Ladies and gentlemen. Good day and welcome to Kansai Nerolac Q1 FY 2026 earnings 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 completes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is recorded. I now hand the conference over to Mr. Aniruddh Joshi from ICICI Securities. Thank you and over to you, sir. Yeah, thanks Shubham. On behalf of ICICI Securities, we welcome you all to Q1 FY 2026 results conference call o f Kansai Nerolac Paints. We have with us today senior management represented by Mr. Pravin Chaudhari, Managing Director, and Mr. Yash Ahuja, Chief Financial Officer-designate. Mr. Jason Gonsalves, Director of Corporate Planning, IT, and Materials. Now I hand over the call to Mr. Pravin for his 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, Aniruddh, and good morning to all, and thanks for your continued support and interest in our company. Before we have question and answer, let me give brief comments on our quarter one performance. As far as Nerolac is concerned, I have already mentioned earlier that our purpose is to create environments for a healthy and beautiful future, and we're constantly growing and building our growth enablers in this direction, where you'll find that Nerolac is present in our daily lives. We touch across our appliances, walls, cars that we drive, and our idea is to enlarge this space and be in the lives of people more and more through our product portfolio. Our foundation, being multinational, is also very strong on ESG, where we are now water positive. Our emission is reducing year on year, and our green energy footprint is also growing, and now it is crossing more than 40%. As far as our brand legacy is concerned, we are a more than 100 years old brand with strong support of our R&D and various technology tabs in the areas of industrial, which offers cutting edge solutions to various applications in this field. In fact, our brand strength, if you look at despite all the competition, we are still recognized as the number two brand as far as top of the mind awareness in the country. Our Nerolac jingle, which is there, which is more than three decades old, also resonates across age groups. I think that's another asset that we created, and we are leveraging it pretty well. As far as innovator spirit is concerned, backed by Japanese technology, which is obviously powering our industrial business, going forward it will also reflect into our decorative segment, where these innovative concepts can be introduced to also support our growing premiumization requirements as well as decorative is concerned, and the paint range, which is unique to category products that we launched two, three years back, is also another unique proposition that we are offering to the Indian famed consumer. As far as business environment is concerned, decorative will come in detail as you move forward. In terms of automotive, also, demand has been slightly sluggish compared to last year, and government focus on the infrastructure continued more vigorously, and that is helping our industrial business. There has been also positive movement as far as crude oil is concerned, though there has been some volatility due to geopolitical situation around Europe region, but that also looks like to be settled. There has been early onset of monsoon, which has impacted our month of May sale, and also there has been rural demand which is quite stable as of now. Urban demand, there is slight uptick, but still not sure whether that will continue the momentum on geopolitical situation. I would like to add while there was a international issues which have been ongoing for a couple of years, however you also seen this kind of attention closer to our border, and that also has impacted our North and where we are very, very strong specifically on decorating. Our paint plus product range has continued t o gain momentum and in fact sales has increased. Now it is contributing to more than 12% of our sale. There are more than 28 products which are in the market. Our new business continued the strong performance both in construction chemicals, waterproofing, and premium wood finishes. As far as our network expansion is concerned, it has grown by mid-single digits and our total footprint direct dealers are more than 30,000 now. In fact, our visibility campaign which has received well in the form of Nerolac NXTGEN, Shopee, and shop-in-shop also we have added another 400 in quarter one. As far as new products are concerned, there are few new products we have launched this quarter and our total new product contribution has dropped 10%. As far as decorative business is concerned, our projects and institutional business has done pretty okay. It has though not as per our expectation because of this monsoon which has come in that impacted the project business and it has grown mid-single digits. However, exterior texture and waterproofing has seen good growth. Our services business which is Paint-as-a-Service which offers direct reliable services to our paint consumers is now growing pretty well and now it is contributing t o 5% of our total business. New products are concerned, our new product offering, which is in the form of Nerolac No Heat offering, offers superior whiteness, excellent dirt pickup, and more than 15 degrees surface temperature reduction, which I believe is the best in class in this category. As far as Rain Soldiers, which is another brand, we have launched this Rain Raksha white emulsion, which offers a unique proposition in the form of 300% elongation and excellent weather resistance and waterproofing performance warranty. I believe this is unique in this category. As far as industrial concern, another trend we are seeing in industry is also towards better performance and premiumization. In light of that, you will see that in auto four wheeler, where we lead, we have launched now high gloss