Ladies and gentlemen, good day and welcome to Kansai Nerolac Q2 and H1FY26 earnings conference call, hosted by ICICI Securities Limited. 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 *, then 0 on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Anirud Joshi from ICICI Securities Limited. Thank you, and over to you, sir. Yes, thanks, Aykra. On behalf of ICICI Securities, we welcome you all to Q2 FY2026 results conference call of Kansai Nerolac Paints Limited. We have with us today senior management, represented by Mr. Pravin Chaudhari, Managing Director, Mr. Yash Ahuja, Chief Financial Officer, and Mr. Jason Gonsalves, Director, Corporate Planning, IT, and Materials. Now, I hand over the call to the management for their initial comments on the performance, and then we will open the floor for question and answer session. Thanks, and over to you, Pravin sir. Thank you, Anirud, and good morning to all of you. Thanks for joining. I'll request Jason Gonsalves to give you a brief commentary on our quarter two. Sorry for my voice; my throat is not keeping good, but I request Jason to go ahead, then I'll answer the question and answer. Thanks, Pravin, and good morning to all of you. Seasoned greetings to everyone who has joined the call. I am grateful to your continued support and interest in our company. Thanks for joining this investor call of Kansai Nerolac Paints Limited. I will take you through the presentation that we have uploaded last night. We begin with our vision and mission. Our purpose is to create an environment for a healthy and beautiful future. Our vision is we design solutions that protect, inspire, and touch lives every day. We are committed to ESG, and we are already a water-positive company and working extensively to reduce scope one, scope two, and scope three emissions, and extensively on green energy. When it comes to our brand, we are a legacy brand, and as a legacy brand, Nerolac stands tall with over 100 years of excellence. Our strength lies in robust R&D capabilities and strategic technology partnerships, especially in the industrial segment, where we deliver cutting-edge solutions across diverse applications. Despite intense competition, our brand continues to command attention, and we proudly hold the position of the second strongest consumer brand in terms of top-of-mind awareness nationwide. Our jingle resonates across age groups, and that is an asset we have created, and recently we have relaunched it and are leveraging it pretty well. Our spirit of innovation is deeply rooted in advanced Japanese technology, which has been the driving force behind our industrial business. Looking ahead, this same technological edge will give shape to our decorative segment, enabling us to introduce more breakthrough concepts that align with growing demand for premium products. A prime example was our Paint Plus range, an exclusive line of category-defining products launched a few years ago, offering Indian consumers a truly differentiated experience in the decorative paint segment. Coming to the business environment for quarter two, we had outlined six major factors. One is we felt that the demand in automotive was fairly stable. There was a renewed thrust of the government on infrastructure. Monsoons were heavy and prolonged. Of course, we faced a lot of geopolitical tensions. The rupee depreciated, and it was volatile, and crude was also range-bound during this period. Coming to our decorative business, overall, our value growth was slightly negative, and the volume and value growth was almost similar. Key highlights of our performance are Paint Plus products' performance improved by 240 basis points over H1 of 2024. We witnessed a double-digit growth in the project segment. We added 2,500-plus dealers in the first half. Our new retail formats, we have crossed 500 numbers. There has been a strong double-digit growth in construction chemicals, waterproofing, and premium wood finishes. Services, which was an area we entered a couple of years back, is now contributing 5% of our decorative business. When it comes to innovation, in the decorative business, we have introduced two or three major products. One is Beauty Gold Washable, which offers ultra-reshine, stain-resistance, and super smooth finish. In the construction range and waterproofing segment, we have offered a couple of products in terms of grouts and epoxy products, which offer longer durability, chemical resistance, and excellent waterproofing in wet areas. In the industrial segment, in the four wheelers, we have introduced a new 2K PU clear coat, which offers superior gloss and appearance. In auto refinishes, we have offered a clear coat having superior finish for the market. In two wheelers, we have come out with a multi-travel metallic hyper brown finish, which has been introduced, which has the most vivid and chromatic color shifts. We have also introduced a low-bake common monocoat that has been implemented and is suitable for both plastic and metal substrates. In the performance coating liquid segment, we have introduced an under-insulation pipe coating, which is used in refineries, having good heat resistance and high corrosion resistance. In the powders, we have introduced epoxy polyester hybrid powder, which provides good aesthetic and corrosion resistance. When it comes to branding, our brand and marketing investments have remained strong with impactful campaigns running across both TV and digital platforms. These efforts are designed to deepen consumer engagement and reinforce Nerolac's identity in the minds of our audience. A highlight of this quarter has been the revamp of our iconic brand jingle, modernized to resonate with today's consumers while preserving its nostalgic charm. This refreshed sonic identity is already gaining traction, adding a new vibrant dimension to our promotional strategy and further strengthening our brand recall. Coming to the industrial segment, in industrial, our growth has been in lower single digit. In automotive, we have witnessed lower single digit growth. However, the GST 2 reforms and the festive season onset provided demand push towards the end of the quarter. There has been a focus on innovation and creating new technologies to