Kansai Nerolac Paints Limited — Q4 FY26

Kansai Nerolac Paints Ltd Q4 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=luu0ii7AjR8 Published: 7 days ago

0:01 1 second Ladies and gentlemen, good day and welcome to the consignola Q4FI26 results conference call hosted by ICSA Securities Limited. 0:12 12 seconds As a reminder, all participant lines will be in the listenonly mode and there will be an opportunity for you to ask questions after the presentation concludes. 0:21 21 seconds Should you need assistance during the conference call, please signal an operator by pressing start then zero on the touchstone phone. I now hand the 0:28 28 seconds conference over to Mr. Aner Jooshi from IC Securities Limited. Thank you and over to you Mr. Jooshi. 0:35 35 seconds Yeah, thanks Ruja. On behalf of ICICI securities, we welcome you all to Q4 0:42 42 seconds FI26 and FI26 results conference call of Consigner Prints Limited. We have with us today senior management represented 0:51 51 seconds by Mr. Pravin Chowari, managing director, Mr. Yash Auja, Chief Financial Officer and Mr. Jason Gonarvis, 0:59 59 seconds director, corporate planning, IT and materials. Now I hand over the call to the management for initial comments and 1:06 1 minute, 6 seconds then we will open the floor for question and uh answer session and uh thanks to the entire management team for posting a 1:13 1 minute, 13 seconds strong set of numbers uh amid such a steep volatility. Thanks and over to you Pravin sir. 1:19 1 minute, 19 seconds Yeah, I would request Jason if you can walk them through the presentation. 1:24 1 minute, 24 seconds So good evening everybody. I'll just take you through our investor presentation which we have just uploaded a couple of minutes back. Uh uh from a 1:33 1 minute, 33 seconds from a opening standpoint uh re reinstating our purpose. Our purpose was to create environments for a healthy and 1:41 1 minute, 41 seconds beautiful future. Our vision is to design solutions that protect, inspire and touch lives every day. And on the 1:49 1 minute, 49 seconds ESG front, NeroC has been working extensively over the years and it is today water positive. It is committed to 1:55 1 minute, 55 seconds emission reduction and increasing green energy. From a brand perspective, for over a century, Neurolac has stood tall 2:04 2 minutes, 4 seconds as a heritage brand symbolizing excellence and innovation in the paint industry. Our strength lies in robust 2:10 2 minutes, 10 seconds R&D capabilities and strategic technology partnerships particularly in the industrial segment where we deliver 2:17 2 minutes, 17 seconds cutting edge solutions across diverse applications. Despite intense competition, Narolac continues to command attention proudly holding the 2:26 2 minutes, 26 seconds position of the second most recognized brand in terms of top of mind awareness nationally. One of her most enduring 2:34 2 minutes, 34 seconds assets is the Narrowac jingle. A cultural touchstone that has resonated across age groups for more than three decades. This timeless melody continues 2:43 2 minutes, 43 seconds to reinforce our brand identity and emotional connect with consumers. 2:49 2 minutes, 49 seconds Building on our century old legacy, Nerolac continues to shape the future with breakthrough product innovations. 2:55 2 minutes, 55 seconds Our sustainable solutions reflect a deep commitment to progress, responsibility, and customer trust, ensuring that we not 3:03 3 minutes, 3 seconds only meet today's needs, but also safeguard uh tomorrow. 3:08 3 minutes, 8 seconds Looking ahead, this same technological edge will increasingly shape our decorative segment, enabling us to introduce breakthrough concepts that 3:16 3 minutes, 16 seconds align with the growing demand for premium products. A prime example of this is our range of products which are exclusively category defining products 3:25 3 minutes, 25 seconds launched a few years ago offering Indian consumers a truly differentiated experience in decorative uh paints. 3:33 3 minutes, 33 seconds Commenting on the business environment what we have seen this quarter is that there is there has been a significant 3:40 3 minutes, 40 seconds surge in crude oil prices primarily because of the West Asia crisis. There has been a sharp depreciation in the rupee. The West Asia crisis has created 3:49 3 minutes, 49 seconds a lot of uncertainty. There is a supply chain disruption which has happened. 3:54 3 minutes, 54 seconds Demand in automotive has continued to be healthy and there is a continued focus of the government on infrastructure. 4:02 4 minutes, 2 seconds I will now talk about the decorative uh segment in which we will talk about the key elements of our decorative strategy 4:09 4 minutes, 9 seconds which are built on five elements which are new products, new business, the project's business, influencer program, 4:17 4 minutes, 17 seconds branding and marketing. Coming to our new products, uh we have tried to bring out the salient details of our new 4:24 4 minutes, 24 seconds products. I will just touch uh briefly on each of them. Our first product is Excel sheen which is a modified Excel acrylic emulsion with silicon additive. 4:35 4 minutes, 35 seconds Superior sheen with best-in-class dust pickup resistance and anti-al performance across all weather conditions. 4:42 4 minutes, 42 seconds XL Everlast 14 India's first self-cleaning paint powered by Japanese PU silicon hybrid technology with 4:50 4 minutes, 50 seconds anti-alcap technology delivering unmatched beauty and performance. 4:56 4 minutes, 56 seconds uh XL Everlast 20 which is India's first exterior paint with 20-year warranty. It is engineered with bulletproof nano 5:04 5 minutes, 4 seconds silica technology for superior durability, crack bridging up to 2 mm and weather resistance. Beauty gold 5:13 5 minutes, 13 seconds washable plus which is an interior emulsion with rich sheen finish and 1.25 times higher washability than 5:20 5 minutes, 20 seconds competition. It's the only paint in the category that has both antibacterial as well as it's the most washable product. 5:29 5 minutes, 29 seconds Perma no heat. Perma no heat is a heat reflecting liquid applied waterproof coating based on acrylic c-olymer 5:36 5 minutes, 36 seconds imulsion. It reflects visible radiation and infrared rays thereby reducing the surface temperature to by up to 15°. 5:47 5 minutes, 47 seconds Soldier Rain Raa is a high strength fiber reinforced elastoic liquid applied waterproof coating. It is formulated 5:55 5 minutes, 55 seconds with resilient acrylic c-olymers and reinforcing fibers. 