clear coat, which is offering excellent workability and which has enhanced appearance, which is again best in class as far as accurate gloss is concerned. In two wheelers also, there is a journey of premiumization where we are offering QD Matte and Nerolac Heat Resistant Premier Fever Lining Paint, which is also being offered to all the two wheelers. As far as performance coating, which goes into infrastructure, there are these technology paints both in Nerolac Siloxane technology as well as anti-carbonation water-based system for concrete substrate, which has been launched, and in powder coating, thermoplastic is a new set of technologies that we have introduced now, which is offering this antifreeze technology for our white goods segment. As for the brand and marketing, media campaign investment continued, and we are in fact on various brand promotions, which have been done both on television as well as on digital platforms. In fact, to reckon these efforts, we have received many awards in the quarter one, including the global winner of ambient media. The best one was from Goafest, where we received Grand Prix. I think this is the best in the industry, and we also received seven Baby Blue Elephant awards. I think that reckons the effort that the marketing team is doing and how the way it is resonating with the consumer. On industrial front. As I mentioned earlier, Ottawa slightly sluggish. However, our growth has been market leading growth to outperform the market through our premium offerings as well as gaining the new new account. As far as innovation is concerned, we obviously are entering into newer segments of this auto which is going to increase our total addressable market. As such, in case of protective coating, we have reported higher than the market growth backed by a lot of infrastructure, new project wins, and however powder goods were slightly looted based on the appliances which was not done pretty well as far as second half of quarter one is concerned. Another focus area for us is leveraging on our auto strength. We are also now heavily focusing on the auto refinish segment and that is growing pretty well. It is growing in higher double digit ran out and in this also there is a premium segment which is in few technologies that are started doing well based on a lot of approvals and because of our new automotive presence and already having global approvals, this is becoming now another good traction as far as growth is concerned. In industrial also continued with our legacy and high good performance. We have received many awards from the leading auto manufacturers on ESG. First time Nerolac participated in EcoVadis assessment and there we secured a bronze medal which is basically top 35% of the associates which is pretty good recognition to start. Similarly, on CRISIL we have received the strong category award by the CRISIL. In S&P Dow Jones Indices. Also, we are falling in top 80 percentile and FTSE we are in top 12 percentile. As far as firsthand analytics is concerned. We are identified as a low risk. Overall, I think our ESG performance is quite recognized, as far as local as well as international assessing agencies are concerned. As far as our CapEx in quarter one, we have capitalized our Jainpur quarterback facility, which is adding about 44,000 kL of capacity. That is backed by the expectation that we should be seeing a good demand as far as water-based category is concerned. On CSR initiatives, they continue to be present in education, health, and skill area, and we are actively pursuing this in terms of contributing back to the society. Coming to our financial performance, as far as standalone results are concerned, our revenue growth is 1.8%, our EBITDA is -6.7%, and our PBT is 4.11%. On consolidated basis, our revenue is 1.4%, our EBITDA is -8%, and our PBT is -4.1%. Consolidated, Bangladesh continues to be a challenge, and that's, I think, depending on the current situation, it is very difficult to estimate how business will move, but it remains challenging. We are making all the efforts to ensure that we do a sustainable, profitable business. However, external demand is quite challenging out there, and another subsidiary, Nerofix, is doing pretty well now as far as growth is concerned. Our overall gross contribution has started improving through our product mix change, and we are hopeful that by year end, I think that should be performing well and should contribute to our overall consolidated performance. As far as risk and outlook is concerned, this geopolitical tension is leading to supply chain discussions and also leading to volatility in commodity prices, especially also foreign exchange. We are seeing after U.S. Announcement on tariff, you have seen a lot of volatility there, so that remains a big risk because our 30% - 35% metal is imported, and even there are other raw metals which are also subjected to this intermediate usage of the foreign force material. There is another risk in terms of titanium dioxide. Actually, that has already set in. There is anti-dumping duty imposed on all Chinese titanium dioxide, and that has already started impacting as far as this quarter beginning is concerned. On outlook front, construction activity, based on whatever we saw in month of June, we believe that quarter should be better as far as accurately is concerned. It is also due to our Diwali being slightly ahead of time than last year. I think we'll have season October, August and September I think should be better than what it was last year. In automotive, two wheeler and passenger vehicle demand is expected to be stable or for good depending on how month goes. Tractor segment is expected to do well from the agriculture monsoon and enhanced agriculture activity. Infrastructure segments such as railway, roads, airports, power I think should be doing well and that is where we have a and hopefully both auto and industrial both segments should be contributing pretty well, well supported by the upward movement o f green decorative segment itself. We are quite hopeful that quarter they should be better. These are the comments from my side. Now I hand it over back to Aniruddh for taking questions and answers. Thank you. Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question, please press star and one on the touchstone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use a handset while asking a question. The first question comes from the line of Mihir Shah from Nomura. Please go ahead. Hi sir. Thank you for taking my question. If I can ask a bookkeeping question, if you can share what is the volume growth in deco for the quarter and what is the growth in auto and non-auto industrials on a value basis? If you can split that, it would be very helpful. Good to hear you. As far as volume and deco is concerned, it was close to, it was almost flat. As far as industrial is concerned, it was higher single digit. Understood. First question on deco. Wanted to know y our thoughts on network. You mentioned which single use growth seems a little bit low given the high competitive intensity. I recall your presentation that you made on the strategy sometime back. How should one think about network expansion from your side? If you want to maintain your shares, also do you require to grow network in double digits? Also, subpart to that is have you seen any impact or losses of dealers or fixing machine, and that is the reason why this network expansion is net single digits. Yeah, right. As far as network expansion is concerned, what I mentioned was the direct dealer addition, which was in mid-single-digit. There is another initiative of ours, which is distribution via distribution. Actually, we added higher double-digit sub-dealer network, so that is added. The other thing is we are very careful in actually choosing our network addition, and obviously we are focusing on our strong areas wherever we are very strong, not spreading ourselves in, especially the South, for example. On your second part, where we have lost any CCDs, no, we have not lost any series, and in fact we are adding CCD machines every quarter. Coming back to your question on competition, in fact we are seeing the reversal now. Many dealers of ours who started batting with competition have now started coming back to us, and that's a pretty positive sign for us. I think we are realizing the power of the Nerolac brand as well as the groundwork that our team does, as well as consumer and pentra activity that we're doing. I think it seems to be operating well as far as we are concerned. That's fantastic. That's heartening to hear. If I can ask one more question on deco, the dealers are coming back. Has there been any change in dealer margins or there's an increase in margins? That is also leading to them coming back, s ir? No, I think as far as discounting is concerned, I think it is pretty much aligned with the competition. There's nothing extra being given, so that may not be the reason. I think it is also related to overall ROI which that dealer might be getting from competition versus us, and I am referring to new competition now in this context. I'm sure the momentum that they might be witnessing there versus what they would have seen with us earlier might b e different, and I think that is attracting. There is nothing special that you've done compared to competition in industry. Fantastic. My second question is on industrials. You continue to have a very strong, continue to gain market share in industrial, both in powder and auto coatings, and doing quite well, better than industry, etc., and you did value too that there is an expected improvement on that on the revenue foot as well. Any indication or guidance you can share on how should we think about auto, non-auto growth numbers, and how should we think about margins in that context? I remember margins before industry also start inching up. How to think about both these aspects of the industrial part, which is your huge driver for your business. Yeah. I think as far as auto is concerned, we expect now growth to be in mid-single digits. As far as non-auto, which is an industrial segment, I think it should be higher single digit or just touching about double digit. I think that is what we're expecting on margin front. Clearly, with our focus on premiumization and technology advanced performance-oriented products, our margin has started improving. You will see that compared to market, I mean kind of activities which are happening in degree two. Despite that, what we could report was this kind of a performance. I think that is clearly showing that our industry is also now behaving in a positive direction. Hopefully, that should be contributing to our overall target that you said going forward. Thank you very much. Wishing you all the very best. Thank you. The next question comes from the line of Rehan Saiyyed from Trinetra Asset Managers. Please go ahead. As I mentioned, most of the questions are already answered. So I just want your clarification regarding the ESG. Also, you have on the ESG front, Kansai Nerolac has received strong ratings and information recently. So can you talk about how the upcoming ESG limited capital invocation and operational initiatives that could follow this trend? We are not positioning in this yet. Hello, can you repeat? You are not, unable to hear you. [crosstalk] Yeah, sure. So on the E.U. has received strong ratings and information recently. So can you talk about any positioning upcoming or ESG in capital allocation or operational initiatives that will further center your position in site? You are asking any further capital allocation? Yes. Yes. They are already water positive. That already initiative is on. Another big investment