address the total addressable market. In performance coating in the liquid segment, our channel sales witnessed strong demand growth, and our premium segment performed well, driven primarily by the railway segment. In powders, we witnessed strong dealer sales. However, in segments like white goods like AC and electricals, they took a hit due to unseasonal rains. In auto refinish, we have significantly increased our presence in the premium PU segment, and this saliency has gone up because of additions of new body shops. There has been technology upgradation from solvent-borne to waterborne, which is an ongoing conversion, and we are engaging with our customers through continuous training and upskilling. We have won a lot of accolades, which you can see in the slide. We have won the Dragons of Asia Marketing Awards in quarter two. We won six awards, which were held in Malaysia. We are the gold winner in ambient media. We won awards in Goa Fest. We won seven Baby Blue Elephant awards. In the industrial segments, we have got the Best Supplier award from TAFE, a Superior Performance Safety award from Maruti, and a Cost Down award from Suzuki. ESG, we have continued our relentless efforts, and we are ranked 17 out of 571 companies in the chemical sector and have received a low ESG rating from Sustainalytics. In CSR, through our CSR initiatives, we remain deeply committed to positive change in the area of education, healthcare, women's entrepreneurship, and skill development. These efforts reflect our ongoing dedication to giving back to society in meaningful and sustainable ways, empowering communities, and fostering inclusive growth. Coming to our financials, for Q2, our net revenue was up by 0.4%. PBDIT is down by 1.5%, and PBT is down by 4%. For H1, our revenue is up by 1.1%. PBDIT is down by 4.7%, and PBT by 4.1%. On a consolidated basis, our net revenue is up by 0.1%, PBDIT by 1.6%, and PBT is down by 0.6%. In H1, our revenues are up by 0.8%. PBDIT is down by 4.3%, and PBT is down by 2.8%. Coming to risks and outlook. Geopolitical tensions may continue to disrupt global supply chains and create volatility in the commodity markets. Tariff-related inflationary pressures could impact input costs, particularly for imported raw materials. Depreciation of the Indian rupee poses a risk to import-dependent segments, potentially affecting margins. Going forward, in outlook, as per the RBI, the construction activity is expected to remain strong, supporting demand across both the industrial and decorative segment. However, continued rain disruptions and season-time changes might impact the decorative segment. We are hopeful that November and December will see an uplift in demand. Automotive demand is likely to be bolstered by favorable policy measures and seasonal trends, especially in the tractor segment. Infrastructure growth in railways, roads, airports, and power is set to drive demand for high-performance coating. With supportive economic measures in place, consumption demand is expected to pick up steadily in the second half of the fiscal year. With this, I now open the floor for question and answers. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press * and 1 on their touchstone telephone. If you wish to remove yourself from the question queue, you may press * and 2. 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 Sukrit Dev Patil from ISI Twin Trade Private Limited. Please go ahead. Good morning, team. My question is, as paint and coating space gets more competitive, what is Kansai Nerolac Paints Limited doing to build a strong edge, not just through brand or dealer reach, but through something deeper that makes the business hard to replace? Sukrit, thank you for the question. One thing we have been maintaining is about our Kansai Nerolac balance portfolio. As you see, there are segments where there will be competition, and we have seen in the past also. Like today, we are facing this competition in decorative, very heavy competition. As far as we are concerned, while we are definitely going to protect our decorative market, which we are trying to do through the last two quarters, as you would have seen, through making calculated investments in our strong markets and also improving our product mix and not getting into products which are actually no or almost zero profits. That is our clear strategy. At the same time, also invest in other industrial areas. Now, industrial is a very wide segmental play. It is not only auto is possibly one block, but when you go to other industrial areas, there are many, many segments which are possible and infrastructure. There is a lot of investment that is happening, and Kansai has the right to win there with our global technology availability, global approvals, as well as our own capability of R&D, as well as widely spread and well-balanced supply chain network that we have in India. I think as far as our strength is concerned, that is where we will invest very heavily. I believe, because of the nature of the business, it is not so easy to penetrate that quickly because of the inherent technology availability, approvals, capability, service capability, so on and so forth. I think that is slightly difficult to replicate. I think that is our clear aim as to where we will invest heavily. Thank you. I believe Mr. Yash Ahuja is also on the call today. Yeah, he's there. Yes. Yes, sir. I have one question for you. As input cost and product mix keeps on shifting, how are you planning to protect margins and what cost levers do you think will remain strong over the next few years? I'm just trying to understand how you're going to balance short-term volatility with long-term margin stability. Thank you, sir. We keep on looking at our portfolio and keep on improving our product mix. With that, there is a continuous effort going on on our cost reduction activities and value creation. We could keep on innovating our product, working on our formulation, and this is how we manage our cost. Okay. Thank you for the guidance, and I wish the entire team best of luck for Q3. Thank you. Thank you. The Thank you. The next question is from the line of Rehan Syed from Trinetra Asset Managers. Please go ahead. Yeah, good morning, team, and thank