Berger Paints India Ltd — Q3 FY26

Berger Paints India Ltd Q3 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=27gIS6LzH2s Published: 3 months ago

0:02 2 seconds Hello. Yeah. Can we start? Yeah. Yeah. Go ahead, please. 0:06 6 seconds Sure. Sure. Uh, hi, good evening everyone. This is Nitan Gupta from MK Global. I would like to welcome all to the Burgger Paints India Limited's Q3 0:14 14 seconds FI26 result conference call. I thank Burga Paints Management for allowing us to host. We have with us today Mr. 0:22 22 seconds Abijit Roy, managing director and CEO. 0:25 25 seconds Mr. Koshidos, CFO, Mr. Sujioti Mukharji, Vice President, Finance and Accounts and Santan Sarcar, GM Finance and Accounts. 0:34 34 seconds I shall now hand over the call to the management for the opening remarks push which we will proceed with the Q&A session. Over to you sir. 0:43 43 seconds Thank you Nitin and good evening to all of you. Uh with me today here is Koshik and Santan is on the line in Kolkata. 0:53 53 seconds Uh let me start with the presentation. 0:57 57 seconds Uh we have uh uh just a quick highlights of the quarter 3 performance. High singledigit volume growth while value 1:06 1 minute, 6 seconds growth remains muted. Extended monsoon spillover into October impacted demand momentum. 1:13 1 minute, 13 seconds yearon-year and quarteronquarter expansion of gross margin backed by improved product mix and stable raw 1:19 1 minute, 19 seconds material prices and PBDIT margin is within the guided range of 15 to 17%. 1:28 1 minute, 28 seconds Standalone if you look at the performance uh 8.5% volume growth the 1:35 1 minute, 35 seconds value growth relatively much more muted at 0.4% 4% value volume gap driven by mix shift higher share of economy 1:44 1 minute, 44 seconds emulsions textures and tile adips coupled with price corrections taken in financially at 25 in the economy 1:52 1 minute, 52 seconds emulsion segment. The two together had that impact of volume growth being relatively stable but value growth being at 0.4%. 2:02 2 minutes, 2 seconds Automotive segment delivered steady quarterly performance while protective including GI remains muted. 2:12 2 minutes, 12 seconds If you look at the volume and value kagar of quarter 3 and 9 months if you 2:20 2 minutes, 20 seconds focus on the 9 month you know figures it's an interesting uh figure that you will see that in the volume growth for 2 2:30 2 minutes, 30 seconds years 3 years 4 years 5 years whichever you look at it 5 years of course is at 13.9% 2:37 2 minutes, 37 seconds but in the 2 three and four years it's been hovering in that 8 to 10.7 range. 2:44 2 minutes, 44 seconds So it's nearly that high singledigit to double digit type of volume growth. But value growth correspondingly 2:53 2 minutes, 53 seconds is progressively reducing from 13.4% to 8% to 2.8 to 1%. 3:01 3 minutes, 1 second Now the questions can be asked as to why 4 years and 5 years the gap were much lesser and why has it been increasing? 3:09 3 minutes, 9 seconds When you look at the three year, two year or the current quarter, there are two major reasons for it. One 3:18 3 minutes, 18 seconds is the fact that there was this price drop which happened to the extent of about 4 and a half 5%. 3:25 3 minutes, 25 seconds which created this gap for two years consecutive and then subsequently there was this 3:32 3 minutes, 32 seconds price drop which happened in the case of you know economy imulsions which was about two 2 and a half% which is still 3:40 3 minutes, 40 seconds persisting up to December January 23rd it was there and no longer there after that the second reason is the improved 3:49 3 minutes, 49 seconds sale of certain high volume lowv value products like textures, tile adhesives, the growth 3:57 3 minutes, 57 seconds rates of which are much much higher than paint. So therefore the volume growth happens to be there. Uh but the value 4:07 4 minutes, 7 seconds growth is relatively muted in such a case though the profitability as you can see from the gross margin remains at a healthy level. 4:16 4 minutes, 16 seconds If you look at the gross margin figures, in fact this quarter it has been the highest in the last 15 odd quarters 4:25 4 minutes, 25 seconds barring quarter 4 of last year which was matched at 41.2%. This quarter 2 it is at 41.2%. 4:33 4 minutes, 33 seconds At the AIDA level of course it is at 16.1 largely because of the scale effect the 4:42 4 minutes, 42 seconds value sales growth did not happen. So obviously the overheads got spread over a lesser value and hence otherwise the 4:50 4 minutes, 50 seconds AITA also would have been more closer to 17 but it's showing a 16.1% here but well within the range of the 15 to 17% 4:59 4 minutes, 59 seconds guidance that we have given all through standalone quarter 3 results if you look 5:06 5 minutes, 6 seconds at you know therefore total income from operations increase of 0.4% 4% gross margin 4% expansion 5:15 5 minutes, 15 seconds aid the margin flattish at minus0.1 and uh PAT of course is minus 2.5%. 5:24 5 minutes, 24 seconds YTD basis it is 1.2% gross margin expansion of 2.5 PBDIT minus 4.4 and PAT at minus 8.8%. 5:35 5 minutes, 35 seconds Similarly, consolidated is very similar to standalone at 0.3% in terms of top line and minus0.2% 5:44 5 minutes, 44 seconds in terms of bottom line. And on a YTD basis, it is at 1.9% value growth and minus 5.4% in terms of AIDA growth. 5:55 5 minutes, 55 seconds decorative business. The dealer network expansion continued during the quarter driven by installation of 2500 plus 6:04 6 minutes, 4 seconds colorbank machines uh which is you know what we had indicated that we will possibly do and 6:12 6 minutes, 12 seconds enhancing presence through addition of stores and currently the store numbers are in excess of 1,800 stores across the country. 6:21 6 minutes, 21 seconds Store-led urban initiatives undertaken in prior quarters are on track resulting in positive traction with momentum expected to sustain. 6:31 6 minutes, 31 seconds Newly launched immulsion color plus and metallic enamel and metallic water-based paint launched very recently performed 6:40 6 minutes, 40 seconds well. Construction chemicals delivered robust growth driven by differentiated offerings such as roof segment, damp 6:49 6 minutes, 49 seconds proofing solution supported by the successful launch of dam shield and strong traction in the tile adhesive 6:56 6 minutes, 56 seconds segment. Strong double digit and volume growth registered in wood coating segment. 7:04 7 minutes, 4 seconds These are some of the products which we introduced. The color plus is a interior premium emulsion doing quite well in the markets where we have launched so far. 7:14 7 minutes, 14 seconds Uh silk metallics is a new one which we introduced more towards the end of December. Uh doing very well in most 7:22 7 minutes, 22 seconds markets already in January we clocked a healthy sale. uh February also it's been started you know and then now I think we 7:30 7 minutes, 30 seconds expect that the metallics of Luxol metallic and silk metallics these are high profit margin products and doing quite well across the country. 