Ladies and gentlemen, good day, and welcome to Kansai Nerolac Q3 FY 2024 conference call, hosted by ICICI Securities. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Aniruddha Joshi from ICICI Securities. Thank you, and over to you, sir. Yeah, thanks, Tushar. On behalf of ICICI Securities, we welcome you all to Q3 FY 2024 results conference call of Kansai Nerolac Paints. We are with the senior management, represented by Mr. Anuj Jain, Managing Director, Mr. Prashant Pai, Director, Finance, and Mr. Jason Gonsalves, Director, Corporate Planning, IT and Materials. Now, I hand over the call to the management for initial comments on the quarterly performance, and then we will open the floor for question and answer session. Thanks, and over to you, sir. Thank you, Aniruddha. Evening, everyone, and welcome Q3 for financial year 2023-2024. First of all, wish you all a very Happy New Year, and, as usual, we are grateful for your continued support and interest in our company. For the quarter three of financial year 2023-2024, we had a growth of 5.7% over the corresponding quarter of the previous year. If you look at the EBITDA, the growth was 27.3%, and in terms of PAT, the growth was about 40% over the same quarter of the previous year. nine-month basis, the net revenue growth is 4.7% over the same period of previous year, and EBITDA growth is around 31.5% over the same period of previous year. Overall, for the quarter, the demand for industrial paint remained good. In automotive, the passenger vehicle continued with the good rate, and two-wheeler, which was not so good in the previous quarters, we could see some kind of green shoot and some revival of the demand happening in the third quarter for the two-wheelers. Passenger vehicle, commercial vehicle, witnessed a decent demand. The other part of the industrial business, which is performance coating, that also continued to do well, and it's also getting benefit from the infrastructure development spent by the government, the CapEx cycle, all that is supporting the non-auto industrial business. For decorative, the volume growth during the quarter was in double digit, and primarily it is driven by the festive season, because this time, Diwali was in the month of November. Whenever Diwali happens in the month of November, the previous month see a good demand. So October, there was a good demand. In terms of rural, though there's some green shoot, if we compare with the quarter one and quarter two, we have seen some recovery, but still, the growth continues to be higher from the urban market, especially the Tier 1, Tier 2, and the rural market or Tier 3, Tier 4 market growth, if you compare with the urban, is on the lower side. Raw material prices were stable despite the volatility in crude oil, despite geopolitical situation, but prices in the quarter three were stable. I'll give you some highlights for the quarter three, and to start with about industrial business. So automotive, where the market share is high, we continue with our approach of focusing on the technologically superior products, which is in line with our strategy and launching sustainable technologies to reduce VOC and carbon emissions, so low-energy products, we continue with that. And some of the new segments, which we discussed in the past, as a part of our strategy to increase the addressable size of the market, we have entered into some new segments, which is, for example, seam sealer, the underbody coats, alloy wheels, you know, that business has started, and we have started seeing some business contribution from these new segments. In auto refinish, where our market share is low because we have been relatively a new entrant, but continuously, we have been making a progress. As a part of our strategy, where we wanted to focus more on A-class body shops, which mean, which basically deal with the high, high-end premium polyurethane paints, so that salience is continuously going up in the auto refinish, and we are able to add more and more A-class body shops. In performance coating, again, you know, as we discussed in the past also, that we wanted to come out, come out of some business where the margins were very, very low, and that cycle almost we have completed. Our focus was more on the premium segment. Premium segments here include, like, bridges, the windmills, the appliances, construction equipment, helmets. And, the powder also is a part of performance coating division, where the premium segments include rebar, pipe coatings, you know, the alloy wheels. So some of these segments, you know, that we have started participating because we need approval, and since we started getting approvals, our salience in overall performance coating division from the premium also is going up now continuously and consistently. So overall, in the industrial, we have been able to recover our, our margins. Now that what we have been targeting, what we have been looking at the objective, we have been able to recover it. Coming to decorative, some of the key growth drivers which we discussed in the past, the Paint+, the differentiated product we kept on introducing, and, we are seeing that last year we started getting a decent salience contribution from the Paint+ products.... And this year also the salience is going up, and this is also helping us to increase overall salience of the premium products in our