you for being with us. I have two questions only. First, it will be on the one side of the decorative segment. The decorative segment is headed into an extended monsoon and a shorter resting window we have seen. We have started seeing a recovery in October and November months. What was the demand on the volume, and how is the retail versus project demand trending as of now? Continuing with this question, could you please help me understand? The new product launch contributed around 10% revenue in the H1. Could you share which product categories are driving this traction, and what's your internal target for new product contribution by FY 2025? Yeah. So your audio was not very clear, but let me repeat. I think you're asking for, towards there was an impact due to extended monsoon, but how was the recovery towards the end? I think is your first question. Yeah. Yeah. In terms of demand, definitely we saw a slight uptick towards the fag end of September. I hope that continues. Given October, our last-year base was very heavy because Diwali was in November, and October was the peak month last year, whereas this time, Diwali started—I mean, this was extended Diwali starting right away from 17th. We had a very little window available, really, to push the material. October, definitely, there might be some challenges. We hope that because of this early Diwali, we have seen in the past also that there is a slight uptick which happens post-Diwali also. We are hoping that the month of November and December, we'll see some kind of uptick. I think looking at the trend that we are seeing, I believe Q4 should be far better in terms of the growth prospects are concerned, both for decorative and industrial. That's our belief as of now, subject to many things that keep happening in the environment. That was your first question. Second question, I was not very clear as to what to ask. If you can repeat. Specifically, the second question is on the side of new product launches that is contributing around 10%. What are the products that are driving the H1 in this quarter? What's the target for new product provision by 2015? Right. Yeah. Our contribution is about 10%-12% is what we target because there is always new product which comes in, some cannibalization happens. We obviously do that. In the product category, all the innovation that happens is basically in emulsion category. That's where actual play is. In terms for us, now this construction chemical that we have entered into, which is basically a repair segment, there also we are introducing a lot of new products. I think these are the two segments, emulsion as well as construction chemical, I think will remain our focus area in coming quarters. Yeah. Okay. Just last one more question. After this new product launches, you will definitely get any operating leverage in your margin. Is there any guidance or trend that you have to put for coming two years or quarter, like you are maintaining with the margin? No, it's difficult to put margin guidance, but as we have been always maintaining, it's about 13%-14% in the short term. In the long term, I think it will be about 15% is what we are aspiring to be. Okay. Okay. Yeah. Thank you. Good luck for the quarter. Thank you. Thank you. The next question is from the line of Avi from MACQ. Please go ahead. Yeah. Hi, sir. This is Avi here. Sir, I just had a few questions. First, if you could give us a sense on how the decorative performance has been across geographies, across products. This is more from a sense to appreciate, kind of correlated with the margin performance. Is the weakness in margin on a sequential, how you witnessed, is this more a mixed thing between industrial or decorative, or is it even within each of the subsegments? That would be my first question. I will come back to the other speakers. Thank you, Avi. As far as decorative is concerned, region-wise, I think because of this extended monsoon which impacted North, which is a strong area, North obviously did not perform well. In the order of pecking, I think it is East, which we did very well, followed by West, and then North and South. I think this is how I think our market performed. In terms of geographic or socioeconomic classification, also we found that urban class, I think, slightly doing better than the rural. I think that is our sense that we got from our quarter two. In terms of products, obviously, emulsion is a driver there. Emulsion, obviously, we are pushing, and our premium saliency has increased compared to last year. We are definitely dialing down upon or we are reducing our exposure on all these ancillaries and patties and all that, which is actually getting into kind of a commodity play and people are using it as more of an entry kind of product. We are okay with it. I think through our network and the relationship that we have built over the years, we have got the sense that that does not make much sense. I think despite reducing our inputs on these products, we saw that there was no major impact as far as the network defection is concerned. I think that is as far as decorative and product is concerned. On overall margin, definitely, it cannot be compared against last year quarter two because of Diwali, our inputs on the ATL as well as BTL were actually pulled earlier, and it was heavy in September. That is the result you will see a reflection in the quarter two. Coming to industrial, I think, as I have already stated earlier in last quarter also, we are continuously improving our margins because we are focused on premiumization. That is true mainly for our industrial segment, where there is a lot of play available. Because it is a pretty big market and wide areas of premiumization available, certainly, that is the area which is doing fairly well. We are actually touching almost as far as growth is concerned, it is slightly higher than the mid-digit as far as quarter two is concerned. Yeah. Thank you. Very clear, sir. Very clear. The second bit is essentially, if I were to kind of just get a sense on margins, I do understand your earlier comment that you are looking at a 13%-14% in the near term. For FY 2026, we ended at 13% in FY 2025. First half is a decline to some extent. Would you believe that