhere.

Speaker #3: So I think it is sufficient to say that our investment will be commensurate with the mix that we are trying to drive in the market.

Speaker #3: So, I'm sure it has to be a very productive investment. It's just that, I think for Nerolac, awareness is not a concern.

Speaker #3: I think our awareness is 95-plus. So I think people know the Nerolac brand, people know everything. I think it's availability, distribution reach, and then obviously getting conversion, I think, is a priority, and for which we are investing in the market.

Speaker #3: And digitally, the main spend—where we are actually targeting these towns now. And we saw very good success when we target the market, rather than just being on television and trying to sprinkle everything everywhere.

Speaker #3: So I think that's our approach. The net-net, ad spend has increased, and it is in line with the overall mix improvement that we saw.

Pravin Chaudhari: I think that's our approach. The net ad spend has increased, and it is in line with our overall mix improvement that we saw, hence the impact on the margin is not significant at all.

Speaker #3: Hence, the impact on the margin is not significant at all. Yeah.

Nirav Joshi: Okay, sure, sir. Very helpful. Many, many thanks.

Speaker #2: Okay. Sure, sir. Very helpful. Many, many thanks.

Speaker #3: Thank you Aniruddha.

Pravin Chaudhari: Thank you, Anirudh.

Speaker #1: Thank you. The next question is from the line of Mihir Shah from Nomura. Please go ahead.

Operator 2: Thank you. The next question is on the line of Mihir Shah from Nomura. Please go ahead.

Speaker #2: Hi sir, good evening. Thank you for taking my question, and congrats on your decision set of numbers. My first question is on the quarter margins.

Mihir Shah: Hi, sir. Good evening. Thank you for taking my question, and congrats on a decent set of numbers. First question is on the quarter margins. It seems like in Q1, we did not see any impact on the gross margins as you would have some low-cost price inventory. How should one think about Q2 margins, which will see both an impact because of a seasonally weaker quarter and also you will start consuming the high-cost inventory and the full impact of that will come in Q2. How should one think about the margins in Q2 specifically? That's question number one.

Speaker #2: It seems like in one quarter, we did not see any impact on the gross margins, as you would have some low-cost price inventory.

Speaker #2: How should one think about second quarter margins, which will see both an impact because of a seasonally weaker quarter, and also, you will start consuming the high-cost inventory—and the full impact of that will come in Q2?

Speaker #2: So how should one think about the margins in Q2 specifically? So that's question number one.

Speaker #3: Yeah. So, there was some inventory with us on both the RM and SG front in Q1. In Q2, obviously, there will be high-cost inventory, but coupled with that, the full impact of the price increase of Deco as well as Industrial will come in.

Pravin Chaudhari: Yeah. There was some inventory which was there with us both on RM and FG front in Q1. Q2, obviously there'll be high-cost inventory, but coupled with that, the full impact of price increase of Decorative as well as industrial will come in. We are quite hopeful that we'll be able to manage this overall inflation that was there. Needless to say, it is challenging, but obviously with our internal sourcing efficiency, value engineering, and formula optimization, obviously, we'll try to overcome that. The second thing is also the inflation which was there in month of June at peak. We saw some downward trend also, and there's slight deflation that has happened. I think that augurs well in terms of offsetting. If there is any shortfall in the price increase we see, I think it will be helpful for us to really manage that overall cost inflation.

Speaker #3: So we are quite hopeful that we'll be able to manage this overall inflation that was there. Needless to say it is challenging but obviously with our internal sourcing efficiency value engineering and formula optimization obviously we'll be able to we'll try to work on that.

Speaker #3: The second thing is also the inflation, which was there in the month of June at its peak. We saw some downward trend also, and there's slight deflation that has happened.

Speaker #3: I think that August, in terms of offsetting, if there is any shortfall in the price increase we see, I think it will be helpful for us to really manage that overall cost inflation.