portfolio. The influencer program and services, we are in fact, our concentration was in terms of, the painter program and also establishing next-gen services. So there also, in fact, every quarter we are making a progress now, and it is gaining a momentum. The project business, where our participation was lower and we expanded number of towns, our salience is going up now, and our growth also, you know, based on whatever information is available, probably we are better than the market. Also in the new business, which include wood finish and the waterproofing and the construction chemicals, now we are having a growth which is better than the market growth. We have, in line with our strategy, have been increasing our marketing spends, so even in third quarter we have increased our marketing spends and enhanced the visibility. All these efforts are helping us to expand our distribution and network. Some of the new product which I just spoke about, what we launched in the recent past is, we have launched some product in the under the brand of Kansai. So this is like a Japanese brand, Kansai Select. It's a designer finishes, so it's like a, you know, very high-end, premium designer finishes, which we have introduced on the select basis in quarter three. In the popular and the economy segment, we've introduced Beauty Little Master Sheen. This is across the country, and we got a very good response. This is a unique product which have a very good sheen, which is equal to a premium, but at a price which is, you know, basic category, which is matching in the basic category of economy range. We also introduced some niche products, like, the polyurethane floor coatings, and, you know, these products have an excellent adhesion property to, to concrete substrate with excellent abrasion resistance. We also introduced. In fact, we have introduced Impressions Kashmir in the earlier quarters. We came out with the variant of, high sheen. Some of the markets, some of the states in the country, they prefer a very, very high sheen level, so we have introduced high sheen and also matte. So with this, within the Impressions Kashmir, we have high sheen, mid sheen, and matte, so there are multiple variants which are available. We also introduced one more, unique product, which is, you know, this Crystal Seal, which act like a putty, but it helps in the waterproofing. So some of these products we have introduced in the recent quarters. As I spoke about, next-generation painting services, which is gaining traction, and our digital presence is going up, so now we are present in more than 450 towns. But if you look at the active lead generation, we have started doing in more than 170 cities, where we do our target marketing, we generate the leads and convert it to a business, and we have developed the capability to paint almost 4,000, 5,000 homes, you know, on a monthly basis. For architect interior designer, we have launched a program called Illuminati in the market, and that is also gaining traction. So we are able to reach out to the architect, demonstrate the benefits of our Paint+ products, and you know, started generating business through them. And whatever business we are generating from this program, it has a high saliency of the premium products. New businesses, I spoke about, that overall growth is higher, and the saliency also is continuously going up. Similarly, it is happening in case of project business also. Our network expansion is in double digits, and that's the rate which we are growing at. Some of the other highlights for the quarter, the capacity expansion projects at Visakhapatnam and Jaipur, they are on track, as we announced earlier, and capacity utilization is around 60% at the YTD level. We have been speaking about our ESG initiatives in the past, and for that, in fact, we submitted our application to SBTi. And as of now, we've become the probably the first Indian paint company to get approval from SBTi for near-term science-based target for GHG emissions, which is in reduction in line with the 1.5-degree pathway. So that's something, you know, that which we feel good about. And so these are some of the highlights related to industry business, decorative business, and some other highlights, which I just spoke about. And now welcome you all for the questions. Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchtone phone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Mihir Shah from Nomura. Please go ahead, sir. Hi, sir. Thank you for taking my question. Yes. Sir, so I did hear you indicating that in the projects business, the waterproofing business, the wood coating business, you are doing much better than market growth. Can you talk a bit more on the Paint+ and influencer strategy, given it has become meaningful? Can this lead to better than peers volume performance for FY 25, or do you think we will still be able to grow in line with the industry or the market rate, basically? Mihir, when we talk about Paint+, this initiative is about, you know, the performance product, because paint is generally known for color. So we are coming up with more and more product, which talks about the performance. As I gave example last time also, that we launched Excel Everlast, which is about 12 years of warranty, and it's a self-cleaning property, the no smell paint. And the salience is going up, it is now in