that will happen is in the area of green energy, where we are increasing our expenditure. As far as green power is concerned, it is heated in the form of solar as well as wind. That will be further enhanced. In fact, now with statewide relaxation happening on the percentage of green energy sourcing. Earlier there was the cap. Now they release that cap and as a result, there'll be further investment that we see in the current year as well. Okay. Okay. One. One more add on the consolidated success. On the consolidated success of around INR 11.9 crore. It is. Again, sorry, you know you are not at all audible. Am I audible now, sir? Yeah, yeah. You're audible. Yeah. Yes, the audio is clear enough. Yeah. From the consolidated point. You're not clear enough. I only heard INR 11.9 crore. That's all. I'm asking, like this progress is contributed most of its losses and loss to major. Is contributing to major loss. Yeah. Yeah. I think it is mainly Bangladesh which is contributing to higher percentage of loss. Okay. Okay. Thank you so much. Thank you. The next question comes from the line of Aditya Bhartia from Investec. Please go ahead. Hi, good morning. I just wanted to get the outlook on margin side because we are seeing some crude and crude derivative prices coming off. At the same time there's anti-dumping duties upon the TiO2 to import from China that you kind of refer to. How are the two levers playing out and how should we think about margins both on the decorative as well a s the industrial side? Yeah, as has been our policy, you know, based on our contribution profile in each business, we have a pass-through policy. As long as we have to, we try to maintain our margins, and if it is getting compromised, we'll be having a price increase to the redshift. Now, as far as decorative, it is for industrial; obviously, for decorative also, the industry has been following a similar practice. Looking at the current competitive intensity, we'll have to really be watchful as to what is happening in the industry and how competition is reacting. Based on that, we will be obviously taking the action. Having said this, there are a lot of initiatives which our R&D is taking in terms of, you know, probably optimization. That activity also will help us to mitigate some kind of increase or inflation that is getting caused because of t his tariff is concerned. Under stood, sir. What should be the increase in costing on account of TiO2 to import the anti-dumping duty, and how much of that can be offset by reduction in cost that we have seen for other derivatives? Yeah, I think net going forward right now, raw material prices are benign. I don't see as a whole be able to see any major significant impact as far as titanium is concerned i n the short term. Purely on titanium front, I think it should be contributing about 1%- 1.3% of the inflation. Perfect. Perfect. That's great. My second question is on the demand outlook side. You think about Q2 looking slightly better also on account of an earlier Diwali. Are you seeing green shoots as far as underlying demand is also concerned? What would the trends be like in July? If you could kind of speak about that, whether it's urban or rural, where you are seeing an improvement, and if there's any differences that you're seeing on a regional basis as well, if you could highlight that, that would be very useful. Regionally, I think North has done pretty okay as far as region is concerned. However, overall monsoon in many places has caused some disturbances that have led to this temporary, I would say, stoppage especially in the area of Projects as well as some part of retail. I don't see any significant difference as far as June exit is concerned. As far as in July, looking at the upcoming festive season, we believe that same trend as what we saw in last year in September and October should get repeat. As far as August and September is concerned, there has not been a significant difference as far as underlying demand is concerned. As the industry typically has been g rowing at about GDP, and with the current competition also playing its part, I think the whole market share distribution is happening. I think in the second half, as I was mentioning earlier, we're able to actually see the change that is happening because it will be more of a stable condition as far as industry is concerned. No new players coming and everyone is settled. I think that's the real time. We have been able to assess what is happening to the industry and overall growth. As far as underlying demand is concerned, as far as July is concerned, no significant change. We are pretty hopeful as far as August and September is concerned. That's pretty much. Thank you so much. Thank you. Thank you. The next question comes from the line of Ajay Thakur from Anand Rathi Securities. Please go ahead. Hi sir, thanks for taking my question. Sir, I had a few questions. One was wanted to check on value volume mix in the decorative segment. What would it be for the current quarter, and how do you look at this value volume gap in decorative food trends going forward? Compared to last year, our volume value gap has reduced significantly. As I mentioned earlier, our volume has been pretty flat and our value degrowth was in a lower single digit. We expect the similar trend to be maintained going forward. Yeah, we are hopeful of that. Yes. Okay. What's the growth outlook for the rest of FY 2026 in decorative both in terms of volume and value for us? Ajay, we don't comment really on the forward as far as numbers are concerned. Okay. Sir, if you share some insights on our painter influencer program, what would be the additions that you have done for this quarter, and how has it been, you know, crashing in that context? Have you seen any attrition due to the competition and in them, in influencers? Yeah, painters and the influencer. Yeah, that