7:40 7 minutes, 40 seconds Uh the other is you know in terms of the expanding range of construction chemical 7:47 7 minutes, 47 seconds products and waterproofing range. We added dam shield uh which is another product uh which which we added in the 7:55 7 minutes, 55 seconds last quarter and we are going to add one or two new products this quarter as well. 8:01 8 minutes, 1 second uh industrial business. Auto segment deliver 8:08 8 minutes, 8 seconds high growth value in protect and general growth underpin 8:19 8 minutes, 19 seconds industries of volume and value remained muted. 8:28 8 minutes, 28 seconds These are some of the photographs of the uh stores that we are setting up in various markets. 8:35 8 minutes, 35 seconds Uh net cash position consolidated has improved from about 689 cr in March 25 to 918 cr in December 26. 8:47 8 minutes, 47 seconds Console performance Bollix strong topline and operating profit growth partly aided by P&L appreciation. 8:56 8 minutes, 56 seconds BJ Nepal muted revenue and profitability amid political disruption but things are stabilizing there. STP limited topline 9:06 9 minutes, 6 seconds impacted by temporary shutdown at Jamshitpur plant operations normalized from January 26. So now it's okay. SBL 9:16 9 minutes, 16 seconds speciality quotings limited revenue impacted by weak industrial demand and tariff impact profitability affected by 9:24 9 minutes, 24 seconds scale and one-off startup costs. We set up a new factory near Chundigar which consumed you know some initial uh 9:32 9 minutes, 32 seconds expenses but it is one off and should come off you know from this quarter. 9:38 9 minutes, 38 seconds Burgger Becker quotings robust sales and profitability driven by scale and margin expansion. And Burgger Nippon paint 9:46 9 minutes, 46 seconds automotive quotings strong double-digit revenue growth aligned with buant demand in autopace. Profitability also strong 9:54 9 minutes, 54 seconds double-digit growth improved improved actually and aided by stable raw material prices as well. 10:03 10 minutes, 3 seconds uh ESG excellence at Burgger Paints with a score of 64 across ESG parameters given by NSE. 10:11 10 minutes, 11 seconds Uh score is a leader amongst the peers within India in the paint domain. We also got you know our corporate office 10:20 10 minutes, 20 seconds was lead platinum certified. We got the certificate in last month. It's December 2025. 10:28 10 minutes, 28 seconds Business outlook demand conditions continue to be closely monitored with early signs of gradual 10:35 10 minutes, 35 seconds improvement. So October was negative, November slightly positive, December more positive, January slightly more 10:42 10 minutes, 42 seconds positive than December. So it's improving month on month. Focus remains on revenue growth with sustained gross margins remaining the key objective. 10:53 10 minutes, 53 seconds Operating margins are expected to remain within the guided range. 10:57 10 minutes, 57 seconds Competitive intensity expected to remain elevated. 11:02 11 minutes, 2 seconds Continued investments in branding, distribution, expansion, and urban initiatives remain key to capture potential demand improvement as and when it keeps happening. 11:12 11 minutes, 12 seconds Geopolitical uncertainty, forex volatility, and evolving tarif dynamics may pose near to medium-term volatility. 11:22 11 minutes, 22 seconds Thank you and open to questions. 11:27 11 minutes, 27 seconds Thanks Abijit. So we will now start with Q&A session. I hand over the call to my colleague Mohit Durja to moderate the 11:35 11 minutes, 35 seconds question and answer session. Over to you Mohit. 11:41 11 minutes, 41 seconds Thank you. Those of you those of you who have questions can raise your hand now. 11:46 11 minutes, 46 seconds We'll announce your name and unmute your line. Please highlight your full name and the organization you are representing. 11:57 11 minutes, 57 seconds The first question is from the line of Miha. 12:01 12 minutes, 1 second Please highlight your full name and the organization you are representing and go ahead with your questions. 12:06 12 minutes, 6 seconds Hi sir, good evening. Uh this is Miha here from Namura. Uh thank you for taking my question. Uh so I wanted to check with you if you strip off the month of October uh from the results. 12:18 12 minutes, 18 seconds how uh is the uh sales growth momentum uh for November and December uh and any insights you can share on how that 12:26 12 minutes, 26 seconds continuity happened is happening in Jan as well. Uh you did mention uh that u you know the the uh uh AITA margin would 12:35 12 minutes, 35 seconds have been closer to 17% uh if the impact wasn't there. Uh some insights on the sales growth momentum would be uh helpful sir. 12:44 12 minutes, 44 seconds Yeah. So as as as I had mentioned you know uh October was negative you know and which I had indicated in the last uh 12:53 12 minutes, 53 seconds time we met you know here with all of you. Uh November uh did have a slight 12:59 12 minutes, 59 seconds positive uh and then December was better than that in mid-s singledigit type of a growth rate and and that is where we are 13:08 13 minutes, 8 seconds in January as well. So that is how it is in terms of value in terms of volume you know obviously that differential still exists up about 7% 6 to 7%. 13:20 13 minutes, 20 seconds Understood. Uh sir any insights on the competitive landscape that you can share uh it remains stable the way it was? Uh 13:29 13 minutes, 29 seconds is some deceleration or now uh you know gradually the the other players were kind of getting 13:35 13 minutes, 35 seconds stagnated. U any any insights on how the intensity is shifting uh on the competitive uh front please? It remains 13:44 13 minutes, 44 seconds very stable now you know more or less you know the main player uh remains at a at a stable point now uh in terms of 13:53 13 minutes, 53 seconds competitive intensity it's not increasing it's not decreasing it is at a stable level uh quarter on month we 14:00 14 minutes see the values remaining very similar you know to that uh category and you know uh in a on a quarterly basis if you 14:09 14 minutes, 9 seconds look at it there is no major gains happening yes there is a slight gain But not like they were growing at say you 14:15 14 minutes, 15 seconds know 35 40 you know now it's 7 8 10 12% type of a gain. 14:22 14 minutes, 22 seconds In light of all these how do you see the next year shaping because now we have at least 2 years of uh uh you know lower 14:31 14 minutes, 31 seconds value growth in the base. Uh can one expect and and there are most of the tailwinds around the macro parameters uh 14:39 14 minutes, 39 seconds already there. uh can one expect any improvement in volumes to go to mid- teens levels in next year and then you 14:47 14 minutes, 47 seconds can go back to doubledigit growth uh in value terms uh o over the next year sir so I think you know the double-digit 14:54 14 minutes, 54 seconds volume growth should happen uh and it is already very close to it we should be able to definitely go into the volume doubledigit volume growth happening as 15:04 15 minutes, 4 seconds far as value growths are concerned I think the differential will remain in the extent of 4 to 5% so if the volume growth goes up to say 12 13%. Then the 15:12 15 minutes, 12 seconds value growth should be in the range of 7 8%. That's where I think it should be uh and that's I think realistic as of today. 