the high single digits. The advantage of this strategy is that it keeps us insulated from the competition as we go forward and as we increase the salience, you know, more and more. Also, you know, these products, the margins are good, and as the sale of this product goes up, it will also help the premium saliency, you know, going up. So, so that's the Paint+. And influencer strategy and the service strategy, what we have taken, it's ultimately, what we said is that, you know, we would like to work directly with the users. So it could be a painter, contractor, contractors are there in the project business, and also from the service point of view, reaching out directly to the consumer. So that talks about, you know, that, the brand, what we have, the, you know, number two mindshare brand, that we are able to reach out to the users directly and able to generate, you know, business. So to tell you that whether it gives higher or lower, the important point at the segment level today, we really look at, because some of the segment, like project and new business, we were under-indexed. So our salience is lower and the market salience is higher. So if we, you know, if we convert it to a market salience, probably, you know, that our growth definitely be equal to the market growth. And, yes, we feel that, you know, that we have seen the green shoots of all these initiatives, and therefore it gives us the confidence that keep working on these initiatives. And I think we're in the right direction, to see that, you know, our growth is equal or better than the market. Understood, sir. Just a quick subpart to it for the near term. In the fourth quarter, there is a high volume base that is there. You know, is the pickup in demand strong enough to drive double-digit growth in the fourth quarter as well? Any indication from, you know, the Jan month that you can give? I believe market leader indicated in December, the growth had kind of fizzled away, in December, the growth had fizzled away a bit. But your thoughts on the near-term demand, and can double-digit growth sustain over the, you know, coming quarters? My comment is that, the going forward, for a few quarters, the demand would be volume-led, and, maybe a possibility of closer to the double-digit growth remains. Got it, sir. So second, I wanted to ask on how should one think about the gross margins, given that the industry has started taking price cuts despite reaching, you know, historical high margins of 40% that you had achieved pre-COVID? Can one expect gross margins to get better from current levels despite the price cuts, as raw material prices are lower? And the quantum of price cuts, you would have also taken about 1.5% price cuts in November and 1.5% in mid-January, right? I mean, and is there any price cut in the industrial part of the business as well? So, Mihir, the gross margin, if you look at the category level, you know, because in our case, the mix changes on a quarter-to-quarter basis. But at the category level, our endeavor will be to maintain the gross margins. And yes, we have taken a cut in decorative for the, you know, price, two price cuts we have taken, approximately around 3%. See, the deflation has been better in decorative or you can say water-based products, but in the solvent-based product it is little different. So and the situation looking forward is still not stabilized, still not very clear, because there's a volatility in crude and the geopolitical situation. So as of now, in industrial, we still want to wait and see that when the prices get stabilized and then take appropriate call. Okay, got it. Sir, two small bookkeeping questions. There seems to be a material step up in employee cost and other expenses. What can this be attributed to? Is it the steps to retain talent or limit attrition and higher ad spend in the wake of, you know, increase in new organized competition? Or any new facility which is driving this higher cost, and these costs can sustain at these current levels, or it can mean revert towards the downside, basically, to the historical levels? So Mihir, then in other expenses, the one is the advertising marketing cost, which we have stepped up in the quarter. In fact, it is more than 1% we stepped up. YTD level also, it is around 1% we stepped up, and this is basically to enhance the visibility. Also, this target marketing services, what I'm talking about, the lead, you know, this, the targeting marketing, what we have started doing, so that's one part of it. The other part, you know, this, the digital, you know, because all these initiatives are completely supported with the digital platform, and we have made a good investment, you know, because that will give us a long-term advantage in the market. So, so that's a part of the other expenses. And, you know, for the existing employees also, one is, you know, all these initiatives for that we have created a separate structure. So you can say there are new teams to support the services, to support the architects, and that's how it is reflecting in the employee expenses. Okay, got it. Got it. Sir, fourth quarter last year, and maybe Mr. Pai can elaborate on it, you know, the tax rate was lower than the nine-month average. Can you just jog our memory into if there was any one-off, and will there be a lower tax rate in the, in fourth quarter this year, or will it be