you would still want to retain that guidance given that the uptick is likely to happen only in Q4? How should or is the near term would more be the next year? Wanted to kind of just better appreciate that. Avi, I think we are not very far from that. I mean, for 13% plus. Looking at the material movement that we are seeing with slightly benign condition which are prevailing, I do not see that changing immediately. Subject to, obviously, this X and some other commodity variation because of all these global policies that are happening. I do not see that changing. I am sure if that happens and through our value engineering effort, which our procurement and R&D is very active, I believe I think that we should be reaching that in this year also. Got it. Exactly. Last, if I may, just two bits. One, any comment on the competition? You did cite towards dealers coming back. How is that momentum continuing? How are we performing in the focus markets that we have kind of decided to dial up our energies? Second, if you just share some comments on the subsidiaries in aerospace as well as the international subsidiaries. That's all from my side. Right. Yeah. I think that trend continues. I'm sure last time our competitor has said that it's a multi-brand store. I think that is true. That going away and coming back keeps happening. We are seeing a definite trend where we believe it's positive for us. That is as far as our dealer bit is concerned. On AeroFix, you would have seen that we are a bit positive this quarter. I think very good growth is what we are seeing as far as AeroFix is concerned. There also, we are changing our mix and moving away from industrial to more retail. That is also improving our overall contribution as well as profitability. Even the construction chemical business, which we acquired along with that company, is also doing fairly well. It's a focused approach now with a dedicated team being given. I think they are doing a fairly good job supported by all our support functions. As far as international subsidiaries are concerned, Nepal had some bit of issues with that protest and something was brewing earlier also. Slight pressure, but I think fundamentally we are fairly strong and we have done reasonably well, I believe, compared to the competition. As far as Bangladesh is concerned, I think things are just the same. I think there's no change as far as disturbance levels are concerned and the market remains challenging. I think we are also one of them facing the brunt as far as Bangladesh is concerned. Yeah. Thank you. For Sri Lanka, last time, sorry, you did cite towards some weakness last time. Is that also? Sri Lanka also, I think yeah, Sri Lanka also very challenging situation continues there also. Yeah. Got it. I think in international subsidiary, I think only Nepal is fairly good. Bangladesh, Sri Lanka is a problem right now. Clear, sir. Thank you very much, sir. I'll come back in the Q&A questions. Thank you. Thank you. The next question is from the line of Aditya Bharatiya from Investec. Please go ahead. Hi, good morning, sir. My question is on gross margins. How should we think about them? There are different forces which are moving in different directions. On one side, we are seeing crude being quite benign. Rupees are depreciating, and there is likely to be a hit on anti-dumping duty that has been imposed on TIO2. I just wanted to understand what is happening on the costing front and what would be your anticipation regarding gross margins. Thank you. Yeah. In our case, there has been some improvement in the gross margin. Definitely on the back of crude, there is definite advantage we're getting. Rupee has depreciated, but not to the extent where crude has depreciated. That is the advantage, I would say. As far as anti-dumping duty is concerned, I think through our Indian Paint Association's effort, I think anti-dumping duty is stalled. They have been referred back to government to reconsider it. As of now, there is no anti-dumping duty as far as TIO2 is concerned. I think with these two factors, I hope the next these two quarters, we should have a stable gross margin scenario. In that case, sir, should we be seeing a reasonable improvement in the second half in gross margins? I understand that negative operating leverage may play out in the third quarter, but at least on the gross margin side, should we start seeing a reasonable improvement? Yeah, I guess so. I think, yeah, we also believe so. But whether it will be substantial or marginal, I think it remains to be seen based on the product mix. Because quarter two, obviously, is not the comparable quarter. Its product mix is very different. It's very economy-driven. But as we have always seen in last years, also quarters, despite being, should have been a premium quarter, actually turned out to be a downtrading has happened. If something like that happens, I guess then there'll be again pressure on the gross margin. Given the same scenario, given the same product mix as it was last year, I believe there'll be improvement in the gross margins, subject to no change happens in the mix. Fantastic, sir. Thank you so much. Thank you, Aditya. Thank you. The next question is from the line of Mrunmayee Jogalekar from Asit C Mehta Investment. Intermediate. Please go ahead. Yeah, fortunately. My question pertains to the subsidiary profit because you also mentioned that AeroFix has turned a bit positive. If I look at the difference between the console and standalone margins, that has also come down. Going ahead, how do you expect this to pan out? In the last year, we have seen console margins to be about 90 basis points lower than the standalone margins. Going ahead, do you expect this gap to narrow further, or how should we look at it going ahead? Yeah, you are right. Actually, what has happened is, as we mentioned, that we have a challenge in the subsidiaries, the international subsidiaries. Overall, when you look at total, there is an improvement with the last quarter. That improvement, that is why you will find this. Better in consolidated. In going forward also, we are trying to improve those things. It should keep on improving. Okay. Is there any timeline where maybe the console margins would get in