6:00 6 minutes Coming to the new growth drivers uh in that in the new business uh we 6:07 6 minutes, 7 seconds have had robust growth in new businesses and a salency of new business has increased further compared to the 6:14 6 minutes, 14 seconds previous quarter and for the year. The project business has also expanded to more towns. It has registered a high 6:21 6 minutes, 21 seconds double-digit growth and the salency of projects for K&P has further increased. 6:26 6 minutes, 26 seconds We have given some of our marquee projects that we have painted the Jarkand high court the vidan sabai tripur and and the general pool residential accommodation at Raipur. 6:39 6 minutes, 39 seconds Coming to our influencer program, our paint as a service is today present in more than 250 cities and we continue to 6:48 6 minutes, 48 seconds invest aggressively in the nextG service. Our architect and inter interior decor designer program which is 6:56 6 minutes, 56 seconds Illuminati today is present in more than 45 plus cities and it is also growing healthily over last year. A secondary 7:05 7 minutes, 5 seconds program for painters today covers more than 1.2 lakh painters which are associated with the program and secondary salience to primary has also significantly increased. 7:15 7 minutes, 15 seconds Coming to our retail platforms, we had two platforms uh earlier which was the next gen shopppee and the shop and 7:22 7 minutes, 22 seconds shopop. We have now evolved and migrated to a new uh retail platform which is called the narolac uh paint plus zone 7:32 7 minutes, 32 seconds and almost 250 plus shops stores have been opened across India. 7:39 7 minutes, 39 seconds Coming to branding and marketing, our brand and marketing investments have remained strong with impactful campaigns 7:46 7 minutes, 46 seconds running across both television and digital platforms. These initiatives are designed to deepen consumer engagement 7:53 7 minutes, 53 seconds and reinforce Narolak's identity in the mind of the audience. The Girki Ronak program or campaign has beautifully 8:01 8 minutes, 1 second captured the emotional essence of home, strengthening our bond with consumers by celebrating the joy and pride of living 8:08 8 minutes, 8 seconds spaces. In addition, our association with the Asia Cup has amplified our visibility on the national stage, connecting Narolac with millions of 8:16 8 minutes, 16 seconds passionate fans and further cementing our position as a brand that resonates across diverse audiences. Together, 8:23 8 minutes, 23 seconds these efforts showcase how Narlac continues to blend heritage with contemporary relevance, ensuring our brand remains vibrant and top of mind. 8:33 8 minutes, 33 seconds Now coming to the industrial business, the industrial paints uh serves diverse applications and thus creates diverse 8:41 8 minutes, 41 seconds business opportunities in the three segments of powder, general industrial and high performance coating. And as is seen we we have shown some you know 8:50 8 minutes, 50 seconds areas in each segment that the company is uh present in. Coming to new products 8:58 8 minutes, 58 seconds uh our focus has been on enhancing finishes and functionality offering versatile application and prioritizing environment sustainability. 9:09 9 minutes, 9 seconds Some of our products uh we have tried to uh spell out here in the passenger vehicle segment. We have introduced 9:17 9 minutes, 17 seconds products which are energy energy efficient veton weight systems structural primers for for chassis as 9:25 9 minutes, 25 seconds well as premier clear finishes. In the two and three-wheer segment we have introduced lowbeck technology. We have 9:33 9 minutes, 33 seconds got anti-corrosive underbody protection products and high gloss clear coats which we have introduced in this year. 9:41 9 minutes, 41 seconds For commercial vehicles, we have introduced super low bake color coatings, anti-corrosive casting sealers for castings and clear addition promoters. 9:51 9 minutes, 51 seconds Now when it comes to high performance coating again on the three on the same three platforms uh the development has 9:58 9 minutes, 58 seconds taken place and in general industrial and high performance coatings we can see that some of the products which we have introduced is highly flexible ROS 10:06 10 minutes, 6 seconds compliant coil coatings which withstand severe forming operation high performance outdoor coating systems which have long-term UV resistance and 10:16 10 minutes, 16 seconds thermal insulating coatings. For powder coatings, we have introduced low bake oneshot matte powders, fusion bonded 10:24 10 minutes, 24 seconds epoxy top coats and coatings of furniture and consumer durables which have got high scratch resistance properties. 10:32 10 minutes, 32 seconds Coming to the performance highlights of industrial uh passenger vehicles as as I mentioned earlier has had healthy 10:39 10 minutes, 39 seconds demand. New models and SUVs continue to support the passenger vehicle growth in the two and three-wheeler segment. High 10:47 10 minutes, 47 seconds we have witnessed high double-digit growth and growth was supported by low interest rates and easy financing option in the commercial vehicle and tractors. 10:56 10 minutes, 56 seconds Again we have had doubledigit demand and a strong harvest season supported this demand. 11:05 11 minutes, 5 seconds uh uh uh in addition we have a new new segments where further salency further increase in salency of specialized 11:13 11 minutes, 13 seconds products in passenger vehicle is where the company is putting a thrust in the ARF business 11:20 11 minutes, 20 seconds uh as far as the business growth is concerned there has been moderate demand there has been a thrust towards premium premiumization where where the salency 11:28 11 minutes, 28 seconds of premium products have increased and there's an active conversion of body shops from solventborn coatings to waterborn quotings and there is a lot of 11:37 11 minutes, 37 seconds digitalization of service operations which is being undertaken to improve the customer experience and interaction. In 11:44 11 minutes, 44 seconds performance coatings the liquid segment witnessed strong growth channel sales witnessed very strong growth and we 11:51 11 minutes, 51 seconds maintained the premium salency in powder coatings. The demand showed good recovery in Q4 and we witnessed mid-s 11:59 11 minutes, 59 seconds singledigit growth. Channel sales witnessed very good growth. Among the accolades which the company has won, it 12:06 12 minutes, 6 seconds has won quite a few accolades. Uh during the year, we've in decorative we have won the dragon of Asia marketing awards 12:13 12 minutes, 13 seconds in quarter 225 where we've won six awards for the Dukanit yourself campaign in in the Mahakum. We we won the gold 12:22 12 minutes, 22 seconds winner ambient media award, the goldfest award, seven baby blue elephant awards. 