15:22 15 minutes, 22 seconds Got it. Thank you very much. Uh wishing you all the very best sir. Thank you. 15:31 15 minutes, 31 seconds The next question is from the line of Sukrit Patil. Please go ahead. 15:35 15 minutes, 35 seconds Uh good evening to the team. My name is Sukrit Patil from Isite Fin Private Limited. Am I audible? Yes, you are. 15:42 15 minutes, 42 seconds Yes, thank you. Uh my first question to Mr. uh Roy is uh as the decorative paints market continues to evolve, how 15:49 15 minutes, 49 seconds is the management thinking about prioritizing growth levers such as distribution reach and product 15:56 15 minutes, 56 seconds innovation? Among these, which do you believe will be most critical in strengthening Baja Paint's competitive 16:04 16 minutes, 4 seconds uh positioning and sustaining long-term brand leadership? That's my first question. I'll ask my second question after this. Thank you. 16:12 16 minutes, 12 seconds Right. Thank you. You know, I think both are important and very important for the decorative business and specifically for 16:19 16 minutes, 19 seconds us. We as you know are a number two player but we have many areas in the country where we have a relatively weak presence in terms of distribution 16:27 16 minutes, 27 seconds network. We have been ramping up this network you know at a furious pace in the last I would say 3 four quarters. Uh 16:35 16 minutes, 35 seconds the results will take some time to become completely visible but it should start showing you know very soon. uh 16:43 16 minutes, 43 seconds because it takes time for a machine to start off and establish itself and you know you get some sales you know and the mass builds up. Uh that's going to 16:52 16 minutes, 52 seconds happen and and that is something which we and that drive will continue from our side. You know there are still many 16:59 16 minutes, 59 seconds areas of the country where you know there are gaps in terms of availability of material and which we are now trying 17:06 17 minutes, 6 seconds to bridge by adding more manpower on the ground and at the same time concentrating on improving our distribution. So that's that's one area which we will continue to lay stress on. 17:16 17 minutes, 16 seconds The second is in terms of the product innovations which you mentioned. Uh we did mention two or three products which we have recently launched one two more in the pipeline very interesting ones. 17:28 17 minutes, 28 seconds Uh and I think we will continue to do that for two reasons. One of course you know this channel that we are developing and increasing in size. We already have 17:36 17 minutes, 36 seconds a fairly large number of machines on the ground and we are adding this. So to these counters we add these innovative 17:43 17 minutes, 43 seconds products so that improves the sale. The second is of course the profitability moves up. So these are all products with 17:49 17 minutes, 49 seconds higher margin also normally and then therefore you know it tends to boost the profitability as well. So we will continue to do both of these simultaneously. 18:00 18 minutes Thank you. My second question to Mr. Hos is uh from a financial uh point of view, can you elaborate on the key trade-offs 18:08 18 minutes, 8 seconds managed between input cost volatility uh pricing discipline and continued investment in brand and distribution? 18:15 18 minutes, 15 seconds How do these considerations influence your approach to sustaining cash generation and return metrics across the cycles? Just want to understand your 18:24 18 minutes, 24 seconds point of view on this and how do you approach this. Thank you. 18:27 18 minutes, 27 seconds So basically brand building has always been our priority. One second. Can you see me? 18:36 18 minutes, 36 seconds Yes. Yes. Very very clearly. Thank you. 18:38 18 minutes, 38 seconds Yeah. So basically brand building has always been our priority and when it comes to margin maintenance that's also a very big priority for us. 18:50 18 minutes, 50 seconds So we continue to whenever it comes to maintaining the 18:59 18 minutes, 59 seconds cost ratios, we continue to monitor them on a regular basis. 19:10 19 minutes, 10 seconds And so there is this con constant uh 19:17 19 minutes, 17 seconds innovations and the uh coordination with materials and cost efficacy which we continuously monitor. 19:30 19 minutes, 30 seconds Uh is that it means uh okay fine thanks thank you and best of luck. 19:38 19 minutes, 38 seconds Thank you. 19:43 19 minutes, 43 seconds The next question is from the line of Adita Bhartya. Please go ahead. 19:52 19 minutes, 52 seconds Uh hello. Hi, good evening sir. Hi. 19:55 19 minutes, 55 seconds Um so my first question is uh on on uh uh the insights on demand momentum that you shared. Um in the last conference 20:03 20 minutes, 3 seconds call uh uh we sounded a lot more optimistic about demand. We were speaking about uh uh possibly uh um mid 20:11 20 minutes, 11 seconds singledigit kind of revenue growth in third quarter touching close to double digit kind of a revenue growth towards fourth quarter. Um this time around uh 20:20 20 minutes, 20 seconds it it has changed a bit and not only for you but but for the entire sector just want to understand uh how are things 20:27 20 minutes, 27 seconds changing at the ground uh uh why is the same optimism that was there last time around not there? That's my first question. uh and and my second question 20:36 20 minutes, 36 seconds is on uh uh RM costs. Is there any progress that has been made on anti-dumping duty on TIO2? 