similar to nine months that we have seen in, in this quarter? It will be similar to the nine months. Got it. Got it. So lastly, any words on the, you know, INR 1,100 crore war chest that you've created? I know that you've indicated that your first priority will be towards business growth, but any more elaborate, you know, you sold two large land parcels. Any more insights on that will be really appreciated. ... No, Mihir, I think we stay with the earlier comments what we are giving. Okay, thank you very much. All, all the very best, and that's all from my side. Thank you, Mihir. Thank you. Ladies and gentlemen, please press star and one to ask questions. The next question is from the line of Avi Mehta from Macquarie. Please go ahead, sir. Hi, sir. This is Avi here. I just had two questions. So first, you know, on the margin front, and, you know, for the last nine months, we have done at the standalone level, a margin of almost about 14.5%-15%. How should we look at EBITDA margin on an annual basis, especially because I was not clear on the demand side. We have heard that demand has weakened in December, and hence, should that be a cause for concern or how should we look at annual margins for this year, and probably a sense on how do you look at this, you know, on a going forward basis, would be useful. So Avi, demand was, within the quarter, if you compare with the October, demand was weakened in the month of December. And as I said, that the going forward, the demand would be volume-led because some of the, the price reductions in the decorative also bring, will bring down the average selling price. So we'll have to wait and watch and see. But I think as of now, the direction we can take, that still the volume growth, would be there in the, in the coming quarter. That's one part. And the gross margins, you know, overall, I think we have been talking about for the entire year, because quarterly, because of the mix of changes, but as we have been talking about within 14%, that is what we are actually looking at. So 14%-15% mark or 13%-14%? Sorry, sir, I, I didn't quite get a sense on when you say 14%. 14%. Within 14%. Around 14% we are saying. Around 14%. Around 14% for the full year. Okay, sir. So the second bit I wanted to kind of just also, you know, you've, you've highlighted a lot over the last few quarters, the focus on the industrial side and especially moving it there up the curve. Would you be able to give us a sense on how should this translate in terms of margin profile? I mean, what I'm trying to get is industrial margin, for example, you said that you've reached the level that you were targeting. So maybe it was pre-COVID levels were x. You are probably back to those levels. I'm not sure what that means. But because of these initiatives, would that x percentage number, pre-COVID become x + 200 basis points, x + 300 basis points, or will it remain at that pre-COVID level and the volatility will reduce? How should we look at these, you know, the end result of these initiatives being kind of panning out? So how you should look at, Avi, is that if you remember that we have been saying that, you know, margins have gone down low single digit, and we were saying that we need to go to the double digit margin, margins, and then create a situation where we are able to hold on to their margins. So that's what we are looking at, you know, because as I said, that once the prices stabilize, there may be a possibility of some, there's some price pass-through. But we have, we are, we are in double digit now. And based on the strategy on the initiative, what we are discussing about or the premiumization, which is, which we are doing in some of the segment in the industrial business, what we are looking at, that we are able to hold on to this double digit margins. Sir, would these also result in, you know, volatility in margins going down as we even because of raw material inflation versus what we used to see earlier? Would that be a fair comment? Yeah, if you compare with the past, yes. Okay, sir. Okay, perfect, sir. That's all from my side. I'll come back in the queue for the other questions. Thank you very much, sir. Thank you, Avi. Thank you. The next question is from the line of Abneesh Roy from Nuvama. Please go ahead. Hi, Abneesh. Yeah, thanks. Hi. Thanks. My first question is on market share in Deco in last nine months, based on the results of the market leader. How do you compare your performance in Deco? And now we are just one month away from the large player entering. I understand whenever a new player enters, market share losses are inevitable. But from a growth perspective, would you need to change your strategy in a big way? Because in last 20 years, we have seen many players enter, but most players have failed to really build up any scale. Taking that into account, are you looking at any big change in terms of marketing spends, distributor policies, et cetera, or more product launches? If you could give some color. I understand it depends upon the new player strategy, but any sense you are getting, because the new player has already come out with the painting solution business and some of the imported wood, wood finishing business. So till now, any impact of the new player? So Abneesh, I think the one is you are saying the impact of the new player, and your first question was? On the Deco market