Speaker #3: I think, net-net, I believe while it is challenging, but obviously our endeavor and our internal alignment and, you know, initiatives are to maintain our margins compared to last year, same quarter.

Pravin Chaudhari: I think net net, I believe while it is challenging, obviously our endeavor and our internal alignment and initiatives are to maintain our margins compared to last year's same quarter.

Speaker #1: Okay.

Mihir Shah: Understood. For quarter also you have a outlook of maintaining margins. That's actually wonderful. Sir, if you can just talk about what is the level of pricing growth in this quarter on an overall consolidated level and what is the kind of pricing growth that is likely to go through in Q2, again, on a console level, which includes both Decorative and industrial, given industrial price increases will come with a lag. We can get some understanding on the level of pricing that we can expect.

Speaker #2: Understood. So, for the quarter also, you have an outlook of maintaining margins. That's actually wonderful. Sir, if you can just talk about what is the level of pricing growth in this quarter on an overall consolidated level, and what is the kind of pricing growth that is likely to go through in Q2.

Speaker #2: Again, on a console level—which includes both Deco and Industrial—given that industrial price increases will come with a lag, we can get some understanding on the level of pricing that we can expect.

Speaker #3: Yeah. So, I think in Q2, I believe, Deco, we should see an additional, you know, 3-odd percent, which will flow through, which we did not see last quarter.

Pravin Chaudhari: I think in Q2, I believe Decorative, we should see additional 3%, which will flow through, which did not last quarter. Industrial, I guess it will be another maybe 3% to 5% is what I can put. That is the number which will come along.

Speaker #3: And industrial, I guess it will be another maybe 3% to 5% is what I can put. That is the number which will come along.

Speaker #2: And for this quarter, what was the pricing for this quarter? On which I can take a three percent.

Mihir Shah: For this quarter, what was the pricing for this quarter, on which I can take a 3%.

Pravin Chaudhari: About 5%.

Speaker #3: About 5%. About 5%.

Speaker #2: On a console level.

Mihir Shah: On a consolidated level?

Speaker #3: Yeah.

Pravin Chaudhari: Yeah.

Speaker #2: Understood. Got it. Got it, sir. Thank you, and wishing you all the very best.

Mihir Shah: Understood. Got it. Got it, sir. Thank you and wishing you all the very best.

Speaker #3: Thank you Mihir.

Pravin Chaudhari: Thank you, Mihir.

Speaker #1: Thank you. The next question is from the line of Seth Gandhi from IIFL Capital. Please go ahead. Seth sir, can you hear me?

Operator 2: Thank you. The next question is on the line of Sid Gandhi from IIFL Capital. Please go ahead. Sid, sir, can you hear me?

Persi Panchski: Hi, sir. Persi Panchski here. Am I audible?

Speaker #2: Hi, sir. So, I keep on thinking here—am I audible?

Speaker #1: Yes sir you're audible.

Operator 2: Yes, sir. You are audible.

Speaker #2: Hello?

Persi Panchski: Hello.

Speaker #1: Yes sir, you're audible. Please go ahead.

Operator 2: Yes, sir. You are audible. Please go ahead.

Persi Panchski: I just wanted to understand in terms of the Decorative business, is there no price hike this quarter? You mentioned that volume is in line with industry, which is a high single digit. In response to another question, you mentioned that sales growth in Decorative is also high single digit. If both are high single digit, does that mean that this quarter actually no price increases have gone through? Or if they have gone through, they have been nullified by some other force, I mean, some other aspect, which I am not aware of?

Speaker #2: I just wanted to understand, in terms of the decorative business, is there no price hike this quarter? Because you mentioned that volume is in line with the industry, which is high single digit.

Speaker #2: Then, in response to another question, you mentioned that sales growth in Deco is also high single digit. So if both are high single digit, does that mean that this quarter actually no price increases have gone through? Or, if they have gone through, have they been nullified by some other force—I mean, some other aspect which I'm not aware of?