20:45 20 minutes, 45 seconds Right. You know a very valid question that you asked. You know I was also optimistic you know about being more 20:52 20 minutes, 52 seconds closer to you know 7 6 7% in terms of the growth and possibly going towards the 8 9% mark you know by the fourth 21:00 21 minutes quarter. uh that was the expectation that once the rains stop the demand will pick up. Uh it did pick up but not to the extent that we would have loved to 21:08 21 minutes, 8 seconds see. Uh possibly also that you know while the rains which was elongated quite a lot we kept you know pumping 21:16 21 minutes, 16 seconds material into the dealer shelves. So there was some amount of stock buildup which happened uh which got liquidated 21:24 21 minutes, 24 seconds in the period between November and January. Uh so therefore you know the replenishment sale did not happen to the extent that we would have loved to see 21:32 21 minutes, 32 seconds there. Uh possibly it will start you know seeing improvement in terms of the 21:39 21 minutes, 39 seconds actual growth situation uh February March you know progressively it should it should stabilize. Uh this is you know 21:47 21 minutes, 47 seconds to answer your first question. You answered this. You asked another question. I think what was the second you asked 21:55 21 minutes, 55 seconds the on anti-dumping duty at anti-dumping duty you know tit we we did fight this case and we won this battle 22:02 22 minutes, 2 seconds in the court and uh the government the the court has given a judgment that you know it needs to be given back. So we've 22:11 22 minutes, 11 seconds got part of the money back. uh the other part we have applied for and we should get back that money also in form of the 22:19 22 minutes, 19 seconds anti-dumping as of now there is no anti-dumping duty on titanium dioxide uh until that point of time therefore uh 22:28 22 minutes, 28 seconds the cost has come down for titanium dioxide marginally sure sir just just a clarification is this a final order from the court or is 22:36 22 minutes, 36 seconds it the stay that they had put uh no it's a final order which was given so that's why the government had to uh 22:45 22 minutes, 45 seconds refund uh you know the anti-dubbing duty from the date when that order was given. 22:51 22 minutes, 51 seconds Perfect. Perfect. Thank you so much for answering my question sir. Thank you. 22:56 22 minutes, 56 seconds Thank you. The next question is from the line of Karthik Jalapa. Please go ahead. 23:04 23 minutes, 4 seconds Yeah. Hi Karthik here. Sir am I audible? Yes you are Karthik. Go ahead. 23:08 23 minutes, 8 seconds Okay great. Uh sir two questions from my side. First is if we were to look at this value volume gap of about 8%. And 23:16 23 minutes, 16 seconds if I were to bifurcate it between let's say mix level changes where the economy segment probably did better as well as let's say the price revisions that we 23:25 23 minutes, 25 seconds have undertaken which are yet to probably anniversarize. How will that split look roughly in your opinion? So the mix change will be probably be about 23:34 23 minutes, 34 seconds 3 three and a half% you know on account of the uh low value high volume products 23:42 23 minutes, 42 seconds selling much more uh than other products the about two to two and a half% were on 23:50 23 minutes, 50 seconds account of direct price drops which were there uh which we took in the low-end emulsions last year which is still impacting as I said till January this 23:59 23 minutes, 59 seconds impact was there uh from February onwards that wans off. Uh the third part which was there is we increased our 24:06 24 minutes, 6 seconds spends in the painter uh spends which was there in reaction to the competition which is there uh and therefore that's 24:15 24 minutes, 15 seconds about one and a half odd percentage which has gone up. So all put together this gap is explained. 24:23 24 minutes, 23 seconds So sir in a way uh going forward to your comment on the value volume gap will still remain four 5%. Even as volume uh 24:32 24 minutes, 32 seconds goes to double digit. So inherently you are making the assumption that the mixed changes is something that will continue 24:39 24 minutes, 39 seconds isn't it because yeah the price will anniversarize at some point and then things okay why is that why do you think that is the case? 24:48 24 minutes, 48 seconds Why? Because the growth of these categories is much higher. You know, it's starting from a low base as of now 24:55 24 minutes, 55 seconds and therefore you know and the market is you know quite big. We have just you know started and and therefore the 25:03 25 minutes, 3 seconds growth rate for us the trajectory of growth is much much higher and hence this is going to continue for the next possibly one one and a half two years 25:11 25 minutes, 11 seconds maybe after which it will obviously start petering down. 25:15 25 minutes, 15 seconds Excellent. Okay. My last question sir is uh I think this quarter as well as probably the previous quarter uh the 25:22 25 minutes, 22 seconds market leader has probably done slightly better than us and in the past we used to have commentary or slides on our market share gains and uh that was not 25:32 25 minutes, 32 seconds there uh this quarter what would you attribute uh let's say the slowness in our market share gain 25:39 25 minutes, 39 seconds so you know uh even today you know we are we have lost a little bit of market share in In fact market leader is also lost market. It has gone mostly to Bir. 25:49 25 minutes, 49 seconds If you take BLA also into one of the categories given the fact that you know whatever they say we assume that they 25:56 25 minutes, 56 seconds are saying that this is what they have done. If you can consider that then there is a slight gain in market share for them you know and and losses for 26:05 26 minutes, 5 seconds everyone else in the system. Uh the reason for the slightly lower growth that you are seeing for us compared to 26:14 26 minutes, 14 seconds the competitors because competitor leader you are talking about had a very low base in the third quarter and the fourth 26:21 26 minutes, 21 seconds quarter of last year as well second third and fourth quarter. Uh the differential was very high you know in 26:29 26 minutes, 29 seconds fact the gap between us and them in the fourth quarter was 9.5%. you know so they stand at an advantage of 9 and a 26:36 26 minutes, 36 seconds half% starting uh so obviously I would expect that the growth rates will be higher in their case compared to us so 26:44 26 minutes, 44 seconds that is what it is but we are still you know holding on to fairly decent we didn't lose any market share last year 26:51 26 minutes, 51 seconds at all this year there is a marginal decrease but you know we are still there you know doing fairly okay I would say 26:58 26 minutes, 58 seconds given the current situation got it okay thank you very much for the detailed responses sir you and the team 27:04 27 minutes, 4 seconds all the very best. That's all from Thank you. The next question is from the line of TJ. Please go ahead. 