share, last nine months, if any color you can give? So, like, you know, we have been talking about that, in the past for maybe one or two years, we had a difference from the market growth, and our first endeavor was to catch up with the market growth. For that, we are, we have been looking at the segment level, the project business, the new business, the putty segment, and the retail segment. So some of the segment we were under index, and then we took certain steps. So in wood finishes and, project business, we are higher than or better than the market growth now. Putty business, earlier, our participation was selected, but we said that's a commodity and maybe at, the right time, when we want to participate, you know, we can slightly up our, our discount and see a better growth. So, so that's also we have started doing now in the selective markets. And, so at the segment level, if you look at few segment, we are better, few segment, we are very close to the market growth. So overall, we can say that, you know, we are in the line, we are close to the... you know, in the line with the market growth. That is one statement. When you talk about the new player, I think, you know, I think I said earlier also that the new competition, the healthy competition, is always good for the industry, and that is what I hope, that there's a healthy competition, because when more player participate, you may see upsurge in the formalization of the industry, and there may be a better penetration, so it can help the industry, you know, growth also. As far as we are concerned, our strategy was that we wanted to focus on Paint+, the influencer initiative, the services, you know, those kind of things. Since we have been seeing that, you know, quarter-on-quarter basis, we are getting a good green shoots in those exercise. We would like to remain focused on our activities, because ultimately this business is all about creating a demand with the influencer and from the painters and the architects, and that is what our activities are focused upon. We have already deployed the resources and efforts in that direction. We would like to remain focused on those activities. And also, like, you know, our business has been higher in North and East, so we have a good potential in the market like West and South, where in fact, you know, with these activities, now we have the growth drivers available. We feel that, you know, we should be in a position to remain active in the market and continue to work on our focus activities to do better. Till now, any impact from the new player in paint solutions or wood finishing? No, as of now, no impact. One related question was on your new business. You mentioned your growth rate is higher than market. Now, obviously, that's on a much smaller base. Here, would you expect that longer term, just like in Deco paint, you're number three player with, say, low teens market share. So would you expect that in construction chemicals and other new businesses also, except putty, putty I understand is very commoditized. In rest of the new business, would your market standing be similar, number three, within paint companies? I understand there are non-paint companies also, but within paint, would you have the ambition of being the number three here also? What we are targeting internally is that, you know, our salience should be equal to the market. As of now, it is lower. If you are able to achieve that, then the market share would be equal to our total decorative market share. Okay. Now, second question is on the projects business. How is the margin profile there that is much more competitive? So if you could talk about the margin profile in that part of the business. So margins, if you compare with the retail, definitely they are lower. But, if you look at the EBITDA level, you know, because that's a direct B2B business, so if you remove the marketing expenditure, advertising expenditure, still it will remain lower, but I think it's good. And, also, like in the retail business, there's a mix of solvent and water-based. Water-based margins are higher, solvent-based are lower. And while in the project business, most of the sale is happening on the water-based. So though margins are lower than the retail, but I think still it is good. And, the manageability of the business, you know, because most of the bulk business, so the other indirect factors in terms of freight and all those things, it becomes a different business. Sure. My last question is on the Deco mix. So currently, there is a general slowdown in consumption. I'm not talking about paint. If you see any form of consumption, there is a slowdown currently. But in spite of that, premiumization is also still happening, which is quite possible in a large country. Two different themes can be there. My question is, versus pre-COVID, in terms of premium part of the mix, how would the number be for you in terms of premium as a percentage of portfolio within Deco? Pre-COVID versus now. So our saliency in the premium segment was lower. Maybe for the market, it is, you know, premium saliency would be more than 30%, 30%- 35%, while in our case, the saliency was lower. It was in, you know, around 25%, which we are trying to increase, and the saliency is now closer to 30%. Thanks a lot. That's all from my end. Thank you. Thank you. Participants who wish to ask questions