12:28 12 minutes, 28 seconds In industrial uh we have had some excellent awards one from TAFE at the global supplier meet 2025 where we were 12:36 12 minutes, 36 seconds awarded the best supplier award. Toyota Kiloskar Motor Company has awarded as the best raw material supplier. Marudi 12:44 12 minutes, 44 seconds Suzuki has uh uh you know given us the superior performance in safety award. 12:49 12 minutes, 49 seconds Suzuki motorcycle has given us the best vendor award and as well as the cost town award which we got from Suzuki motorcycle. 12:58 12 minutes, 58 seconds Coming to the area of uh ESG uh KN&P was rated in the B category in climate change and water security in the CDB cycle 2025. 13:09 13 minutes, 9 seconds We have been awarded a bronze medal in ecoardis. The result places KN&P among the top 26% of companies assessed by EcoAD is 2025. 13:19 13 minutes, 19 seconds We have been recognized in the strong category by Crystal ESG ratings 2025. 13:24 13 minutes, 24 seconds We have been rated in the top 12 percentile companies within the chemical industry group in the SNP global large 13:31 13 minutes, 31 seconds and midcap ESG index 2025 and we have been rated in the top uh top and ranked 13:38 13 minutes, 38 seconds 20 out of 577 companies in the chemical industry and have received a lower risk rating indicating lower ESG risk in 2025. 13:48 13 minutes, 48 seconds Coming to our CSR initiatives. Through our CSR initiatives, we remain deeply committed to driving positive change across multiple dimensions of community 13:57 13 minutes, 57 seconds well-being. Our efforts span skill enhancement, ensuring environment sustainability, and community development while also prioritizing preventive health care and sanitation. 14:08 14 minutes, 8 seconds At the same time, we continue to invest in promoting education, empowering individuals, and fostering inclusive 14:15 14 minutes, 15 seconds growth. These initiatives reflect Narolak's ongoing dedication to giving back to society in a meaningful and 14:22 14 minutes, 22 seconds sustainable way, creating impact that uplifts communities and builds a brighter and healthier future for all. 14:30 14 minutes, 30 seconds Coming to our financials for the quarter 4 on a standalone basis, the revenue growth is 7.6%. 14:40 14 minutes, 40 seconds PBTIT was up 21% and PBT before exceptional items was up by 12.8%. 14:49 14 minutes, 49 seconds For the year on a standalone basis, net revenue is up by 3.2%. 14:53 14 minutes, 53 seconds PBDIT is up by 1.2% and PBT before exceptional items was down by 9%. 15:02 15 minutes, 2 seconds For the consolidated basis, growth in quarter 4, revenue was up by 7.5%. 15:09 15 minutes, 9 seconds PBDIT was up by 30.6% and PBT was before exceptional items was up by 23.2%. 15:17 15 minutes, 17 seconds For the full year on a consolidated basis, net revenue is up by 2.9%. 15:22 15 minutes, 22 seconds PBT PBDIT was up by 3.4% and PBT before exceptional items was up by 1.4%. 15:31 15 minutes, 31 seconds We have improved our working capital uh during the year though the number shows an increase but our special focus has 15:39 15 minutes, 39 seconds been on reduction on inventory. The number of increase increases because of investments. 15:45 15 minutes, 45 seconds As far as the dividend is concerned the board has recommended a dividend for the year of 250% which comes to 2.5 rupees per share. 15:55 15 minutes, 55 seconds When it comes to capex uh the capex is more or less normal and in line with previous previous years. Coming to risk 16:03 16 minutes, 3 seconds and out and outlook the west among risks west Asia crisis lead leading to supply chain disruptions is one of the key risk 16:11 16 minutes, 11 seconds that we see in this quarter. High commodity prices due to crude oil price surge and impact on downstream products. 16:20 16 minutes, 20 seconds Import cost surge due to rupee depreciation. And as far as the outlook is concerned as per IRBI construction 16:27 16 minutes, 27 seconds activity uh momentum will be sustained price paint price increase on account of steep material inflation is being taken 16:35 16 minutes, 35 seconds and considering the inflationary scenario demand v visibility remains more or less a wait and watch. So with that I come to the end of the 16:44 16 minutes, 44 seconds presentation and I now open up uh the floor for question answer. 16:51 16 minutes, 51 seconds Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press 16:58 16 minutes, 58 seconds star and one on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are 17:06 17 minutes, 6 seconds requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. 17:24 17 minutes, 24 seconds The first question is from the line of Aishroy from Noama. Please go ahead. 17:29 17 minutes, 29 seconds Yeah, thanks. Uh my first question is overall competitive intensity. So we have seen severe cost inflation last two 17:36 17 minutes, 36 seconds months. As a result of that uh we are seeing price hikes by almost all the paint players including new players 17:43 17 minutes, 43 seconds fairly being similar on advertising uh promotional intensity. Are you seeing some reduction from the new player 17:50 17 minutes, 50 seconds because they have never seen obviously this kind of inflation given the very short cycle any evidence you have seen either free gram or in terms of dealer incentive? 18:01 18 minutes, 1 second Yeah. [clears throat] So as far as we understand from our sources you know that on economy the free thing has been withdrawn but I don't know I mean that's 18:08 18 minutes, 8 seconds there's a mixed response always come from the trade but I don't know what is the policy but that's what we understand on um this thing advertisement see I 18:18 18 minutes, 18 seconds think whatever we have seen in month of April was committed much before this geopolitical problem and installations I would I think you know they would have 18:25 18 minutes, 25 seconds to go go through it. I don't think there's a much option left now. Now it remains to be seen as to remaining months in quarter 1 and quarter two 18:33 18 minutes, 33 seconds because this time Diwal is late. So we might see some adjustment there. It might happen. But as far as current quarter is concerned, I think April 18:40 18 minutes, 40 seconds being committed. I think that intensity we could see that it was there and then people spend money on advertisement as well in month of April. 18:51 18 minutes, 51 seconds Right. Uh one related question is generally uh when we see sharp inflation in FMCG paints local players lose market 18:58 18 minutes, 58 seconds share. Now uh you are a respectable player in the legacy overall market share but uh overall your size is much 19:07 19 minutes, 7 seconds smaller than say the two legacy players and the number one new player is also very aggressive. In that context, are 19:14 19 minutes, 14 seconds you gaining from the local players or are you now starting to lose some more share to the these three players given you have a overall pricing which is a 19:23 19 minutes, 23 seconds bit delayed in the B2B and definitely those three players those two legacy and that new players are very aggressive. So 19:30 19 minutes, 30 seconds overall you see this uh situation as a positive or a negative. 