27:14 27 minutes, 14 seconds Yeah. Hi sir. Thanks for the opportunity. Uh sir uh first question pertains to your observation or your comment that you made that uh the 27:22 27 minutes, 22 seconds competition from the big u challenger has plateaued. Uh I just wanted your observation or comment on the broader 27:30 27 minutes, 30 seconds competitive landscape as well. So uh there are uh there is a long tale of competition also which is joining the industry uh be it 27:39 27 minutes, 39 seconds smaller fragmented players are also coming and and then there is also consolidation which is creating another large entity which is AXO JSW 27:47 27 minutes, 47 seconds um and then we also picked up that uh Hisha also it's it's not a very sizable competition but high is also from Pilite 27:55 27 minutes, 55 seconds is also kind of entering East India. So uh when we zoom out and when we see it competitive landscape overall not for only on from one uh new player how how would you read that? 28:06 28 minutes, 6 seconds So uh so you know this this type of competition the other competitors that you spoke about you know those type of 28:13 28 minutes, 13 seconds competitors have been coming into this country and fighting for long years. 28:18 28 minutes, 18 seconds Some of the MNC's we used to keep coming in you know sometimes hempel will come sometimes Joton will come sometimes Shervin will come sometimes two other 28:26 28 minutes, 26 seconds people will come so they are there but they are not very disruptive or you know takes away a large chunk of the business 28:34 28 minutes, 34 seconds so it is impacting but to a lesser degree I would say you know maybe all combined together they may be again impacting the growth rate by 1 one and a 28:42 28 minutes, 42 seconds half% but that's about it right but the bigger impact is coming from that one player uh which is you know stabilizing. 28:52 28 minutes, 52 seconds So so I would place it in that way. 28:55 28 minutes, 55 seconds There are other players who are there are not very disruptive or not coming from zero base uh they are there for now 29:02 29 minutes, 2 seconds quite some time. The incremental gains that they are making uh is not substantial to disturb the uh equilibrium in the system. 29:13 29 minutes, 13 seconds Fair point sir. So second uh just uh referring to earlier participant question that uh the industry at large 29:21 29 minutes, 21 seconds gave very positive signals in in the previous quarter and and um investors also kind of uh uh we we want you to say 29:30 29 minutes, 30 seconds good things. So we also kind of cheered it very very happily and then the same could not last for a quarter. Uh so just 29:39 29 minutes, 39 seconds wanted to understand uh what is the forecasting significance of some of this highfrequency monthly numbers or should 29:47 29 minutes, 47 seconds we rather wait for at least two quarters before we say that the worst is behind and then that along with one broader 29:55 29 minutes, 55 seconds question that if our bull case scenario is 7% value growth for us 5 to 7% or you said 30:03 30 minutes, 3 seconds mid-s single digit uh India uh the the government of India is actually hoping for 10% nominal GDP growth rate. Uh so 30:12 30 minutes, 12 seconds now when I tie it up with low penetration of the category and we not even eyeing or or targeting nominal GDP 30:21 30 minutes, 21 seconds growth rate, where's the disconnect? Why this number and that number are not matching? 30:27 30 minutes, 27 seconds Yeah. So you know uh why is this uh that you know we were relatively more uh I 30:35 30 minutes, 35 seconds would say positive in our outlook and why we are not saying that you know is largely because you know normally in the 30:43 30 minutes, 43 seconds paint industry we had seen in the past that when rains happened or when there was a disturbance in the demand 30:50 30 minutes, 50 seconds situation and it got broken for some time like say covid or like any other uh disturbance in the system and the paint 30:58 30 minutes, 58 seconds demand was disrupted. When it came back, it came back. You know, all the pent up demand used to come back and it used to be far more stronger demand once it came 31:08 31 minutes, 8 seconds back. This time when it did come back, it did not happen at the pace at which 31:15 31 minutes, 15 seconds we had seen earlier. Now you might ask why did it not happen? Why did it happen in the past and why did it not happen 31:22 31 minutes, 22 seconds now? Uh it can be that you know as I said we were still uh playing the game. 31:28 31 minutes, 28 seconds It was not completely disrupted. We were selling we were still growing at a at a at a lower pace maybe but it was still 31:35 31 minutes, 35 seconds there hanging on there and therefore you know there was a built-up demand in the system which got liquidated you know in 31:43 31 minutes, 43 seconds the uh next 2 3 months. The second reason is that there is or there are other new players who have come into the 31:51 31 minutes, 51 seconds system which again you know we should have anticipated that that was there still there and that growth rate is 32:00 32 minutes still disturbing right so that to that extent it did not bounce back fully you can say that why are we not looking at a 32:07 32 minutes, 7 seconds 10% nominal growth should result in at least a 10% growth for the industry true it should uh logically 32:15 32 minutes, 15 seconds You know that is how it should be but given the current context that at which pace which we are growing we want to be conservative and be very sure that what 32:23 32 minutes, 23 seconds we are saying we should be able to deliver and that's why we are saying that it may so happen that we may actually grow at what you are saying as 32:30 32 minutes, 30 seconds 10% possibly next year but you know we would like to be playing it safe we don't want to say that you know we will grow at double digit and then land up with four 5%. 32:41 32 minutes, 41 seconds Thanks for the detailed answer. And if I may squeeze in last one, any pocket of demand be in product side or regional side which is uh doing much better than 32:50 32 minutes, 50 seconds uh the aggregate uh numbers that we are delivering. 32:54 32 minutes, 54 seconds Well, you know, some some of the products, you know, as we have always said, you know, construction, chemical, waterproofing, wood coatings, uh some of our emulsions, you know, in the premium 33:03 33 minutes, 3 seconds uh category are doing quite well uh much better than the categories itself and and overall uh growth rate of the 33:12 33 minutes, 12 seconds company. uh and in in some regions uh some of the urban markets where we have 33:19 33 minutes, 19 seconds invested have started doing better than what we used to do and much better than the category growth rate. 33:26 33 minutes, 26 seconds Thanks and all the best for coming quarters. Thank you. 33:31 33 minutes, 31 seconds Thank you. The next question is from the line of Pratik Gothi. Please go ahead. 33:43 33 minutes, 43 seconds Hello. Yeah, Pratik, go ahead. 33:46 33 minutes, 46 seconds Yes, thank you for the opportunity. This is Pratik Goi from HSBC. Uh, most of my questions have been answered. Um, I want to push on a particular point you made. 33:56 33 minutes, 56 seconds Uh, regarding some down trading to the economy segment from premium and luxury in general. Uh, could you elaborate on that? Why do you see that is happening? 