line with standalone margins or maybe a minimal deviation or something like that? Yeah, there will be a minimum deviation because that improvement path will continue. We are continuously, as we have spoken about the AeroFix and Nepal also, they are doing well. We are seeing good traction coming in, and we are seeing good improvement happening over there. This is a good potential area. It will keep on improving. Got it, sir. Okay. Secondly, I think you did allude to the auto segment. If you can just give some more sense on in Q3, how are you seeing growth pan out in that segment? Is it like a significant uptick from the previous quarter? Yeah, definitely. I mean, as far as quarter three is concerned, there has to be slightly better fundamentals as far as auto demand is concerned. We saw that after GST change happened, there was a rush in bookings also that we have seen. Now, it remains to be seen whether that demand continues or whether, again, some slowdown happens. As of now, we are pretty optimistic. The focus that we have so far got is quite positive. Let's believe that it goes on that way. Okay. Sir, any new client acquisitions in the auto space? I think whoever is there, I think whoever comes except for, I would say, Hyundai, Kia, Korean accounts, I think we have all of them with us. So whoever comes in, I think they start dealing with us. That's, I think, the shortest answer I can give. Yeah. Okay, sir. That's great to know. Thank you. Thank you, Mrunmayee. Thank you. The next question is from the line of Vishwa Solanki from PL Capital. Please go ahead. Yes. Hi, team. I wanted to know what was your volume in quarter two for decorative and industrial? Volume growth? Yeah. In terms of decorative, our volume and value are slightly negative. The gap between the two was absolutely nil. That much we can say. Yeah. Okay. Okay. Thank you. Secondly, given the GST push, could we expect high single-digit growth in auto in terms of value for the second half? Yeah, I think you can. Yes. I mean, it has been always positive. I think it used to be mid-single digit to slightly higher single digit. I think we'll be hovering around that range. Yes. Okay. That's it. Thank you. Thank you so much. Thank you, Vishwa. Thank you. The next question is from the line of Amit from Elara Capital. Please go ahead. Yes, sir. Thank you for the opportunity. Just in case I missed out, I just wanted your comments on what would have been the decorative industry growth in Q2 and how it is shaping up right now in October, November. Yeah. As far as decorative is concerned, it was slightly negative, both value and volume. I'm saying your no. I'm saying generally your industry, would you be able to comment? Okay. Okay. I think what sense we got, I think, will be flattish or maybe trending towards maybe mid-single digit is what we understand. Obviously, we'll know in this week itself what has happened. As far as industrial is concerned, obviously, we have grown far better than the industry. There also, I think it was lower single digit is what we understand. As far as market is concerned. Okay. How has been October and now? October, as I mentioned earlier, I think with Diwali being early and a fairly extended Diwali, there was a very small window available. I think about 15-odd days were available for us to really build. After that, there was a long period of silence in the market. It has been, I think, quite a challenging October. I believe, as has been seen in the past, post-Diwali also, when Diwali comes early, the demand picks up on the back of other events like weddings and so on and so forth. We believe that November and December should be slightly better. We are able to cover it up is what our belief is. Looking at the movement that is happening in the market, we believe that quarter four should be better than the remaining three quarters that we've seen. Okay. Thank you so much. Thank you. Thank you. The next question is from the line of Pratik Gothi from HSBC. Please go ahead. Hello. Hi. Can you hear me? Yeah, Pratik. We can hear you. Okay. Thank you. Thank you for the opportunity. I have a couple of questions, please. You've added 2,500 dealers in HY. Can you please comment on the region where you added them, what kind of dealers they were? Are they hardware shops or are they paint dealers? This is their second, third printing machine. Some color on that. The new entrant has commissioned the last plant in East India in Kharagpur. Any comments from a product availability perspective? Has competitive intensity increased in the East region? Any color on that, please? Okay. So, Pratik, as far as dealers are concerned, I think dealers are quite evenly, I would say, well added. If I have to still rank amongst them, I think it was East first, then North, West, and South. I think this is the order of picking in terms of dealer addition. As far as quality of dealers is concerned, they are a mix of both hardware as well as paint dealers we got added. With our distribution initiatives, where there are a lot of white spaces available, it is difficult to reach for us. Their distributor has been appointed, and the distributor is obviously reaching to these retailers, which need not be large paint dealers. I think they typically fall into this hardware type of shops. That is how I think the spread is as far as dealer additions are concerned. You must also note that this dealer addition has been, I think, far higher than what I think we have been tracking in a couple of years. I think it is a positive sign. On the back of it, we also saw that the participation of the dealers in the first half, I think, is far better. I think these two drivers, I think, give us confidence that the initiatives, actions on the ground, field force activation, influencer management, all that is now resulting into positive momentum. We hope to continue this as we go forward. As far as the second question is concerned on new entrant, yeah, they started their plant in East, and obviously, that will give them some advantage in terms of some freight benefit and some service level, I would say. I think supply chain today is so matured that even we service our East from our Kanpur plant, and our line fill rates are very, very high. I