also, you know, what happens is it is very difficult to estimate on quarter on quarter because that mix keeps changing because of the nature of the product mix. It is slightly difficult to say that. However, rest assured, in terms of our top category of influences, they are with us and they're growing consistently as a business is concerned. Okay. Are we kind of incentive? Have we increased any incentives for our painters or influencers in the last one year, any quantum in case you can share anything around that. Content is difficult to share. However, as far as incentives are concerned, yes, they have gone up because, yeah. Quite helpful. Thank you, sir. Sure, yeah. Thank you. The next question comes from the line of Mrunmayee Jogalekar from ACMIIL Research. Please go ahead. Thank you for taking my question. Firstly, you mentioned in the decorative business that North is doing okay. Any color you would like to share on how the West, East, or even South, which is a smaller presence for us, how are those territories working out? Yeah. As far as North and East are concerned, both are doing fine in that order. For us, even West has started doing better since the month of May. South continues to be a problem for us because as such we are reached there. Given the onslaught of competition and extra focus on South where most of the leading players are, there has been the issue for us and as such that remains to be a concern area for us. Despite the North market being a little bit impacted in this quarter, that has still been the best performing region for us. Yeah. In terms of, you know, if you take out that one-time event of North, what happened and that impacted us equivalently, I'm not taking it as a, I'm taking it as exception in one time. If you take that out, I think other markets where I am as normally performing has done better. Okay. Had that event not happened, I think our performance would have been slightly different this quarter. Okay, all right, got it. I'm looking at the consolidated EBITDA margin. We are seeing a pressure of about 140 basis points on a YoY basis. It is largely attributed to the share of industrial business increasing. Drop in the. EBITDA margin. Yeah, yeah, yeah. Yes, yes, yes. That is also because of our North impact in the decorative that I mentioned one time. That has led to our loss of sale there, and that also has reduced our operating leverage. That is a major reason. The second reason is also in decorative, the kind of mix that was there in the quarter one compared to last year same quarter was slightly poor, and it was towards the more economic kind of a segment. That has all led to this kind of a drop. Yeah. Okay. Not because of industrial mix, that has not impacted. Okay, that is not a contributor at all. No. Okay, thank you. Thank you. The next question comes from the line of Abneesh Roy from Nuvama Institutional Equities. Please go ahead. Yeah, thanks. My first question is to Pravin. It's been around three months since you became the CEO of the company. Wanted to understand from a strategy perspective, both consumer facing and on the cost side, any big changes you have done or there is plan to change anything of that in the coming quarters. So Abneesh, in terms of change is concerned, I think our focus is clearly on choosing our battery in the market, which is extremely competitive. We are very conscious in terms of spreading our wings, focusing on the stronger markets, and going more deeper and putting our resources there. That is a strategy, and it will take some time because you have to reorganize ourselves in that direction. Now, as far as executive is concerned in industrial, obviously as far as auto, I just mentioned that we are getting into new areas where we'll increase our addressable market. As far as auto is concerned and as far as industrial, which is non auto market, is concerned, there are many segments where we are not present, and those segments call for a lot of global kind of access and technology and approval. Those are the areas where work has already started happening, and going forward you see more action in that area. Sure. One follow up question on the nuclear. I completely agree with what you're saying and the second paint player, and here I'm talking about second paint player as per revenue, not as per capacity. That second player also said that the new player field for the last four months had been formulating and this was i n an Indian interview. I wanted to understand this 10% extra grammage, which I think is a key differentiator by the new player. How much disruption is still happening? It's hanging. Are you also forced to respond to this indirectly at the lower end, especially to overcome this extra benefit which mostly the end customer is getting? I don't think the dealer is getting too much out of this, maybe in some cases. If you could tell us, is the dealer getting the benefit or the end customer, and how are you responding to the 10% extra grammage? It's a kind of a mixed feedback, but I heard that in some market they already started withdrawing anyway. That's a strategy which will automatically pan out because it is very difficult to sustain with their offering forever. As far as the logic is concerned, I think it was more for a consumer and consumer awareness campaign, which obviously goes after this 10% free, and they start demanding that kind of a product with the consumer dealers. I don't think I've got anything except for higher inquiries at the counter because that was getting publicized every now and then. In the process, I don't think dealers and painters have got anything specifically as far as margins are concerned out of 10%. Yeah, in terms of inquiries, yes, they would have got that extra inquiry because of this 10%. As far as our response is concerned, our response is not in terms of offering anything