Speaker #3: Yeah. So, you know, earlier I did not talk about volume growth in decorative. I talked about value growth, which was slightly lower than the competition—that is, what single digit is.

Pravin Chaudhari: Yeah. Earlier I did not talk about volume growth in Decorative. I talked about value growth, which was slightly lower than the competition, which is what single digit is. Our volume growth is obviously lower. It is the lower single digit.

Speaker #3: And our volume growth is obviously lower. It is a low single digit.

Speaker #2: Okay, got it. And what is the reason that the volume growth is on the lower side? Because this time Asian Paints said that the mix effect has actually been positive.

Persi Panchski: Okay. Got it. What is the reason that the volume growth is on the lower side? Because this time Asian Paints said that the mix effect has actually been positive. It is the volume, it is like a genuine volume growth and not through low value added product.

Speaker #2: So, it is the volume which is a genuine volume growth and not through low value-added products.

Speaker #3: Yeah, that is right for them. But for us, you know, our mix is obviously not in line with what possibly the industry is.

Pravin Chaudhari: Yeah. That is right for them. For us, our mix is obviously not in line with what possibly industry is. We are correcting that, hence we are sacrificing some of the volumes and trying to over-index on the premium market, which is basically emulsion. That's our endeavor, and that's why this picture you are seeing.

Speaker #3: That's, and we are correcting that. Hence, we are sacrificing some of the volumes and trying to over-index on the premium market, which is basically emulsion.

Speaker #3: So that's our endeavor, and that's why this picture you're seeing.

Speaker #2: Okay, okay. Understood. That's all from me. Thank you.

Persi Panchski: Okay. Understood. That's all from me. Thank you.

Speaker #3: Thank you.

Pravin Chaudhari: Thank you.

Speaker #1: Thank you. The next question is on the line of Palak Shah from Entrust Family Office. Please go ahead.

Operator 2: Thank you. The next question is from the line of Palak Shah from Entrust Family Office. Please go ahead.

Speaker #2: Hi. Am I audible?

Palak Shah: Hi, am I audible?

Speaker #1: Yes sir.

Operator 2: Yes, sir.

Speaker #2: Yes, okay. Hi, thank you for taking my question. Just quickly, on the ₹600 crore of capex that we are announcing, should we look at our reported numbers also excluding cash?

Palak Shah: Okay. Thank you for taking my question. Just quickly on the INR 600 crores of CapEx that we are announcing. If you look at our reported numbers also excluding cash, our ROE, ROCE are in between 15% to 18%. What are our expectation from this incremental CapEx of INR 600 crores over the next five to six years on average ROE or ROCE that we are intending to make?

Speaker #2: Our ROE/ROCs are in between 15 to 18 percent. What are our expectations from this incremental capex of ₹600 crore over the next five to six years, and what average ROE or ROC are we intending to make?

Speaker #3: Yeah, so I think our anticipation is, I think, it will be in line with what we have currently because growth will also be in that direction.

Pravin Chaudhari: Yeah. I think our anticipation is, I think it will be in line with what we have currently, because growth will also be in that direction.

Speaker #2: So in terms of capacity utilization, is the current industrial utilization optimal—seventy, seventy-five percent and above—and thus, do we need to have this additional capex?

Palak Shah: In terms of capacity utilization, is the current industrial utilization optimal 70%, 75% and above, and thus we need to have this additional CapEx? Or this is for a new set of products?

Speaker #2: Or is this for a new set of products?

Pravin Chaudhari: You're right. You are right. That is how it is. Second thing is, our start to end, I think in industrial is quite high. That is why it is going to take about 2 years from now. By then, I think we'll be reaching our capacity where we need definite addition to maintain the market demand, to meet market demand.

Speaker #3: Right. No, no, you're right. That is how it is. And second thing is, our start to end, I think, in industrial is quite high.

Speaker #3: So that is why it is going to take about two years from now. And by then I think we'll be reaching our capacity where we need definite addition to maintain the market demand to meet market demand.