19:36 19 minutes, 36 seconds So uh it's very difficult to estimate you know how much uh unorganized players are gaining or losing but we believe I think they are there in the pockets and 19:45 19 minutes, 45 seconds in difficult times they go down and again they you know emerge again so very difficult to say as to whether we're gaining or not but what we are 19:53 19 minutes, 53 seconds definitely seeing is since uh November there has been constant uptick in the market and I think that is a positive sign and this trend is only uh 20:02 20 minutes, 2 seconds improving. Now if if I talk about November, December, Jan, there was no sign of any war or nothing of that sort. 20:08 20 minutes, 8 seconds It was pretty stable. Raw metals cost was benign. So I think with that thing also. So overall I think market is quite 20:15 20 minutes, 15 seconds uh I would say bullish in a way for decorative and uh this might be a temporary pause I would say for 20:22 20 minutes, 22 seconds unorganized sector but remains to be seen. We have no data as such to really support that and uh very difficult I would say. 20:31 20 minutes, 31 seconds Yeah. Thank you. Okay, that's all from my side. Thank you. Thanks. 20:36 20 minutes, 36 seconds Thank you. The next question is from the line of Mahil Sha from Nura. Please go ahead. Go ahead. 20:42 20 minutes, 42 seconds Hi. So, thank you for taking my question and uh congrats on a good performance. 20:46 20 minutes, 46 seconds So, firstly just few bookkeeping questions. Uh what was the growth uh between Deco and industrial given auto sales were relatively strong this 20:55 20 minutes, 55 seconds quarter again. So what is the difference in the growth in both of those key segments also in Deco? Uh if you can 21:02 21 minutes, 2 seconds help us understand the volume growth and mix impact for you. Uh last time last quarter it was quite negligible. Uh but 21:10 21 minutes, 10 seconds uh you know what was it for this quarter? That's my first question. 21:15 21 minutes, 15 seconds Yeah. So as far as volume value volume value gap for decorative is concerned it is again not very significant and I 21:22 21 minutes, 22 seconds think that is how I have been stating right from quarter one that you know our focus is very clear we'll be focusing on select market where you want to gain 21:30 21 minutes, 30 seconds market share and concentrate second thing is profitable mix is very very important so we have cautiously you know 21:38 21 minutes, 38 seconds uh curtailed our sale into items which are not profitable so that might be seen in in terms of value but I don't think you know that's very critical going 21:46 21 minutes, 46 seconds forward. I think profitable growth with good margins and decorative is the key focus and I'm we are confident the progression that you have seen from 21:54 21 minutes, 54 seconds quarter 1 to quarter 4. I think that journey I think is def we are getting getting lot of confidence now that I think we are on right path and I think 22:01 22 minutes, 1 second there's no point in getting into this mad rush of market at any cost anywhere that is not the idea I think you know it's important to deploy resources 22:09 22 minutes, 9 seconds carefully and it's a time where actually resilience will matter and I think if we pass through this I think future is very bright for decorative paint as far as 22:16 22 minutes, 16 seconds companies concerned so that is that is the road map that we'll have in future also as far as auto is concerned yeah auto did grow by in double digit 22:25 22 minutes, 25 seconds But we also have very sizable presence in indust which which grew by single digit. So overall I would say it was mixed um slightly you know mid mid 22:34 22 minutes, 34 seconds mid-digit plus as far as industry is concerned and as far as decorative is concerned then obviously it will be also in that range. So overall I would say 22:42 22 minutes, 42 seconds very balanced growth this quarter and that too I think with good improvement in contribution and overall profitability. 22:51 22 minutes, 51 seconds Understood and thank you for the road map that makes uh you know this brings a lot of clarity there. Uh so secondly on the cost inflation that we are seeing if 23:00 23 minutes you can highlight the kind of price increases that uh you have taken that will uh sit in one queue from here on 23:08 23 minutes, 8 seconds also uh given that you have a higher exposure to B2B flares uh historically we've always seen 23:16 23 minutes, 16 seconds uh seeing some initial sign uh initial pressure on margins because the price hikes from B2B usually come with the 23:23 23 minutes, 23 seconds lag. Uh so how are your discussions with the B2B players? When do you expect the price hikes in industrial business to 23:31 23 minutes, 31 seconds come through and the kind of price increases that you've taken in Deco? 23:36 23 minutes, 36 seconds Yeah. So Deco I think we were the first one to go in the market with price increase. The first increase we took in month of March itself about 25th March 23:44 23 minutes, 44 seconds we took the increase and then followed by 10th April followed by 21st April and now it will be 11th May. So this this 23:51 23 minutes, 51 seconds price this March was about I think 2%. After that it was all five to 6% 5 to 6%. So 23:58 23 minutes, 58 seconds net I would say will be higher single digit as far as price increase is concerned in decorative as of now. And in industrial also I think auto also we are very strong in terms of negotiation. 24:09 24 minutes, 9 seconds We got a good breakthrough. there are price increases which have been granted but obviously you know it is not I can't say it for entire auto but one thing is 24:16 24 minutes, 16 seconds very clear that it might be slightly delayed negotiation but it is always defective from so I think that is very important so I think with that in mind I 24:24 24 minutes, 24 seconds think we are not losing out on inflation as far as profitability is concerned maybe it will be slightly here and there 24:31 24 minutes, 31 seconds in terms of timing in case of industrial there is a good mix of OE as well as channel now when it comes to channel like decorative there also they 24:39 24 minutes, 39 seconds announced the price increase and uh that new new prices are effective uh midappril itself. Overall, I would say a pretty satisfactory price scenario and I 24:48 24 minutes, 48 seconds think we're very cautious about our overall profitability when we're getting into the business and that is how the team is working on. I I think as far as 24:57 24 minutes, 57 seconds our investor community is concerned, I would urge you know don't look at it quarter wise what is happening. I think it's important to look at uh on a longer 25:05 25 minutes, 5 seconds r longer run as to how is our overall strategy and direction is concerned. But as far as profitability is concerned, uh 25:12 25 minutes, 12 seconds definitely you know pressure is on on the team in terms of taking the price increases and direction is fairly positive. That that is what I would like to comment. 