mean, they are compared to all FMCG benchmarks. I do not think in terms of having a plant only will give you that edge, because these items are stock and sale items. These are not made-to-order items. Anyway, I have to stock in my depots, and I have a wide network as far as depots are concerned. We manage our inventories and focusing tech methods so well that we respond to the changes that happen. I do not think we have lost any sale because of not having plant in East. Yeah. If I can add a squeeze in a question, please. Go ahead, Pratik. Thank you. In terms of you said influencer management and sales activation, in general, if you think about incentives, both dealer and influencers, any comment on that? Are they still increasing? Have they plateaued? Yeah. As far as inputs are concerned, they are not increasing now. So they remain at what they are. It is only when market will stabilize, we'll see some directional change happening for better as far as margins are concerned. I mean, incentives are concerned as far as dealers and painters are concerned. As of now, there's no increase is what we've seen now. Okay. Thank you for that. Thank you. Thank you. Before we take the next question, a reminder to all, you may press star and one to ask a question. The next question is from the line of Shashank from Krisantia. Please go ahead. Yeah. Can you hear me? Yeah, Shashank, we can. Yeah. Just one simple question. Trade receivables have gone up substantially over the last six months to this six months. Are we extending extra credit to buy market share? A little bit we extend that credit also. Otherwise, also, this is a seasonal impact, if you look at. As such, when we look at season to season, it's not increasing much because it's a seasonal impact. And because of the mix. Interesting. Industry sales for it to mix because of that. Thank you. Thank you. The next question is from the line of Pankaj Agarwal, an individual investor. Please go ahead. Hi. Good morning. My question is regarding the EV segment. Now, with so many companies coming with their EV pipeline, what is the input that we have been able to make in EV team now or any major contracts in progress or discussion? Yeah. Yeah, Pankaj, thank you. As far as EVs are concerned, I think our existing players have obviously EV play. Percentage of that obviously is not great, very high. We obviously supply to all of them. As far as others are concerned, there are too many players in the two-wheeler segment. There also, if I have to say that there are about 80-100 players which are there in the market today who make EV, either bicycle or motorcycle or whatever. I think we have a sizable play in there also. As far as any automotive, any mobility solution that you can name it, I think we are there. We are substantially present in those segments. Yeah. Thanks for your answer. Second question is on the waterproofing business because in the last three years, we have seen many paint companies coming into waterproofing business. Is it really so lucrative that three, four companies in the paint business are coming in waterproofing business? What is currently the status of consignment? Do we expect any sizable business contribution out of our overall scheme of operation? Yeah. So Pankaj, as far as waterproofing is concerned, there are two segments in that. One is the waterproofing, which is actually a paint application. Another one is the mason laid, which is basically a clear-cut, leak-proof kind of a solution which goes in at the time of building a house or a building or a repair kind of a thing. As far as waterproofing is concerned, which is a paint-led solution, I think it's just an extension of my painter and availability of that space where I enter. I try to do that waterproofing also. I think it has become an integral part of the paint segment. The penetration and awareness of that is fairly low. It's difficult to put a number, but I think maybe it's about 40% of people only are aware today about the waterproofing. That's a huge scope given our urban infrastructure and otherwise urbanization that is happening. I think there's a huge scope of increasing this overall waterproofing domain is concerned. As far as margins are concerned, I think since it is coming at a very incremental cost because there's no advertising happens per se largely in this segment, which we did in the beginning, but today I don't see that happening significantly. I think it makes more sense to take more, I think, share of that space by offering products which suits and which meets the requirement of the area. Understood. So this means that this can be taken only as a supplement to our existing paint business and cannot be regarded as a full-shaded business in the near future. Yeah. I think, as I said, now it has become an integral part. Earlier, decorative definition today has completely changed. I mean, earlier, it used to be just enamel, distemper, and emulsions. Today, we have so many other categories which are also being driven. Like for example, wood finish also. I think earlier, there were different classifications. They used to get accounted in a different domain. Today, that has also become part of the decorative largely. I think there are segments which will keep emerging based on the consumer test and where we see opportunity. That, I think, should be one which because we see the growth there, I'm sure that is where we'll go after. Yeah. Thank you for clarifying, sir. My last question is on the margin expansion because of the crude stabilization that might be possible in Q3 and Q4. Yeah. So yeah, like I answered earlier also, I think looking at the current crude levels, we believe that it should be sustained at that level subject to something dramatically changing in the global economics. But I do not see that happening as of now. So we believe if my product mix remains the same as last year's same quarters, I believe there will be definitely marginal improvement in the margins are concerned. But if there is an increase. At least 10-20 basis points. Sorry. At least 10-20 basis points that we expect in Q2 or Q4 increase? I think it is suffice to say that there will be some improvement. Difficult to put a number because I can't really