free, but it is in terms of offering a better product which is offering better properties in terms of coverage as well as better performance. That has been our offering, and you'll be happy to note that that particular area, whatever action you have taken, is being pretty good and that is part of our Paints Plus production that we have. One follow up question I had on your comments you have made in the earnings release, it was a bit confusing to me actually. You have said there are some early signs of revival, but when I dissect the statement you have said later part of the quarter got impacted because of monsoon and April got impacted in North India because of the disturbance. Almost the entire quarter there is some issue or the other. From what basis are you saying there is an early sign, is there science or reality? You have not used the word earlier. Also you have said signs of revival. What is it based on? Yeah, it is based on the exit that we took. I'm taking out that April North event as an exception event that happened and that impacted us largely because we are very strong in Jammu Kashmir, Punjab, and Baghala. Now, if you look at month on month, the trajectory has been on the improvement. The expectation that, based on the exits that we were trying to get in May, was not there because of monsoon that hit us. If you really take out this kind of event and monsoon episode that has happened in certain pockets, I think we can clearly see that there is an improvement which is going to take place as far as quarter two is concerned. Thanks. The last quick question, this was Bangladesh. Bangladesh, another FMCG company is not a paint company. They have seen a double edit case g rowth in Q1 with a volume growth also. Of course that category is different, but still my question is in the same economy is paint industry facing some more pain or is it that you are perceived as an India company? Maybe there is some more nuance to that or maybe because this is slightly different versus the hair oil company which I'm seeing or the edible oil company. A consumer can delay which of these is the key reasons for more weak performance in Bangladesh versus the hair and edible oil company seeing a double digit sales growth in the same quarter in the same country. I think it is clearly a discretionary product and that is definitely which is postponable. That is one definite reason. I don't think it has to do anything with India versus Bangladesh. I don't think that sentiment are playing out. We have not seen or witnessed that as such. Obviously, they are also with kind of economy state they are into right now. I think practice and the consumption patterns are also very different and I don't think even other competitors have done significantly better in terms of performance in this paint treatment expenses. Thanks, that's all for me. Thank you. Thanks. Thank you. The next question comes from the line of Naman Barjatya from AUM Capital. Please go ahead. Yeah. Hi, good morning and thank you for the opportunity. Most of the doubts have already been answered. I would just refer you to kindly, for a better understanding, put some light on your plan to increase your presence in the Indian OEM, and how are you going to protect your market share compared to your competitors? Indian OEMs, you know, if you see that one is our Japanese customers, there we are very, very strong. Even other OEMs which have entered in auto segment, they're also based on our technology availability, service, and supply chain network. I think that has also started gaining traction and there also we need as well as automotive is concerned. Oh, okay. Thank you. Also, considering the geopolitical uncertainty and the volatility in the commodity prices and the inflationary risk, particularly due to the imposition of tariffs by the government, how do you plan to weather from the bank is moving on. Yeah. As far as tariffs as far as India is concerned, it is mainly for an incoming material which is titanium dioxide. As earlier explained, based on our R&D and capability that we have in terms of reformulating and adjusting of formulations to bring down cost, that too is already underway. As a package, I'm sure we'll be able to overcome to some extent. If it is not, obviously, then we'll have to really look for price pass through based on whatever industry dynamics permit us to do. Okay. Can you put some color on the company's future plans to meet the growing stand in the construction chemicals? Yes. As far as we are concerned, the waterproofing segment is obviously doing well. You would have seen that in my commentary also. That is clearly different. Our No Heat product that we launched is also addressing further enhanced waterproofing, come No Heat kind of a proposition. Another thing that we have done is the CC core, that is [mix on] category, is also started. We are focusing on it by creating a separate structure and separate distribution go-to-market strategy. Hopefully, we'll also see better growth in that particular area, which has not been focused till date. Okay, so yeah, thank you for answering the questions and all the best for your future plan. Thank you. Thank you. The next question comes from the line of Pratik from HSBC. Please go ahead. Your line has been unmuted. Please go ahead. Yes, thank you for the opportunity. I have a couple of questions for you on dealer incentives. You mentioned that dealer incentives are aligned with competition, largely similar to competition. Can you please help me explain? In the annual report, the difference g etween your net and gross revenues. That of competitors is a little different. Yours is around 10% while competition is around 15% - 20%. What am I missing there? Can you please help explain? It is also because of our industrial being there. That is why you see the difference. Yes, that. That makes