may please press star and one. The next question is from the line of Jay Doshi from Kotak. Please go ahead. Hi, Jay. Yeah. Hi. Hi, thanks for the opportunity. Two questions. One is, when I look at your volume growth, and if I, like, calculate your value growth, the gap seems to have widened in this quarter or this year versus what it used to be maybe a year or two years back. And I heard you mention that you're now more aggressively participating in putty, in some of the states which, you know, a segment that you avoided earlier. So is that the reason, you know, why volume growth is looking very strong? Is it partly driven by your, higher participation in putty this year? So there are three reasons to that. So one is the better participation in putty. Second is that we have introduced, as a part of construction chemicals, we have introduced the products like tile adhesives and admixtures. So there also, those are like low, low selling, low ASP product. So that's the second reason. And third reason is that in some ancillaries and undercoats, there is some kind of down downtrading. So especially like, you know, if you look at primers and the other putties, because we have come out with a lot of products which are more affordable products, so there is some downtrading there. So these are the three reasons why the gap between the value and volume is higher. That's helpful. If you could give us some color in terms of our core decorative paints portfolio, if we leave aside the low-end products that you've introduced recently, what are the premiumization versus downtrading trends that you see at portfolio level? Premiumization, as I said, that, you know, the premium saliency has gone up. And down trading is happening in the undercoat, undercoat contribution to the total business would be about maybe 15%-20%. So there the other selling prices come down. Understood. That's helpful. Second is, you know, you've called out that, you know, 14% is your ballpark margin band for this year. Given that there will be more competition next year and, you know, which would require higher investments, either in the form of marketing, advertising, more aggression on projects and, you know, slight changes to trade schemes. What do you think should be the right margin band that we should think of, you know, your operating margin band for next year, assuming commodity prices remain where it is today? Prashant, do you want to answer? Okay. So, Jay, it's very, you know, difficult to answer this question because the thing is how the competition is going to react with the new entrants and how, you know, how it is going to pan out is very difficult to, you know, compare now. But still, there will be some margin impact on the margin. But as we are, you know, also, as said earlier, we are also knowing fully well this the competition is very intense in the decorative field. We are focusing very hard on the industrial non-auto business, where we see a very big potential and chances of margin improvement in that area. So overall, we see some complementary in that section, which will help us to at least protect our margin. Understood. That's helpful. Thank you so much, sir. Thank you. The next question is from the line of Keyur, from ICICI Prudential Life Insurance. Please go ahead, sir. Thank you for the opportunity. Just want to understand on the margin front, I mean, with raw material prices settling in that to at a lower levels, what is the reason you are seeing for, say, gross margin volatility, or is it or, or EBIT margin volatility? I mean, is it because of the reinvestments in the brand building or at the gross margin level you are guiding for some volatility in the margins? So gross margin, see, volatility has been there in quarter three also, despite that, the raw material prices remain benign and stabilized, and maybe expectation in the fourth quarter also. But we cannot rule out because volatility is there, so we cannot rule, completely rule out the possibility of the, the margin. But as of now, what we are working is that at the category level, the margins may be protected, and but at the EBITDA level, yes, the expenditure which we are up in terms of, marketing, manpower, and the digital, that will have... that will cause some difference between the gross margin and the EBITDA. Okay. The second question was related to this higher OpEx and employee costs that we have seen increase Q-on-Q also and year-over-year also. So, any one-off initiatives or activation, or this should be the run rate we should go ahead with, if you can throw some light on that. You're talking about the marketing expenditure, right? Basically, this quarter employee cost as well as other expenditure is higher substantially year-over-year, as well as Q-on-Q with similar revenue numbers. So I think I just spoke about it, that one in the marketing, the areas of these, this obviously the target marketing, the enhanced visibility, what we have done, and also because of this new initiative, you know, we have ramped up our team and we have created a new team structure. So that's it. And obviously that, that cost is a part of our business today. So that is how it will move forward. We should go ahead with similar run rate in future? Yes, yes, yes. Okay. And just last question on the industrial side. I mean, some we keep on hearing about some moderation in