25:23 25 minutes, 23 seconds Got it. So thank you very much for that. 25:24 25 minutes, 24 seconds So lastly can I ask you if is there is any uh margin guidance uh for FI27 that you would like to share? uh where do you 25:33 25 minutes, 33 seconds think we will probably be aggregating towards for FI27 on console and standard on board? 25:40 25 minutes, 40 seconds Yeah. So like historically we have been talking about 13 to 14. I think that is what endeavor is. This year also I think we were in that range only. So 25:48 25 minutes, 48 seconds definitely uh we would be uh there our endeavor is always to go on higher end but as of now I can leave it at that. 25:59 25 minutes, 59 seconds Got it. Thank you. Wishing you all the very best. Thank you mayor. 26:04 26 minutes, 4 seconds Thank you. The next question is from the line of Rahan Seyad from Asset Management. Please go ahead. 26:14 26 minutes, 14 seconds Uh hello. Yeah. 26:18 26 minutes, 18 seconds Uh and thanks for taking my question. Uh so I have uh two questions regarding the 26:25 26 minutes, 25 seconds modus and cost structure side. So firstly now material uh uh given the 26:32 26 minutes, 32 seconds crude inflation into depreciation. So what is epidm sensitivity to a 5 to 10% increase in input cost you have that we 26:40 26 minutes, 40 seconds have shown in this I think if I and [clears throat] I could not hear you but if I understand 26:48 26 minutes, 48 seconds question correctly you're talking about inflation and it impact on profitability. Is that right? Is that what you want? Uh yeah yeah. 26:56 26 minutes, 56 seconds Yes. So as I explained earlier I think u we are going ahead with the price increase and trying to pass on inflation as much as possible. Second thing you 27:04 27 minutes, 4 seconds know there is inventory that also will carry both on FG and RM. So to that extent there is a cushion available but obviously you know the inflation already 27:12 27 minutes, 12 seconds taking place will come in effect sometime but we are we have we are hopeful that you know by then price increase also kicks in. We our endeavor 27:19 27 minutes, 19 seconds is to neutralize so some impact cannot be ruled out. 27:25 27 minutes, 25 seconds Oh okay. Okay. Uh on uh second question was on your industrial segment that you have mentioned increased reliability of 27:34 27 minutes, 34 seconds specialized products in passenger vehicles. So what percentage of auto cing revenue now comes from this high value products. Could you just tell me? 27:44 27 minutes, 44 seconds Yeah. So you know being a leader there I think our endeavor is to increase uh penetration into each vehicle that gets 27:52 27 minutes, 52 seconds produced. So in a vehicle there are many many areas which are still unexplored. 27:56 27 minutes, 56 seconds So we are trying to tap that each surface if there is a paint application that is possible and now the areas which 28:03 28 minutes, 3 seconds are left are very very niche but they are very I would say premium in nature. 28:09 28 minutes, 9 seconds So I think that is the one area which now we'll tap so that more of a car I think is a is our endeavor and that's the that's the specialized band we offer. 28:18 28 minutes, 18 seconds Okay. And then continuing with this part on how the performance cing and powder putting short recovery and growth in this water. So what is the current 28:26 28 minutes, 26 seconds utilization level in these segments and uh capacity hydrates for growth going forward? 28:33 28 minutes, 33 seconds Yeah. So in case of ind industrial I think in powder and industrial liquid coating we have sufficient capacity we 28:40 28 minutes, 40 seconds should be operating about 70 to 75% as of now. 28:46 28 minutes, 46 seconds of uh also the second part like segments or 28:55 28 minutes, 55 seconds capacity for both in this in this segment. 29:00 29 minutes Sorry not able to understand the question. 29:05 29 minutes, 5 seconds Uh like you have answered the current utilization. I'm asking about the segments capacity hydro for growth in the segment. 29:15 29 minutes, 15 seconds when you're asking for outlook like yeah yeah yeah yeah so I think like we have been 29:23 29 minutes, 23 seconds reporting you know in growth areas like performance quoting we have been growing in double digit so I would say that's our endeavor I think in infrastructure 29:31 29 minutes, 31 seconds spend as long as it keeps happening and we create we start expanding a segment which had briefed in our strategy session in month of February I think 29:39 29 minutes, 39 seconds that's our endeavor to really grow double digit as far as performance quoting is concerned Okay. Okay. Thank you. 29:52 29 minutes, 52 seconds Thank you. The next question is from the line of JAR from Masc Ma investment. Please go ahead. 30:00 30 minutes Uh hi sir, good evening. I hope I am audible. Yeah, you're audible. 30:05 30 minutes, 5 seconds Yeah. Uh sir, uh historically Q4 has been a sequentially weaker margin quarter for us. uh because of uh uh the 30:14 30 minutes, 14 seconds mix being tilted towards industrial uh this time if we see the margin pressure sequentially was much lower compared to 30:21 30 minutes, 21 seconds some of the historical Q4 numbers. Uh so is it mainly because the scale was a little better? We are improving 30:29 30 minutes, 29 seconds sequentially or any other factor that you you would like to highlight here. 30:34 30 minutes, 34 seconds Yeah. So one is in both industrially and decorative of course performance is better and in decorative also mix wise 30:42 30 minutes, 42 seconds we are far better than last quarter and that I think has resulted into overall contribution improvement. 