34:05 34 minutes, 5 seconds Why do you think that is happening? This is my first question. No, it's not really downtrading per se. 34:12 34 minutes, 12 seconds You know, we the luxury category is not growing as much. You know, part of the reason can be that, you know, in our 34:19 34 minutes, 19 seconds case at least. You know, much of the luxury category growth uh and the luxury base exists in the east for us. Uh the 34:27 34 minutes, 27 seconds east market hasn't done all that great in in the last few months. Uh and therefore, you know, uh for us luxury 34:35 34 minutes, 35 seconds category has been a bit muted. Uh the economy category on the other hand you know has been doing better. Uh this is 34:44 34 minutes, 44 seconds an upgrade actually from lower down distemper etc. Moving into imulsions. Uh there has been a price cut which we had 34:52 34 minutes, 52 seconds taken which I mentioned about in the economy imulsion also. Uh it is therefore much more price competitive and therefore the demand and the volume growth has been higher in the economy. 35:04 35 minutes, 4 seconds Uh sure this helps. uh uh since we're talking about regional presence as well uh I remember that you 35:12 35 minutes, 12 seconds also have a decent presence in Uttar Pradesh I think it's above average uh in terms of your national presence uh so 35:20 35 minutes, 20 seconds any regional trends from that particular state where growth has been strong at least the GDP growth underlying growth has been strong there uh 35:28 35 minutes, 28 seconds UP has been doing so any trends there it continues to do well for us okay okay thank you for the answers. 35:36 35 minutes, 36 seconds Thank you. It's all for mine. Thank you. Thank you. 35:42 35 minutes, 42 seconds Uh the next question is from the line of Rishi Modi. Please go ahead. 35:54 35 minutes, 54 seconds Yeah. 35:57 35 minutes, 57 seconds Yeah. Um so first question I had was on the resin facility that you all have operationalized. 36:05 36 minutes, 5 seconds uh just wanted to get an understanding on how much gross margin how many bips gross margin expansion should come from 36:13 36 minutes, 13 seconds this and what do we intend to do with that margin accretion are we going to retain it let it flow to the bottom line 36:21 36 minutes, 21 seconds or we going to use it um somewhere in the P&L well you know not very significant I 36:29 36 minutes, 29 seconds would say though it will have some impact you know this is basically for solvent based production which we have started you which we are going to start 36:36 36 minutes, 36 seconds in Hindur. We are expanding there in our southern plant. Uh it is meant for industrial paint also for decorative 36:45 36 minutes, 45 seconds more so for industrial and also a little bit for decorative paint. Uh 36:52 36 minutes, 52 seconds this is this was necessary because you know we were a bit stretched in the industrial side for capacity. uh and 37:00 37 minutes this will help us to actually be a comfortable as far as production capacity is concerned on the industrial side which is growing at a decent pace. 37:08 37 minutes, 8 seconds Uh especially the automotive has started picking up and at the same time we expect protective and general industries also to pick up soon and therefore you 37:17 37 minutes, 17 seconds know we wanted to have the capacity in place uh beforehand. So this is the reason why we have you know started off the raisin manufacturing capacity. It 37:25 37 minutes, 25 seconds will have some impact uh but that will possibly be utilized by us uh in the market. It is quite intense in terms of 37:34 37 minutes, 34 seconds competition. So possibly we will have to spend a little bit more know we will brand building efforts might require you 37:41 37 minutes, 41 seconds know more money there. Uh so therefore you know that might go there. 37:45 37 minutes, 45 seconds Got it. Got it. Um second question I wanted to understand you know um you mentioned that you all will have a four to 5% gap on the value volume numbers. 37:56 37 minutes, 56 seconds Um Asian paints also mentioned the same thing and um the rational given by both of y'all is that uh non-p paint products 38:05 38 minutes, 5 seconds which are lower ASP are growing faster and economy is growing faster than premium. For Asian, I can understand 38:12 38 minutes, 12 seconds because a larger portion of their decor paints is premium paints. For us, it's 38:19 38 minutes, 19 seconds um kind of the reverse where we are more dominant in the economy and the exterior paint segment and we are making our 38:26 38 minutes, 26 seconds foray into the premium segment. So shouldn't ideally that gap be much lower 38:32 38 minutes, 32 seconds for us or do you think the demand for premium is not there or we are missing something in that proposition and hence 38:41 38 minutes, 41 seconds our economy is still going to grow ahead of premium? 38:44 38 minutes, 44 seconds No no not you know I explained that you know a minute a few minutes back you know as to why this is happening. Our 38:52 38 minutes, 52 seconds reasons are different you know their reasons are quite different. uh as I said you know we have our own reasons 38:59 38 minutes, 59 seconds why the eastern area did little bit of underperformance you know for our own internal reasons which we have corrected 39:05 39 minutes, 5 seconds now uh so therefore you know uh that growth rate uh will be restored you know 39:14 39 minutes, 14 seconds as far as the luxury emulsion is concerned premium emulsion in our case is doing quite well the it's the luxury 39:20 39 minutes, 20 seconds which is slightly below par uh the economy emulsion on the other hand is growing because the category itself is 39:28 39 minutes, 28 seconds growing. India is a vast country even for them and for us you know whether we are present slightly more in terms of 39:36 39 minutes, 36 seconds percentage but they are also equally present there both of us are growing because the category is growing at a faster pace you know uh so that's that's 39:44 39 minutes, 44 seconds the reason why economy immersion keeps doing better got it and uh so final question from my end um it's more on the capital 39:52 39 minutes, 52 seconds allocation piece given that we'll be generating close to 1400500 crores of cash flow from operations over the next 40:00 40 minutes couple of years. Um what of amount of that will be used for organic capex and what do we plan to do with the remainder 40:09 40 minutes, 9 seconds and are we open to doing buybacks at the you know given the current valuations instead of paying out dividends. 