demand, if not slowdown, in the, say, four-wheeler, and commercial vehicles, though two-wheelers are doing well. So net-net, at an industrial level, both auto and non-auto, what kind of growth do you expect for, say, next financial year or next calendar year in absolute terms? Outlook is positive, because if you look at passenger vehicle, this year also the production growth of passenger vehicle is in the range of 5%-6%. And the two-wheelers, quarter one, quarter two, were actually negative. Quarter three was good. So we feel that two-wheeler will get revived. So even if—though I feel that passenger vehicle also may remain at 5%, because today also the penetration of even four-wheeler is just 6% in India. So the overall next three years, five years outlook, if you really see, it is quite positive. But in case if there is some slowdown in the auto demand, it should get compensated by, one, the two-wheeler, where in fact the last two, three years, two-wheeler has taken a dent. You know, and there were multiple reasons. One is the COVID, the other is, the technology, and the third is the compliance, BS- IV, BS- VI. So last three years, a lot of things have happened and the base is reduced. So I feel that, you know, in the coming year or next two, three years, the growth in the two-wheeler would be definitely better, maybe 8%-9%. And also the commercial vehicle today is growing at a decent rate, but, with the infrastructure going up, the infrastructure expenditure, commercial vehicle may do better. Tractor industry has been under stress for last one year, two year. Actually, the production growth is negative, and it is always cyclic in nature. So with the good monsoon, the elections around the corner, from the next year, we feel that even the tractor industry may do well. So we are positive about tractor industry, commercial vehicles, and the two-wheeler. And if there is some downtrend in passenger vehicle, these three factors will compensate. So overall, the auto should do well. In general industrial? ... General industrial also is good, you know, because, again, these sectors and specifically if you look at the infrastructure spent by the government, and all this is helping the sectors like power, the plant building, infrastructure projects, and there we are participating through the general industrial. The infrastructure projects like road, bridges, bullet train, and this project we are participating. In fact, we have already started supplying the pre-engineered building, the genset, the transformers. So we are seeing good prospects there, and that's also a part of our focus area. So there also we see good demand. So just one last question, which is a follow-up to this, is, with all the averages that you mentioned and with relatively stabilized and lower RM prices, the industrial business should witness double-digit growth in terms of revenue, if not volume, with better margins than what they used to be, say, in current financial year? So, the growth, definitely the outlook is positive, 8%-10%, it may be closer to double digit. That outlook is positive. Margins, as I said, that, in the decorative business, on the water base, the prices reduced and we have, we had done some kind of price reduction in the market. But in the solvent, and most of the industrial-based products are solvent-based products, where the deflation is not that much. And also we want to wait for the prices to get stabilized or get some clarity or visibility for this geopolitical situation. But once we are able to cross that, there may be some kind of price pass-through. What is important is, as a strategy, we want to hold on to the margins. Understood. Thanks a lot, and all the very best. Thank you. Thank you. Before we take the next question, we would like to remind participants that you may press Star and One to ask question. The next question is from the line of Atharva from Purnartha. Please go ahead, sir. Atharva. Hello. Thank you for the opportunity. I just wanted to understand on demand front for the decorative paint, how do we see the demand going forward for the next financial year? So I think, you know, the last 10 years, the volume growth has been double digits, so we still feel that there's no reason that why the volume growth should be... I think 8%-10% is the answer. Mm-hmm. Thank you. Thank you. The next question is from the line of Ajay Thakur from Anand Rathi Securities. Please go ahead, sir. Hi, Ajay. Hi, sir. Hello, sir. Thanks for taking my question. Sir, I have two questions. One was, trying to understand more on the ad spend or, you know, ad and sales promotion spend. What would be that, as a percentage of sales for Q3 and for the nine months, any number? You are talking about the advertising expenditure, right? Right, right. 4%, what is it? Advertising expenditure. The percentage? Yeah. 4.5%-5%. Yeah. Yeah. It's in the range of 4.5%-5% for YTD, and quarter three, it is higher than 5%. Sir, just wanted to cross-check. You mentioned around 3%, right? The voice- Sir, your voice is not clear. We can't hear you. You mentioned Q3, we have seen 3% kind of a price correction. Was... Just wanted to cross-check on that. One, no, no. In Q3, there was about one point- One- ... 