30:49 30 minutes, 49 seconds Uh so mix you're saying individually in both uh industry and record in both in both. Great sir great and 30:57 30 minutes, 57 seconds secondly uh after the price hikes that you mentioned the four set of price hikes that you've taken um have you seen 31:05 31 minutes, 5 seconds any impact on volume so far I know it's not a long period since the price hikes have been implemented but any color you 31:12 31 minutes, 12 seconds can give on how the volumes are shaping up as of now uh frankly there is no impact we have seen and uh if really this 31:22 31 minutes, 22 seconds geopolitical situation obviously someday we believe it is meeting over someday again we think you know it's now not ending but I I hope if things change I 31:30 31 minutes, 30 seconds think we should be in a stable zone as far as quarter is concerned uh all right got it thank you 31:38 31 minutes, 38 seconds thank you thank you the next question is from the line of AIT puroh from please go ahead 31:47 31 minutes, 47 seconds yes sir hi uh thank you for the opportunity and congratulations so I just wanted to understand uh on 31:54 31 minutes, 54 seconds your outlook for the next year. Uh you indicated that November is seen an uptake uh from an industry growth 32:02 32 minutes, 2 seconds perspective and for you as well. Uh and the context that uh till now you haven't seen any significant negative impact. Um 32:11 32 minutes, 11 seconds but how would the trend in terms of secondary sales now probably much of the activity would be primary or be 32:18 32 minutes, 18 seconds secondary sale also because price increases have been taken. So stocking up might be happening. How do I assess for the full year if you could just give a some sense on the industry growth? 32:31 32 minutes, 31 seconds Yeah, [clears throat] I mean frankly difficult to you know predict at this stage but uh if you if I have to go by 32:38 32 minutes, 38 seconds the recent trend of last five months if that is anything to do with the overall market and economy for for economy which 32:46 32 minutes, 46 seconds concerns paint industry I think there has been significant improvement in in all the verticals. I think if that is 32:53 32 minutes, 53 seconds the indication which was pre-war that mean there is a fundamental things are getting corrected or changed I would say that's the I would say green shoot that 33:02 33 minutes, 2 seconds I'm seeing and uh if this war gets over I mean soon I think then there should not be any impact as the overall year is 33:10 33 minutes, 10 seconds concerned but of course if this gets dragged on and this then it starts impacting our delays in terms of fuel increase and you know all those other 33:18 33 minutes, 18 seconds cars going up then I think it is anybody's guess and if it happens to us it might happen to enter I would say other sectors also which are 33:24 33 minutes, 24 seconds consumptiondriven but it's like a very difficult to guess as to what will happen as of now I'm only relying on past five months uh trend and I I'm 33:33 33 minutes, 33 seconds pretty hopeful that if that trend has to sustain I think we should have another good year I would say 33:42 33 minutes, 42 seconds and luckily on the project side which is our I mean you could uh give some indication on the new initiatives new 33:51 33 minutes, 51 seconds businesses And the project what would be the uh as a percentage of our total sales the project 34:00 34 minutes in a sense decorative projects you are saying yes yes sir yes I think decorative project should be now 34:07 34 minutes, 7 seconds about uh about u 10% plus yeah 10% plus 34:17 34 minutes, 17 seconds and the new uh businesses which includes waterproofing construction chemical uh even the boot finish. 34:26 34 minutes, 26 seconds Thank you. 34:27 34 minutes, 27 seconds I think that also should be uh 10% plus but slightly on a higher side than than projects. 34:34 34 minutes, 34 seconds Okay. Okay. That's it. Thank you so much. Okay. 34:38 34 minutes, 38 seconds All the Thank you. The next question is from the line of Prati Goauti from HSBC. Please go ahead. 34:50 34 minutes, 50 seconds Hello. Am I audible? Yes sir. 34:54 34 minutes, 54 seconds Yes. Hi sir. This is Pratik Goti from HSBC. Thank you for taking my question. 34:58 34 minutes, 58 seconds I have a two please. Um on delay incentives. Uh if I remember correctly, delay incentives were increased across 35:06 35 minutes, 6 seconds the board by all companies. I think uh when input costs were benign. Uh have you seen incentives lowered now that 35:12 35 minutes, 12 seconds cost inflation is back? This is for you and if you have a comment on the industry dynamics as well that will also be helpful please. 35:21 35 minutes, 21 seconds I see you know dealer incentives is also function of you know time and it it varies month on month and April 35:28 35 minutes, 28 seconds typically is also a high stocking month otherwise also I mean forget this year with war and price increase it could have been slightly accentuated but 35:37 35 minutes, 37 seconds otherwise also it happens. So I would say it's very difficult to comment on just one month of this inflation what has happened because I think it is 35:44 35 minutes, 44 seconds pretty much in line with what we would have seen otherwise also in last year or otherwise now the it remains to be seen 35:51 35 minutes, 51 seconds that if this inflation persist in next one or two months then what happens and definitely you know whenever there's a price increase that happens incentives 36:00 36 minutes are obviously adjusted to certain extent that is a normal practice which always happens in the industry. Understood. 36:07 36 minutes, 7 seconds uh and on paint demand uh if we split the deco markets into projects business construction chemicals wood finishes and 36:15 36 minutes, 15 seconds uh what we can call as core retail deco paints business uh basically business that goes through uh the dealers uh have you seen any improvement or growth in the core retail decoup paints business? 36:27 36 minutes, 27 seconds Yes, we have seen improvement. 36:30 36 minutes, 30 seconds Okay. And in terms of mix um you mentioned that mix had improved for you. So can you give more color over there? 36:37 36 minutes, 37 seconds uh how is that mix improvement coming about is that narrow narrow plus range that you have or any color on that would be helpful please. 36:44 36 minutes, 44 seconds Yes. So you know if you have I think in presentation you know this can be detailed out on a new products. So in a quarter four I think a new product contribution is very high. I think that 36:53 36 minutes, 53 seconds is one thing is contributed and all these products are launched in imulsion category which is obviously as such as a mix it is considered premium and in that 37:01 37 minutes, 1 second also when we classify economic premium super premium there also super premium is done well. I think that is the uh direction that obviously has taken. So 37:10 37 minutes, 10 seconds new product in in that also it's a super doing well. I think all in all that is why I call out as overall mix better. 37:18 37 minutes, 18 seconds Understood. Okay, that helps. Thank you. Thank you. 37:24 37 minutes, 24 seconds Thank you. The next question is from the line of Tja Sha from Aenda Spark Institutional Equities. Please go ahead. 