40:18 40 minutes, 18 seconds So you know uh we we believe that it is a growing country even though the growth rates have been a bit uh under the water 40:27 40 minutes, 27 seconds you know for some time now uh but we believe that things are going to change uh as of now we have plans for two 40:34 40 minutes, 34 seconds factories one in Panagar and one in Orisa uh both of which together is an investment 40:41 40 minutes, 41 seconds of about 1,800 to 2,000 cr so it will absorb the free cash flow that is there We already have about 900 plus crores in 40:50 40 minutes, 50 seconds our books and as you said you know about 1,400 cr might be generated in the next 2 years. Uh so this will be consumed a 40:59 40 minutes, 59 seconds large part of it in this two new factories which are going to get set up. 41:03 41 minutes, 3 seconds Uh whatever leftover is there uh well you know we don't know as of now we keep looking at acquisition opportunities but 41:13 41 minutes, 13 seconds we don't look at very big uh stakes. We look at small stakes which we can integrate with us you know either in 41:20 41 minutes, 20 seconds terms of new technology or in new geographies or new product lines which can help us to grow at a faster pace. 41:28 41 minutes, 28 seconds Got it sir. Got it. No plans for buyback though at this point. Not at this present. 41:33 41 minutes, 33 seconds All right. Great. Thank you. That's it from my end. 41:40 41 minutes, 40 seconds Thank you. The next question is from the line of Anuda Jooshi. Please go ahead. 41:48 41 minutes, 48 seconds Yeah. Uh thanks for the opportunity sir. 41:52 41 minutes, 52 seconds Uh uh while the market growth is slow u the owners to grow is on market leader 41:58 41 minutes, 58 seconds and even uh bger also. So what will be our initiatives to in a way drive growth 42:05 42 minutes, 5 seconds of the market means what is really required like uh in terms of higher ad spends or higher ad spense of the 42:12 42 minutes, 12 seconds premium products or um in a way little bit price cuts means what is uh can 42:19 42 minutes, 19 seconds really drive the growth of the uh premium end of the market and in a way premiumization also should be driven 42:26 42 minutes, 26 seconds from the corporate side as well. So reducing the gap between premium and economy products will that serve as the 42:34 42 minutes, 34 seconds purpose. So so what are the thoughts on uh uh these aspects? That is question number one. And then question number two 42:42 42 minutes, 42 seconds uh the new challenger player uh uh had indicated that it's share of voice was more than 30%. 42:51 42 minutes, 51 seconds So uh and the uh share of voice of other players had declined materially. So has 42:58 42 minutes, 58 seconds there been any change in that now and uh uh has the share of voice for uh especially BGER has gone back to its 43:06 43 minutes, 6 seconds share of market or probably higher than share of market also? Yeah, that's it from my side. 43:12 43 minutes, 12 seconds Yeah. So you know to answer your first question you know uh it is true that you know it's incumbent on the major players 43:19 43 minutes, 19 seconds in the industry to try and shore up demand. You know there are two major things which can happen which can help build up demand. You need to create 43:27 43 minutes, 27 seconds excitement by generating new product ideas, new thoughts. Uh something which is different and you know which the consumers want you know and and we keep looking at innovative product launches. 43:38 43 minutes, 38 seconds Uh we have been you know doing so for some time now. You know many many new products which we have introduced into the market which later got copied in the industry and we will continue to do so. 43:50 43 minutes, 50 seconds uh in the in the near term we are you know we just introduced know two products three products actually you know dam shield uh color plus and the 43:59 43 minutes, 59 seconds metallic range all of which are in this premium super premium category and uh with good profit margin and at the same 44:06 44 minutes, 6 seconds time much in demand in the marketplace and I think it should do well you know so that's one part uh the second which 44:14 44 minutes, 14 seconds you said you know what what was the other question which you asked uh about uh share of voice. 44:22 44 minutes, 22 seconds Share of voice. So you know in terms of the advertisement that we do, we are on par with almost you know our market 44:29 44 minutes, 29 seconds share. The the player that you spoke about you know is much in excess of the market share that they hold. Uh and 44:36 44 minutes, 36 seconds that's their entry strategy which they don't have to worry about their profitability. We do and you know we we are very conscious about it and we want 44:45 44 minutes, 45 seconds to remain in in the band which we have indicated. Our gross margins are to be protected. We can't operate at negative 44:52 44 minutes, 52 seconds margins and all you know. So uh spending money is not you know something which anyone can do. If you have to be profitable then you have to be careful in doing so. 45:03 45 minutes, 3 seconds Okay. Sure sir. Just last question from my side. Uh you indicated loss of some market share. Uh if you can elaborate a 45:11 45 minutes, 11 seconds bit more on that which region we would have lost uh east west north south or rural urban metros uh which which uh any 45:21 45 minutes, 21 seconds it's a minor share loss you know we were at 19.5 19.6 it would have probably gone down to 19.4 4 overall 2% loss across 45:31 45 minutes, 31 seconds you know various market it's not as if you know we have dropped by 2% or something you know so.1 2.3 here and 45:38 45 minutes, 38 seconds there uh some gains some losses you know it depends on the market and some of it is you know manpower driven our own 45:46 45 minutes, 46 seconds changes which have happened you know so there is no specific market I can point out you know where we are losing 45:55 45 minutes, 55 seconds okay sure sir uh very helpful Many thanks. Thank you. 46:02 46 minutes, 2 seconds Thank you. The next question is from the line of Kumar Dooshi. Please go ahead. 46:10 46 minutes, 10 seconds Hi Abij uh thanks for the opportunity. 46:13 46 minutes, 13 seconds Uh just uh could you elaborate a little bit on uh com you know your comment on competition is stabilizing the new 46:21 46 minutes, 21 seconds competition. So uh one is you know whether it is uh you know the dealer penetration tinting activity or at 46:30 46 minutes, 30 seconds dealer level market share that you may be tracking for some of your key dealers. Is it more or less referred? 46:36 46 minutes, 36 seconds Were you referring to their overall sales number, secondary sales? If that is one and second is could you give us 46:44 46 minutes, 44 seconds some color on what are you know how do you how have you seen their uh you know trade schemes and rebates uh whether 46:51 46 minutes, 51 seconds that is also stabilizing or are they intensifying the effort there. 