Speaker #2: Got it. And given that our asset turns are usually around 1x at the consol level—so would that do even for industrials, or do we do relatively higher asset turns for industrial versus deco today?

Palak Shah: All right. Given that our asset turns are usually around 1x, right, at Kansai Nerolac level. Would that be even for industrials, or we do a relatively higher asset turn for industrial versus Decorative today?

Speaker #3: Similar one.

Pravin Chaudhari: Similar one.

Speaker #2: So, if that's the case and if our margin expectation is fifteen, we are not hoping for more than fifteen percent ROC, even in the new capex that we are doing today.

Palak Shah: If that's the case and if our margins expectation is 15%, we are not hoping for more than a 15% ROCE even in the new CapEx that we are doing today.

Speaker #3: Yeah. So right now yes it also depends on you know how market develops. Are there all are there important things also you know there is some kind of a front loading in this you know capex to the extent of some of the infrastructure we are creating.

Pravin Chaudhari: Right now, yes, it also depends on how market develops. The other important thing is also, there is some kind of a front-loading in this CapEx to the extent of some of the infrastructure we are creating. Hence, the additional capacity which will be required, let's say in 2029, 2030, if the growth volume continues, will be slightly lower than the current CapEx. My per KL CapEx for now and the future incremental capacity will be far better. With that, I think our ROCs will be slightly on the higher end of towards 18, is what our expectation is.

Speaker #3: So, hence, the additional capacity which will be required, let's say in 2029-30, if this growth volume continues, will be slightly lower than the current capex.

Speaker #3: So my per KL capex for now and the future incremental capacity will be far better. And with that, I think our ROCs will be slightly on the higher end—towards eighteen is what our expectation is.

Speaker #2: Got it. Got it. Thank you so much for taking my question. All the best.

Palak Shah: All right. Thank you so much for taking my question. All the best.

Speaker #3: Thank you.

Pravin Chaudhari: Thank you.

Speaker #1: Thank you. The next question is from the line of Amit Purohit from Elara. Please go ahead.

Operator 2: Thank you. The next question is from the line of Amit Purohit from Elara. Please go ahead.

Speaker #2: Yeah. Hi, sir. Am I audible?

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

Speaker #3: Yes.

Pravin Chaudhari: Yes.

Speaker #2: Yeah, so thanks for the clarity on the margins. Just one thing I wanted to clarify: you said FY '27, we should be able to maintain kind of the margins if things remain as they are.

Amit Purohit: Yeah. Sir, thanks for the clarity on the margins. Just one thing I want you to answer. You said FY27, we should be able to maintain kind of a margin if things remain as they are. How do we think about medium-term? Basically, do you think that you would kind of maintain these kind of margins and drive the premiumization gains and invest in the brand? How do we think from a medium-term perspective? Is that first observation is correct, that is the right assumption for FY27?

Speaker #2: And how should we think about the medium term? Basically, do you think that you would maintain these kinds of margins, drive the premiumization gains, and invest in the brand?

Speaker #2: How do we think from a medium term perspective? Is that first of the first the observation is correct that that is the right space resumption for FY twenty seven?

Speaker #3: Yeah, so you are right, Amit. I think, you know, if you look at our quarter one, how do you see this quarter one? I think with industrial also, it is a sizable portion in our portfolio.

Pravin Chaudhari: Yeah. You are right, Amit. I think, if you look at our Q1, how do you see this Q1? I think with industrial also sizable portion in our portfolio, okay, it changes quarter on quarter. It may not be 50/50, maybe it is 45 this quarter or 55 Decorative. In industrial, I think if you look at our main items like solvents and everything, their prices, we don't maintain inventory of 30 or 60 days for solvent. I think they're just barely 15 odd days. The kind of inflation that we saw in solvents, I think it was humongous. Not that we got price increase next day. Despite that, I think we could maintain our margin and actually in absolute terms we improved overall profit pool.