control the mix in the market. If mix changes, then I think it will be difficult to really answer that and justify. Yeah. Thanks, sir. If I get a question in future, I would like to know if Bangladesh, Sri Lanka, and Nepal, we are doing not so great or because of the macroeconomic situation, are we still thinking of international operation to move towards Middle East or Southeast Asia or Brazil, etc.? That's also my check. Thanks. Yeah. So I think as stories for other paint companies, we are also exception as far as these three geographies are concerned. Suffice to say that Nepal is doing fairly well, and I think they are well positioned as far as Nepal is concerned. As far as Middle East is concerned, because we are part of the Kansai global, and they have operations globally. I think there are territories which are marked for each player to play. I think if tomorrow, if there is any change in the policy or if they say that there is some territory opens for you, we will definitely play there. As of now, there are no plans. Sure. Thanks for clarifying all the questions. Thank you very much. Thank you, Pankaj. Thank you. Ladies and gentlemen, anyone who wishes to ask a question may press * and 1 on the touchstone telephone. The next question is from the line of Anirud Joshi from ICICI Securities. Please go ahead. Yeah. Sir, in terms of the cash, which is lying idle on the balance sheet, what will be the plan with the cash, and is there any dividend policy that you are working on in regard to the excess cash generation? That is question number one. Question number two is now we are seeing the market leader and even some of the players are also doing the backward integration projects also. Eventually, in the industry, the cost for some players may go down. Obviously, they may need to do the CapEx for that. Still, they will be able to generate better margin, and so they can pass on some of the benefits just to gain the market share. What will be the confined strategy as far as the backward integration is considered? And the third and last question, you indicated that October has been a relatively softer month. How do you see the quarter panning out in terms of, and a little bit more detail on October, whether it was softer in terms of just the decoratives or it was softer for decorative as well as the industry, including automotive also? Yeah. Thanks. Thanks, Aniruj. As far as your first question on cash is concerned, we are sitting on a fairly good cash position. Obviously, we keep looking at opportunities if there is any possibility of looking at any inorganic options. That continuous scan happens. So far, there's no definitive plan as far as that is concerned. In terms of our own deployment of the cash, looking at our, it may not be in short term, but looking at the lead times that are required to set up a plant, daily greenfield are fairly substantial. Obviously, we'll be also looking at our overall network and optimizing that network going forward. That work will happen in the next year or so. Then we'll obviously decide as to how much of cash can be pulled there. On dividend, obviously, it's a board decision. I leave it to board to decide as to what they want to do with the overall dividend offers. That, I think, will come to as far as in quarter four board meet that will decide on that particular part. On the backward integration questions, earlier also, I think last quarter, I think I reflected on this. As far as we are concerned, there is a backward integration available for all the main product lines that we are already manufacturing. Our backward integration is very, very strong when it comes to industrial. I think that's the one area which, because of our competitive advantageous position we have, I think we always want to refine and strengthen our competitive position there. We keep investing as far as that area is concerned. If you're referring to some of the initiatives which competition has taken on the decorative part, I think because of the size and because of the scale what they operate at, maybe I think it is justified. When we evaluate, I don't think in the short term it makes sense for us. Obviously, we'll not pursue that. Instead, we'll rely on our network of suppliers and relation to really work on the other value engineering projects which might give me similar advantage. I think that is, at this stage, suffice to say on that. As far as October is concerned, decorative has been mainly a softer segment. I think industrial has done fairly well. We believe, I think that trend should reverse as far as, I mean, decorative things should reverse as far as November and December are concerned. As far as industrial is concerned, I think that remains to be a strong growth area. Okay. Sure. This is very helpful. One follow-up from my side. In earlier call also, you had alluded to that some of the dealers from the new competitor are coming back to Kansai now. Has that trend continued, or, I mean, how should we see regarding the distributors who would have started distributing for the new large player, would have started coming back to Kansai? Has that trend continued to be there even in this quarter also? Yes, that trend continues. As I said, there are always some people who, I mean, dealers who go away, and they come back to us also. What we are really looking at is my share in that counter. What it was, let's say, two years back, what was it last year, and what is this today? I think if that is what I map, I find that my share in the counter has increased. I think that I would also call it as a return, so to say. I think that trend continues. Our effort is always on in our focus towns where we really want that to happen more aggressively. I think we are getting good results as far as my focus towns are concerned. Yeah. Okay. Sure, sir. This is very helpful. Many, many thanks. Thank you, Anirud. Thank you. Ladies and gentlemen, you may press star and one to ask a question. The next question is from the line of Amnesh Agarwal, an individual investor. Please go ahead. Yeah. Hi, sir. I have a couple of questions. My first question is on the CapEx part. That how much will be the CapEx in the current year, that is FY2026, and even for FY2026 plan? Secondly, we