46:56 46 minutes, 56 seconds So the first question you know our reading of the situation is that you know uh if you look at the 47:05 47 minutes, 5 seconds month-on-month sales uh sort of you know the pressure that we used to feel you know that's not increasing right you 47:14 47 minutes, 14 seconds know so uh when we do our tracking of our counters where you know they might be present or new counters where they 47:21 47 minutes, 21 seconds might be getting in uh that also does not indicate any sudden changes happening there in any of the markets. 47:29 47 minutes, 29 seconds So I presume that you know it's very incremental changes which are happening which is why I said things are 47:36 47 minutes, 36 seconds relatively more stable. Uh if you look at you know uh the overall 47:45 47 minutes, 45 seconds scenario you know uh and and when we do track uh the movements happening 47:52 47 minutes, 52 seconds in in in our network uh that is what we see that you know we haven't seen any great uh disruption happening or great 48:00 48 minutes changes happening uh in the network. So that's why I am saying and you will get to see that you know primary figures also there will be an improvement 48:09 48 minutes, 9 seconds sequentially quarter two was relatively muted for them and quarter 3 is a move up from that perspective but you know 48:18 48 minutes, 18 seconds month on month it isn't shifting greatly November and December would be possibly be at similar levels for them 48:28 48 minutes, 28 seconds understood and trade schemes rebates any comment trade schemes and rebates have been also very stable you know in fact they these 48:37 48 minutes, 37 seconds days announce you know some 3 month schemes and stuff like that uh the variations are uh limited uh there is uh 48:45 48 minutes, 45 seconds aggression which continues they are already as you know uh much lesser in terms of price compared to competition 48:52 48 minutes, 52 seconds they were at 5% discount in DPL itself now they have taken price increase uh as you know they have announced two price 49:00 49 minutes increases you know totaling to 2 to 2.5 5% approximately on the correct know some of them are now almost matched 49:08 49 minutes, 8 seconds in the luxury category and in the commodity you know the differences are still there so therefore uh the DPL 49:17 49 minutes, 17 seconds difference has narrowed down as far as the schemes are concerned it is still higher uh but as I said stable you know 49:24 49 minutes, 24 seconds not increasing or not doing something disruptive very helpful last thing they were late entrance in eastern region So uh you 49:34 49 minutes, 34 seconds know even in east they have not been able to sort of uh you know penetrate or hello 49:42 49 minutes, 42 seconds yeah they were late entrant in east uh right so in the east eastern region in west Bengal and northeast 49:50 49 minutes, 50 seconds uh also you're not seeing any increase in uh activities very stable there as well stable there you know 49:57 49 minutes, 57 seconds no major change seen so far a final one if I may anything you have seen uh different on exo from exo after 50:05 50 minutes, 5 seconds the announcement of uh things which they have done you know one is of course you know some of the price corrections they used to be at a much 50:13 50 minutes, 13 seconds higher elevated level in terms of their DPL etc uh they have reduced their prices and matched it to the market 50:20 50 minutes, 20 seconds rates you know so that's one thing which is clearly visible obviously you know that was you know constraining them in 50:28 50 minutes, 28 seconds terms of their prices being high in the market so that is that what something which they have adjusted. uh they have launched one or two products in the 50:36 50 minutes, 36 seconds economy category you know which which they are trying to penetrate uh and and adding some manpower in in 50:44 50 minutes, 44 seconds the sales team beyond that you know I think they're a reasonably stable player 50:52 50 minutes, 52 seconds and I so so basically irrational competitive behavior that's right you know no irrationality is something which is being shown 51:00 51 minutes perfect that is very helpful thank you so much and wish you the very best Right. 51:06 51 minutes, 6 seconds Thank you. The next question is from the line of Anurak Dal. Please go ahead. 51:14 51 minutes, 14 seconds Yeah. Hi. So, this is Anra Dal from Philip Capital. Uh my question is on the industrial paint category. Uh the growth trend has been mixed. Uh while some of 51:23 51 minutes, 23 seconds the competitors are doing well in this segment, especially for the protective coating segment, we have not done that well. Uh what is the reason behind it? A 51:32 51 minutes, 32 seconds and second how should we look at the industrial segment growth going forward? 51:36 51 minutes, 36 seconds Uh would could we return to kind of a double-digit trajectory there in FI27? 51:41 51 minutes, 41 seconds Right. No, you're right. You know, so uh automotive uh we are okay, you know, we could have done a slightly better than 51:48 51 minutes, 48 seconds what we did, you know, but the growth rates were actually there much more in the cars, you know, not so much uh in 51:56 51 minutes, 56 seconds the other categories. we we could have registered say another 3 4 percentage but that's about it. uh in uh 52:06 52 minutes, 6 seconds protective we could have done better. Uh our prices are slightly on the higher side. I think you know we will have to 52:14 52 minutes, 14 seconds adjust a little bit uh and be more competitive. Our our aid margin is much higher than competition. Uh we are the 52:23 52 minutes, 23 seconds leader in this category. We thought that you know we should be able to maintain that uh price gap but we may have to 52:31 52 minutes, 31 seconds adjust a little bit and then the growth rates can be restored. 52:36 52 minutes, 36 seconds So could we expect a double digit growth trend of next year? We should be able to do that. 52:42 52 minutes, 42 seconds Okay, that's great to know sir. And secondly just on the decorative side uh Q so we already had a 8% volume growth 52:49 52 minutes, 49 seconds this quarter. So is it safe to assume that we would reach a double digit kind of a 10% in Q4 and maybe maintain a 6% kind of volume value gap? 52:59 52 minutes, 59 seconds Yes, you know you can you can think like that. 53:04 53 minutes, 4 seconds Thank you sir. Thank you. That's my questions. 53:09 53 minutes, 9 seconds As there are no further questions we consider that as the last question for the day. I hand over the call to the management for the closing remarks. 53:17 53 minutes, 17 seconds Thank you all for coming, taking time out and reaching here and uh uh best of luck for the rest of the day. Thank you. 53:25 53 minutes, 25 seconds Thank you. 53:27 53 minutes, 27 seconds Thank you. On behalf of MK Global Financial Services, that concludes this conference. Thank you all for joining us.