Speaker #3: Okay, it changes quarter on quarter. It may not be fifty-fifty; maybe it is forty-five this quarter or fifty-five decorative. But in industrial, I think if you look at our main items, like solvents and everything, they have their prices. We don't maintain inventory of, you know, thirty or sixty days for solvent.

Speaker #3: I think they are just barely fifteen-odd days. And the kind of inflation that we saw in solvents, I think, is humongous. Not that we got a price increase the next day.

Speaker #3: Despite that, I think we could maintain our margin and actually, in absolute terms, improve overall profit per pool. I think that shows the capability and the price through, or the managing overheads and everything, and the ability of the company to really manage that.

Pravin Chaudhari: I think that shows the capability and the price through or the managing overheads and everything, and the ability of company to really manage that. With that, I'm very confident that this year also our endeavor is to maintain 13% to 14%. Now, again, it is always come with the risk statement that if tomorrow the geopolitical situation expands the way we have some indication sometimes that some more countries have got in and something more happens. If that kind of situation happens, obviously it's one-off and it's very difficult to control and maintain. I think that given whatever we saw in last three, four months, I think we could still manage this kind of a margin. I think over a year scenario, I guess we should be around our targeted, stated margin levels.

Speaker #3: With that, I'm very confident that this year also our endeavor is to maintain thirteen to fourteen. Now again, it always comes with the stereotypical statement that if tomorrow the geopolitical situation expands the way we have some indication sometimes that some more countries have got in and something more happens.

Speaker #3: If that kind of situation happens, then obviously it's a one-off and it's very difficult to control and maintain. But I think, given whatever we saw in the last three or four months, I think we could still manage this kind of a margin.

Speaker #3: So I think over a year scenario, I guess we should be around our targeted, stated margin level. And in the mid term, I think our endeavor is obviously to go to the higher end of fourteen percent plus, kind of a thing.

Pravin Chaudhari: On the midterm, I think our endeavor is obviously go to higher end of 14% plus kind of a thing. That is what we stated in February or I think May strategy call also. That's our endeavor in midterm. That calls for obvious strategies of premiumization over index on industrial segments where we are not present and trying to grow at a faster rate. I think all that will deliver these kind of efforts, where my fixed cost leverage will start coming in, where my manpower deployment that has already happened on the ground, investment that have happened in the capacity, all those fixed cost investment will be leveraged. I think that's our endeavor and that's the game we are playing. Hopefully in next two to three years, we should be hitting that range.

Speaker #3: That is what we stated in the February or, I think, May strategy call also. So that's our endeavor in the mid term. And that calls for obvious strategies of premiumization, over-indexing on segments where we are not present, and trying to grow at a faster rate.

Speaker #3: I think all that will deliver this kind of efforts where my fixed cost leverage will start coming in, where my manpower deployment that has already happened on the ground.

Speaker #3: Investments that have happened in the capacity, all the fixed cost investment will be leveraged. I think that's our endeavor, and that's the game we are playing.

Speaker #3: And hopefully, in the next two to three years, we should see us hitting that range.

Speaker #2: Yes. Thank you.

Amit Purohit: Thanks a lot.

Speaker #1: Thank you, Levison gentlemen. That was the last question of the day. I would now like to hand the conference over to the management for the closing comments.

Operator 2: Thank you, ladies and gentlemen. That was the last question of the day. I would now like to hand the conference over to the management for the closing comments.

Speaker #3: Hey. Thank you all for joining. I think it was quite interesting, with some challenging questions and interesting observations. Thank you so much. Hope to see you in the Q2 investor call.

Pravin Chaudhari: Thank you all for joining. I think it was quite interesting, quite challenging questions and interesting observations. Thank you so much. Hope to see you in Q2 investor call. Thanks for always supporting us. Thank you.

Speaker #3: Thanks for always supporting us. Thank you.

Operator 2: On behalf of ICICI Securities Limited, that concludes this conference. Thank you for joining us. You may now disconnect your line.

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