have had a reasonably good amount of total cash and cash equivalent investment at the end of last year. Whereas if we look at on a QOQ basis, our other income has seen a very sharp deacceleration from INR 520 million to INR 280 million. Any color on these two things? See, there are two things. One is that definitely there is some reduction because we have paid dividend. Also, because of the interest rates going down, some of the returns on that investment have reduced. That is a short-term phenomena. That is one of the reasons why it has come down. As far as the cash reserves are concerned, as we have explained previously, we keep on looking at opportunities. CapEx also, there is a plan of around INR 200 crore-plus, which is a regular activity we keep on doing. There are a few projects also which are going on right now. Okay. Sir, I believe you are having close to INR 2,000 crore in your cash and investments and even if we consider dividend. This INR 28 crore seems to be too low a number. Is there a probability that this number should increase in the coming quarters? Yeah, it will increase a little bit. As you know, the rate of interest, the way it is going on, looking at that, it will move in that direction. Okay. Thanks, sir. Thank you, Amnesh. Thank you. The next question is from the line of Henil Bagadia from Equicorp. Please go ahead. Thank you for the opportunity. I hope I'm audible. Yes. I had just two quick questions. We had a strategy where we actually wanted to do a lot of institutional business and push a lot of products as we got into the construction chemical side, we got into waterproofing side, we also did on the floor coating side. How is the institutional business on the decorative side where you actually wanted to test a lot of products and its efficacy? Then you actually want to get on the retail side as the POC proof of concepts pick up. If you could just give some strategy out there. I mean, it's been an extended monsoon. I mean, Q2, I think the construction activity started back. Any feedback from you? Yeah. Yeah. There has been some impact. Despite that, because of our base being slightly low, I think our project business has still recorded double-digit growth. I think that's what we saw. We continuously invest in that area by expanding our territories. Now we are present in more than 85 cities. That is spread both Nimri Creek as well as extraction keeps happening. We are going as far as project segment is concerned. If we actually see those project segment, is it more on the side where it is infra projects and we've got some JICA funding out there and that's why we are empowered? Or are we seeing wins on actually our ability to, I mean, service customers or their specific needs which a lot of competitors may not be able to provide? Yeah. As far as our mix is concerned, we are not so much as far as government segment is concerned. There are no one-off tender-based projects as a significant portion of our project business. It is mainly to do with builders and cooperative housing societies. I think that's our main focus, which I believe is a fairly steady kind of repeatable business considering the nature of it and the growth that we are witnessing. Okay. Lastly, on the one consign strategy, sir, are there any products or any capability or the technology which, I mean, still has to be transferred from our parent or any of the requisition based off Europe or any other place globally where we actually see a growing market actually happening in India? Yeah. I think it's a continuous activity. As and when we come across a segment, because we are also, it's impossible to address all the segments at one time. We have a phased program where we are addressing each segment by scanning it, by looking at the potential, looking at our own strengths. That is how we enter into it. Every quarter, you'll find that there are some kind of technology transfer requests which are made by us from our global operations, and we keep getting that. It's a continuous process. I mean, there's nothing like one shot I'll get everything. There is a box available, but one has to also know what I'm supposed to do with that technology. I think it's a. Since then, actually, my— Yeah, sorry. You please continue. No. It is only when a proper case is made, only then that a particular thing is asked for. My specific requirement here was actually since we are pretty strong in the auto side. Actually, Kansai has got a very good product on the auto electronics side, which is actually used on the printed circuits. There is a coating chemical used on the printed circuits. I mean, it is just an adjacency that we actually need to explore. Have we placed a request to get that technology? Are we doing any supplies here, or are we still in the queue for getting the technology? Yeah. I think that is quite a specific thing. I will not know exactly whether that has been asked for. Given our position in auto, if there is anything that has to do with this kind of requirement, I am sure we would have got that. Yeah. Lastly, also, if I can just squeeze one question. Is the parent looking for any manufacturing for any of the global acquisitions based out of India, given the cost benefits that we have here? Or is that still not a thought that's crossed their mind? Yeah. Still, there's no thought on that area. Okay. Just a follow-up on that, sir, are we willing to commit any of our cash balances that we have for those kind of, I mean, manufacturing outsourcing, or is it on a future date that you might assess it? No. I think tomorrow, if there is a case for me to really invest and also make business sense out of it, definitely we'll do it. As of now, there's nothing on the table. Yeah. Okay. Okay. Thanks a lot, sir. Thank you. Thank you. Ladies and gentlemen, this was the last question for today. I will hand the conference over to the management for closing comments. Thank you all for joining, I think, and thanks for your support all through. Let's hope that quarter three turns out to be a better quarter than one it was. Hope to see you in the quarter three investor call. Thank you so much. Have a good day. Thank you very much, sir. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your line.