1.1% or 1.2%, and the other price change has happened in the month of January. Okay. So including that, it was 3%? Yes. Yes. Okay. Thanks. Thanks for that. Thank you. Thank you. Before we take the next question, we would like to remind participants that you may press Star and One to ask questions. The next question is from the line of Aniruddha Joshi from ICICI Securities. Please go ahead, sir. Sir, so distribution, where do you see we ending the year FY 2024 with the number of outlet total reach? And if you can provide a bit more color on the distribution, means how much, how many tinting machines are there in place right now? Also, the distribution on a region-wide basis, if you can give some color, even if qualitative, it would be great. Also, we have seen the number of dealers for the market leader have crossed 150,000. So the gap between number one and versus number two, number three player has, in terms of distribution reach, has become very wide. So, do you see there is scope to increase in next two to three? You know, the last year we had this distribution numbers in the decorative was about 29,000-30,000, and this year we are expected to grow at the rate of 10%. So that is how the distribution would end at. Region-wise, in fact, north, relatively we are better in north, followed by east, west and south, so that is our, that is how the distribution also flow. And in comparison to the market, so what is comparable is, you know, because today, 85%-90% of the business comes from the machine counters, and our machine penetration is more than 70% in the total counter. And if you compare with the market also, that 150,000, it, it may not be comparable to one, the 150,000, because that include many other segments. I think you know that if you typically look at the paint, you know that, the distance is not that much. So it's not a comparable number of, you know, what we are talking about and what number you are referring to. Okay. Sure, sir. And, sir, in terms of the new product launches, whether we would have crossed, like, 50% of the distribution range, of own distribution range, or there is a significant scope to extend the reach for, the new product launches, also? New product reach in the distribution, you are saying? Current distribution. Yeah, yeah, definitely. You know that, it's not for every product you are touching 50%, but put together the basket of the new product, the reach definitely would be more than 50%. Okay. Sure, sir. Very helpful. Sir, now, the painting services business has also, we see a lot more, in a way, management commentary about the painting services as well. So our NextG en has also crossed 170 cities. So how big it would be, crucial it is concerned? The premium portfolio is also on the rise. So, you know, the services, as you know, the consumer behavior is changing, and especially in the tier one, tier two towns, now people want to go for the organized services. So this market used to be 1% or 2% of the total paint market earlier, but we feel that in going forward, in three years' time or five years' time, it may be a 10% of the, you know, market. So, so that is what we are looking at. And obviously, the contribution of the... It's not necessarily premium, but you can say popular or premium is, is, is higher in this particular category. So more and more business we generate through these services, it help you in increasing your mix. Okay. Yeah, that's, that's from my side. Thanks. Thanks, Aniruddha. Thank you. The next question is from the line of Avi Mehta from Macquarie. Please go ahead, sir. Sir, I just wanted to clarify, the 8%-10% expectation of which we, for the next year, is it from a value perspective or a volume perspective? Volume perspective. Okay. And, 14% margin for this year, next year, we'll have to wait and see. Got it, sir. Yeah. Anything on the industrial side, sir, which you would kind of expect a double-digit growth to continue over there, despite the auto segment probably having high base? 8%-10% is what we feel would be outlook. But there it will be value, sir, right? It will be a value. Yeah, that will be a value perspective, yeah. Got it, sir. Okay, that's all from my side. Thank you very much. Welcome. Thank you. As there are no further questions, I would now like to hand the conference over to the management for closing comments. Thank you, everyone, for your patience and attention, and, thanks for all the questions. Your questions always give us some thoughts. And, you know, I'm seeing a lot of questions in terms of, I think there is a relation with the new competition which is entering the industry, and that's why probably, there are, there are questions in the mind that what will happen to the revenue, what will happen to the margins. So we acknowledge that there's an entry of new competition, but it's a development that speaks about, the attractive nature of the, you know, paint industry. But I think, our confidence remain in our strength, which is, more than 100 years old brand, the loyal customer base, the diversified mix in terms of our decorative, industrial, non-auto industrial, and the new initiatives of performance products, the Paint+, what we are talking about, and also working, directly with the users through services and the influencers. So as of now, where we stand, we are focused on our work and definitely look forward to navigate, this evolving landscape in the paint industry. Thank you so, so much for attending this call. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.