37:31 37 minutes, 31 seconds Uh hi, thanks for the opportunity sir. 37:34 37 minutes, 34 seconds Sir, uh did I hear you correctly that you said that we focused on market share gain and and we have gained market share in some focused market? 37:44 37 minutes, 44 seconds Yes, you're right. 37:46 37 minutes, 46 seconds And so which region or which markets this would be? 37:51 37 minutes, 51 seconds No, no, it is you know when we talk about focus market, it is pan India. It is not like northeast. So each so there are uh you know specific strategies for 37:59 37 minutes, 59 seconds each uh towns and we are focusing on that to really gain share there. So that is what is working very well now. 38:08 38 minutes, 8 seconds And so this would be urban largely uh I I would say um T2 T3 mainly 38:17 38 minutes, 17 seconds T2 T3 and sir just wanted to understand uh the the character of the competition which is now put to test and then this 38:25 38 minutes, 25 seconds time I think there are two new players who are actually facing this inflation for the first time. uh and and and thankfully we have seen that at least uh 38:33 38 minutes, 33 seconds the large listed players have taken price right but uh how how the new competition is behaving and how the long list of a long tail of unorganized or 38:42 38 minutes, 42 seconds large unorganized guys are behaving in this environment. 38:47 38 minutes, 47 seconds I think you know they also took price increase in fact you know they had announced price increase much before this war itself won in Jan 1 in five 38:55 38 minutes, 55 seconds because they were anyway I think below uh market standard price so they wanted to reach and reach that gap that is one but after that again you know uh this 39:04 39 minutes, 4 seconds inflation has hit I don't I don't know as of now whether really they have taken further price increase now so as far as 39:11 39 minutes, 11 seconds that remains you know in terms of uh what competition is trying to do which is a new entrance and on um unorganized 39:19 39 minutes, 19 seconds sector or small player obviously you know there'll be impact which they'll have because of their capacity to absorb the inflation and more than inflation I 39:27 39 minutes, 27 seconds think it is availability also which is causing a trouble so definitely there'll be some I would say uh impact that might 39:34 39 minutes, 34 seconds be happening with unorganized and uh in month of April typically you know it's a big stocking month so as such inventory 39:41 39 minutes, 41 seconds is stocked of all the leading brands so in this month really it's very difficult to say that whether or organ has got impacted and there is a sale that shift 39:49 39 minutes, 49 seconds is happening very difficult. uh it will be only seen in next uh I would say 3 to 6 months where that impact impact is 39:56 39 minutes, 56 seconds really been seen where there is extraordinary demand that is coming of certain products and typically these are you know low-end products like primers 40:04 40 minutes, 4 seconds and all I don't see you know there'll be super premium premium immersion category may there's a major play it's all standard products which I don't think 40:12 40 minutes, 12 seconds will be any significant as far as we are concerned last question are margin guidance of 13 40:19 40 minutes, 19 seconds to 14% % is it assuming citrus parabus on raw material to stay like this or there is a built-in assumption that 40:27 40 minutes, 27 seconds second half they they kind of reverses and and gives us some room to uh to have that benefit. 40:34 40 minutes, 34 seconds Uh yeah I think there is a there is a strong uh I would say belief that you know things will change. I think we are 40:41 40 minutes, 41 seconds seeing some signs and some of the raw metal prices also got corrected. Now uh I think the temporary surge that happened because of this uncertainty and 40:50 40 minutes, 50 seconds panic I would say is now stabilizing. So we believe that I think things should stabilize. Uh quarteron quarter very 40:57 40 minutes, 57 seconds difficult to project because timing wise there is always the issue but I think overall I think things should be better. 41:05 41 minutes, 5 seconds Thanks that's all from my side. Thanks. Thank you. 41:10 41 minutes, 10 seconds Thank you. The next question is from the line of Aimea from Mcquaryi. Please go ahead. 41:17 41 minutes, 17 seconds Yeah. Hi sir. Uh my questions have largely been answered. I just wanted to clarify you said uh on the decorative growth and industrial growth this 41:24 41 minutes, 24 seconds quarter. Could you kind of I missed that comment sir. If you could kind of just repeat how much was the growth momentum in each of the segments. 41:32 41 minutes, 32 seconds Yeah we so you know in industrial I was saying you know there was reference to auto being double digit. I said yeah it 41:39 41 minutes, 39 seconds is uh it's close to double digit but we have also have industrial section which is also large and that that is where uh 41:47 41 minutes, 47 seconds and uh my answer was in relation with the strategy where we focus on extremely premium profitable mix now and we are 41:54 41 minutes, 54 seconds doing away with all lowend uh nonprofitable items so with that I think I was talking about slightly 42:03 42 minutes, 3 seconds higher single digit as far as industry is concerned and even I we were pretty much mid single digit or lower than that 42:11 42 minutes, 11 seconds around that. So I think overall I think better better show as far as mix. 42:17 42 minutes, 17 seconds Got it. Got it. Very clear. So, so just on that front on the industrial side I mean as we move now you know there is 42:23 42 minutes, 23 seconds obviously some inflation concerns but auto industry is my understanding correct that the growth momentum has 42:30 42 minutes, 30 seconds sustained uh till this because there was a clarification that you said that in decorative the momentum has kind of 42:37 42 minutes, 37 seconds demand momentum has sustained but is industrial also the similar kind of situation especially auto. Yeah. Yeah, it is. 42:47 42 minutes, 47 seconds Okay. And uh sorry if I may just from a thought perspective, would that increase the ability to take price increases in 42:55 42 minutes, 55 seconds that sense? Uh or is that uh would would you kind of agree or would your comments on that sir would be helpful? No, I 43:03 43 minutes, 3 seconds think even we otherwise also I think whether it's a low phase, high phase, I think you know definitely we are looking at margin and hence you know this is 43:12 43 minutes, 12 seconds something which we will not forgo and uh team is after price increase. Now look at the scenario actually this is not a 43:20 43 minutes, 20 seconds standard kind of a thing entire ra has undergone uh change along with dollar you know appreciation. So I think 43:29 43 minutes, 29 seconds customers are are listening very carefully engaging and I think based on justification they already started giving us price increases. 