sense. Pretty much higher than where you guys. Are percentage of the mix. These are 50/ 50 as well. Is not that right? Fine. Okay. That's part of the explanation. Thank you. Can you please shed some light on competitive intensity? Why do you think the competition is stalling when in spite of them being so aggressive with higher capacities, higher incentives for painters and influencers? Why do you think this is happening? I mean they are stalling. Yeah. If you say that the business, y ou seeing dealers' interest coming back too. It is narrow, lacking basically. Incumbents are again d oing all right while it's in new competition, have not been able to make a larger dent in spite of putting so much money behind their effort. Yeah, I think it is also to do with what they are trying to follow and what they are exactly trying to do with the network. Broadly, in this business, as has been said many times, all of us in the past also, it depends on overall brand awareness. Creating your own distribution network, which is having higher sellout rate, means your influencers and your consumers are all in sync with all your marketing and brand matrices. I think that whole thing takes time. By creating capacity, I don't think that can be achieved. Maybe that is where things will settle as far as this year is concerned and we'll really know what is going to be the set of affairs going forward. You can't comment on their strategy. What we're seeing in the market, I just narrated that also. Thank you. Thank you, Pratik. Thank you. Next question comes from the line of Keyur Pandya from ICICI Prudential Life Insurance. Please go ahead. Thank you for the opportunity, sir. On this profitability question, earlier you have guided for higher margins over the next two, three years at the company level, and the current quarter's margin looks higher in the last three quarters. Should we attribute that to some of the seasonality, or should we expect a quarter one kind of EBITDA margin to be sustainable for, say, subsequent quarters? Your earlier guidance of higher margin over the next three years, if you can just identify specific steps that have already been taken in that journey, that would be helpful. Thank you. As far as quarterly margin profile is concerned, it varies because quarter one is slightly different product mix. Quarter two remains challenging because of product mix being slightly different. You will find that profile been changing. That is the first question. Second thing in terms of next three years, I have already explained earlier that in case of industrial business decorative, obviously we are going to focus on a strong market and trying to deliver growth there. In terms of auto, we are pretty strong and that is where all new account, new lines, and all advanced technologies which are coming, which will offer us better realization. That is second in terms of industrial is concerned. We have already initiated the process where segment entry has been planned where we are not present and those segments need global approvals, which means that there's a high entry barrier and which also means slightly better realization. These are the three areas where we start. We already started working and obviously you'll appreciate that these things take slightly longer time because you have to go through the process of approvals. We have start entry, start fires and all that. I'm sure you see the improvement as going forward. Okay, just one follow up. If we consider FY 2025 as a full year, we'll be seeing margin expansion in FY 2026 considering where the RM prices are as a basket, which are trading lower than last year. Will this be a culmination of RM prices and competitive intensity? Should we see margin expansion in FY 2026? Our objective is that, but as far as this year is concerned, I think still we should be 13%- 14% looking at the c urrent state of competition. Versus 12% last year, correct? Yeah, 12.8%. Okay. Okay. Okay. Thanks a lot. All the best. Thank you. Thank you. The next question comes from the line of Avi Mehta from Macquarie Capital. Please go ahead. Yeah, hi sir, I just had one question. On the auto side, are we seeing any change in the competitive intensity? Because you know, I'm just confused because there is, you have said a sluggish demand environment while the other players have s aid that there is an auto industry buoyancy. Would love to understand how frames a re behaving, and how are you seeing competition in that sector? Thank you. As far as you know, auto segment is concerned, when I say sluggish demand, it is also to do with our set of large because we are more than 50%-60% market share. From that point of view, yes, and compared to. OEM only. Right. Sorry, just to clarify, it's the OEM that you're talking about, right? Yes. Please introduce us. I'm sorry. It was in that context, sluggish demand as far as expectations are concerned versus what is happening. That was also slightly forward looking in terms of what we saw in the domestic market as to June is concerned. That is how it was. If you look at markets performance versus our performance, we have clearly gained market share even the quarter. Just to clarify, it's not a case of some accounts doing much b etter and our sales being higher. It's not an account specific. Is that how I should see it? Oh no. Okay. It is not okay. It is not okay. Lastly, on the international side, y ou've given comment from Bangladesh. Could you also comment on the other geographies, how things are behaving? Nepal has done pretty good. I think Nepal consistently for the last three years has been doing well and we are performing well there. As far as Lanka is concerned, it remains to be a concerned area. Correct. Like Bangladesh, even Lanka is not d elivering as the expectations. Okay, that's all for myself. Thank you very much. Thank you, Avi. Thank you. The next