43:38 43 minutes, 38 seconds Okay sir. So some price increases already happened. Uh any quantum auto it's very difficult you'll appreciate that. 43:47 43 minutes, 47 seconds No no fair enough. So that's all from Thank you very much. 43:52 43 minutes, 52 seconds Thank you. The next question is from the line of Aner Jooshi from ICS securities. Please go ahead. 43:59 43 minutes, 59 seconds Yeah. Uh sir, uh the price hike in decorative effective price hike uh would be I guess in low means for us as well 44:08 44 minutes, 8 seconds as the industry I guess and um if uh the war ends and if corrects materially so 44:15 44 minutes, 15 seconds will uh there be price cuts or we will try to increase ad spends or we will try to increase the margins. So, so what will be the strategy uh of the company? 44:27 44 minutes, 27 seconds Question uh number one and um uh in terms of how do you see the outlook for FI27 44:34 44 minutes, 34 seconds considering there will be steep inflation not just in paints but in general there is a possibility of 44:41 44 minutes, 41 seconds material inflation in uh across uh commodities in India. So, so how is the outlook and if you can share outlook in 44:49 44 minutes, 49 seconds terms of decorative decorative projects uh as well as industrial and auto. Yeah, thanks sir. 44:57 44 minutes, 57 seconds Okay. So you know auto as I said uh you know it looks like demand is pretty strong and most of our customers are talking about long waiting list as far 45:05 45 minutes, 5 seconds as their products are concerned. So we are hoping that things should be uh okay for auto as a whole concerned. In other industrial segment also we are not 45:13 45 minutes, 13 seconds seeing any change. I think infrastructure and even otherwise appliances and all that is going pretty standard and normal. So we hope that 45:21 45 minutes, 21 seconds also continues. Coming to Deco, we I just mentioned about last five months trajectory and I think that has also gone through April. So we believe that 45:29 45 minutes, 29 seconds things should be okay as far as Deco from demand perspective is concerned otherwise also unless you know something dramatically happens and you know 45:37 45 minutes, 37 seconds there's a inflation which is beyond means and what we saw maybe 3 four years back then of course a different story but as of now it's too uh difficult to 45:46 45 minutes, 46 seconds assume I know have a extreme assumptions in both ends very very difficult uh I mean it's like a crystal gazing now as 45:54 45 minutes, 54 seconds far as price increase topic that you have concerned and inflation or deflation I mean if inflation continues then obviously our price increases are there 46:02 46 minutes, 2 seconds and we we might take further price increase. Second thing is if there's a deflation that happens then typically what industry does in the short term is 46:10 46 minutes, 10 seconds obviously the the scheme gets adjusted and if corresponding deflation if it is making sense is always passed on that happens and price increase is there 46:18 46 minutes, 18 seconds scheme gets adjusted reverse also happens and there is a deflation in a short period obviously if there is a sustained the stability we see with the 46:27 46 minutes, 27 seconds deflation then obviously price will get corrected downward but we don't see that happening and the reason is uh crude of 46:34 46 minutes, 34 seconds 60 or 20 I don't know whether we'll go back so soon there and the structural imbalance that got created with all this 46:42 46 minutes, 42 seconds shipping lane disturbed and all of that I think also might take some time to settle in so I think we have to live with the situation I would guess for 46:49 46 minutes, 49 seconds next 6 months with this and if things improve then maybe second half we might see a dramatic change that's what at least I believe and uh that's how we are 46:58 46 minutes, 58 seconds working with yeah okay so last question assuming uh crude 47:04 47 minutes, 4 seconds uh settles at uh let's say 100 um will there be any requirement to take further price hikes or current price hikes of 47:13 47 minutes, 13 seconds low teams are in a way sufficient I think with 100 I think it should be okay okay sure sir this is uh very helpful 47:22 47 minutes, 22 seconds many thanks right thank you thank you the next question is from the 47:29 47 minutes, 29 seconds line of Sid Gandhi from Capital please go ahead Hi sir, this is Percy Pansuki here. Uh I 47:38 47 minutes, 38 seconds just wanted to ask uh one question on uh uh the other expenses line for this quarter. It is uh down uh and it's uh in 47:48 47 minutes, 48 seconds terms of basis points is about 150 basis points uh down Y as a percentage of sales. Uh in absolute terms it's about 1 47:56 47 minutes, 56 seconds one and a half% down Y while the sales has grown at 78%. So can you give uh uh 48:03 48 minutes, 3 seconds uh any reason why uh there is such a big uh 150 basis points kind of uh uh uh saving in this cost item. 48:17 48 minutes, 17 seconds Yeah. So if you look at absolute increase now from last year to current year it is same right. So because of sale increase you're seeing the drop out there. 48:28 48 minutes, 28 seconds Yes. But as the value of the business increases these costs would also normally increase right? 48:35 48 minutes, 35 seconds No there is a fixed cost leverage optimization is also being done. So that also had mentioned earlier in quarter. 48:42 48 minutes, 42 seconds So we are also looking at cost efficiency spend efficiency all that is also coming in now. 48:49 48 minutes, 49 seconds Okay. So there is no uh full yearing up in Q4 which is causing this movement is it? Oh, no. 48:59 48 minutes, 59 seconds Okay. Okay. Yeah, that's it. That's all for me. Right. Thank you. 49:07 49 minutes, 7 seconds Thank you. 49:10 49 minutes, 10 seconds Participants to ask a question. You may please press star and one. 49:31 49 minutes, 31 seconds As there are no further questions from the participants, I now hand the conference over to the management for closing comments. 49:48 49 minutes, 48 seconds So, you may please go ahead. We don't have any questions. Any closing comments from your side? No, I think nothing. Thank you so much. 49:55 49 minutes, 55 seconds I think uh it is first time we conducted our investment meet in the evening at 5:30. So, thank you all for joining and hope to see you in next quarter. Thank you. 50:06 50 minutes, 6 seconds Thank you ladies and gentlemen on behalf of ICA Securities Limited that concludes this conference. Thank you for joining us and you may now disconnect your lines.