question comes from the line of Tejas Shah from Avendus Spark. Thank you for the opportunity. You made an interesting remark in one of the answers that dealers are returning back. Just wanted to know what specific disappointment are they resisting when they are coming back? Is it largely to do with on the consumer side or is it more of a dealer side servicing or other issues? What we're seeing is an interesting question also. Let me first, as far as what we are understanding, I don't think it is more from consumer side but it is from a dealer side. See, a competition might offer many things which are free, higher, bigger, better, everything, but somewhere you have to settle with the norm or try to ultimately come to terms with what you want to achieve. End up two, three years as was taken. Now, when that starts happening and you realize that the throughput that you get because of all these initiatives is not matching what was expected and what is meeting the target, you start sort of stabilizing or withdrawing. Once that starts happening, obviously there is a dissatisfaction or then the comparison that what is the difference between you and others. Might as well I go to my old brother and then start dealing with it. That's our understanding and that's what we understand from what tests that you got back. Competition impact has been clear and relatively easier for us to track. Slowing industry growth has been a question which you all are puzzling for a while now. What's your take on this? Obviously, there have been false starts. Once in a while in the last two, three years, we believe that things are. There are green shoots but they hardly grow. What's your assessment on why things are n ot sustainably improving for paints? Yeah, so I mean difficult. We have been, frankly, we are also puzzled with this, and we try to answer it ourselves by saying, you know, that looking at the sometime way back it was food inflation, overall inflation, then also looking at the salary rises. I mean all this is homeless data. We try to put all this together to say that, okay, this might be the reason, and the other biggest disadvantage for, I think, paint industries is because being discretionary item, I think that is a lso leading to this kind of performance. I think that is a general answer that I can give at this stage. Perfect. Lastly, on auto side, some o f the OEMs have warned that owing to rare earth shortage, there will be a very massive production disruption by October or September. Do you expect that to hurt us? Are you kind of budgeting w hen you are guiding for p lanning for second half of this? Year as of now, you know, based on our interest and we are not sense that it will lead to major disruptions. It might have some impact as far as EVs are concerned. The EV percentage to total production is pretty small. I don't see there are no red flags raised as yet which is going to cause some serious disruption. That's what we are at right now. Perfect. That's all for me, thanks and all the best. Thanks. Thank you. The next question comes from the line of Aniruddh Joshi from ICICI Securities. Please go ahead. Yeah, sir, the point that you raised, that t he dealers have started coming back. Is it across the board, meaning across the board in entire India we are seeing this phenomenon, or are we seeing this in some of the pockets? Also, the sample size would be, I guess, relatively material, or are you seeing these things happening in certain pockets? That is our question number one. Question number two. I guess the market leader will also very soon start the backward integration projects. Once they start those projects, they will have additional margins to play with. It may result in either then g etting aggressive on the pricing or maybe looking at gaining more market share also. What will be the strategy of Kansai, when the competitive intensity will increase f rom that angle as well? Yeah, that's it from my side. Thank you. On your first question, we are seeing this obviously in some context, and obviously my pocket, when I see, it's about my strong areas where I saw this change or the happening. I don't know whether it is also being witnessed by competition and the pan India, all regions, all towns, etc., but as far as our strong areas are concerned, we are seeing this happening. On your second question, stick is backward integration is also a double-edged one because all backward integration happens. These are the commodity items, and this commodity item has a big cycle, you know, so two years up, two years down. One has to see on. a longer period, whether really it offers competitive advantage or not, there are times when people are offering products even at below cost, which is also seen in the past. If you study that longer period, then we really doubt whether that really makes sense or not. That's a competition to decide what they are planning as far as we are concerned. Obviously, our offerings to the market will be richer, higher, better. That's what our plan is. Obviously, we'll try and defend our territories through the product offering and try to mitigate any advantage that competition might get in a particular category. We have also studied this, and I don't think it will be a very, very substantial kind of a difference that we are anticipating. It will be some difference, but I don't think it will be a substantial one. Okay, sure sir, very helpful. Many thanks. Thank you, Aniruddh. Thank you. As there are no further questions from the participants, I now hand the conference over to the management for closing comments. Thank you. Over to you, sir. Thank you for attending this conference and wishing you advanced festive greetings. Have a nice time and see you in November. Thank you so much. Thank you. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us. You may now disconnect your line. Thank you.