Good evening, and a very warm welcome to one and all to Asian Paints Investor Conference for Q2 FY 2023 results. Today on the call we have Mr. Amit Syngle, MD and CEO. Mr. R. J. Jeyamurugan, CFO and Company Secretary. Mr. Parag Rane, GM Finance. I'm Arun Nair from Corporate Communications. We now request Mr. Amit Syngle to take you all through the presentation. Mr. Amit Syngle, over to you. Hi, everyone. A very, very warm welcome to all of you in terms of today's investors' meet. I'm sure we have an interesting conversation ahead. When we look at overall Asian Paints, this is something which all of you are familiar with. Almost now 80 years of existence in terms of looking at beautifying, preserving, transforming all spaces and objects, and bringing happiness and joy to the world. That's something which is the core value in terms of what we really stand for. Overall, when we look at the business in quarter two, I think the overall business has been very, very strong from the point of view of the environment in terms of what was there for the whole quarter. We had an extended monsoon, as you're all aware, and rains have gone into October across the country in terms of what we are seeing, and which has kind of really taken somewhat of a toll with respect to the exterior painting market and in terms of the overall projects and construction business that is going on around the country. Overall, despite that, we logged in a strong 10% double-digit volume growth, which has come in this quarter, which translates to almost a value sales growth of about 20%, which has kind of come in here. If you look at the three-year CAGRs here, and why three years? Because we have seen that 2019-20 was the normal year in terms of from a pre-COVID point of view. Today we had a normal Q2 in 2020, and that is why the comparison in the entire presentation, we have taken a three-year CAGR kind of a reference. The volumes are very healthy at about 18% in terms of the CAGR and the value is clearly about 20%, which shows the fact that the top line focus has been ensured in terms of the organization overall set of quarters as you have kind of really heard from us. At the H1 level also, if you see, the growths are pretty satisfying in terms of the overall volume at being 22% in terms of what we have been able to achieve overall. If we look at the fact that the three-year CAGR here is close to 19%. Comparable to the last year, where the growths were also pretty high in terms of what we have kind of achieved. The bases are relatively much higher as compared to the last year Q2 in terms of what you see or the last year H1, which you kind of see overall. In terms of value, again, it's a 20.1% CAGR and almost a 37% value growth. I think the H1 trends are pretty staggering in terms of what we have been able to achieve overall. I must remind you that overall, if you see the, each quarter is different in terms of the overall contributions, in the entire year, as well as from the point of view of, how the product mix matters, from quarter to quarter as we kind of go ahead in the year. When we look at the overall, trend of the, top line, it is very clear that, the volume index, what is visible right to you on the screen, is a very strong double-digit, number in terms of what you are seeing overall to that extent. Therefore, this is representative of the three-year CAGR numbers. Quarter-over-quarter, you can see that the overall CAGRs in terms of the, you know, the double-digit growths have been very, very strong in terms of what we have seen over a period of time. That is something which is very clearly the overall organization we are committed that we are able to kind of grow at this kind of volumes quarter-over-quarter. Just a brief description as to what really happened. Overall, as I said, that there was an extended monsoon, and especially what we saw was a larger impact in terms of the west and southern geographies in terms of what we witnessed. Unlike possibly what, the commentary we have been hearing in the market, we have grown much better in the T-three, T-four centers, which means the rural demand for us has been much better in terms of what we are seeing as compared to possibly the growth which we are seeing in the metros, T-one and T-two centers. Now, this also kind of really, impacts the overall kind of a product mix in terms of what we are selling overall in this quarter. I think, the fact that T-three, T-four centers have grown well is kind of auguring well in terms of even future, that today, I think the rural demand is not kind of really died out, but it is still very live and very good in terms of what we see as we kind of go forward. Overall, the product mix in Q2, as I said, that the product mix varies from quarter to quarter. In Q2, it was dominated more by the economy emulsions, the undercoats, to some extent. However, the premium and luxury ranges, when we look at wood finishes, waterproofing, and select emulsions did well. We saw some down trading in terms of the luxury and the premium and some of the economy products, due to the steep prices undertaken in the last about six months on these products to that extent. There is definitely a trend of downgrading in terms of what is kind of relevant. Overall what we see that the mix was a little bit affected, but at the same time it was also having some set of premium and luxury products which were growing for us at a good pace overall. Today, from the point of view of the painting service, we have the biggest painting service today in the world, with a presence in more than 628 towns in India. I think this is something which is clearly a strong advantage the brand has in terms of how we see overall the trend in terms of the consumption, which really happens because you're literally kind of going into so many houses across so many towns to that extent. This service has grown almost at a rate of about 100%. I think it's been a strong kind of a performance which has come in here. When we look at the projects business, the projects business obviously has been growing much faster than the retail business in terms of what we have been seeing. Despite the fact that, yes, we had monsoons, we got some exterior painting and some of the construction work came to a standstill, but we had very good kind of sales realizations coming from the government and the factories segment. Also, we did quite well in the flooring segment, which is a new emerging segment for us, where we have launched a slew of products on the epoxy and the polyurethane platforms to that extent. As we see, one of the key strategies at Asian Paints has been in terms of looking at expanding our footprint with respect to distribution so that customers all across the country have easy access to Asian Paints products. This is something we have been pursuing very strongly, and we have already added about 8,000 new retailing points this year when we look at the half year, which has happened this year. I think it's again something which has been going on a very strong path, and we believe that this is one of the areas which is also giving us very good growth as far as the rural towns are concerned, and that is principally one of the reasons how the rural demand is getting ignited. Going ahead, I think the new products, the innovation, the technology has always been the torchbearer at Asian Paints, and this is something which we have looked very, very strongly. Each product comes with possibly a certain attribute which is unmatched by competition to that extent. We spoke about almost, you know, something like about 40 products in the previous quarter in terms of what we are having, which we have a clear kind of advantage in terms of propositions. We launched four more very clear things, and these are not all the introductions. These are some of the key introductions which we see. Royale Glitz Ultra Matt, which comes with a technology where basically it's a unique self-healing kind of a product which is there. SmartCare Tile Coat, which opens the whole area of waterproofing for tiles in a very big manner. Ace Power+, which is basically looking at elevating the customers from economy to a premium kind of a category in a strong manner. Finally, an enamel which is really differentiated in terms of technology, but a strong source of upgradation from people to come to from an unorganized brand to an organized brand to that extent. Clear kind of innovations with technology as the backdrop and very, very strong innovation from the point of view of the product quality in terms of how it syncs with the consumer. That's about the new introductions in terms of what we do. Coming quickly on to our home decor foray. All of you are aware, we have been speaking about this for some time now. We are transitioning from really the share of surface to the share of space within the homes in a very, very strong way. There are certain clear things in terms of what we have taken today. All categories is something Asian Paints is kind of now present. As I said earlier, we now have basically a very strong model where we are literally into the manufacturing of lots of categories within the home decor space, which comes in, which possibly augurs very well from the point of view of our control over design and in terms of what we need to kind of give the consumers as far as the overall costs are concerned. The engine here is what we call as a BeautifulHomes.com, which basically is the inspiration to people to kind of come in and, we have more than about 60 lakh to 80 lakh people who keep on coming onto this platform in terms of really seeing how people are kind of getting inspired to kind of do up their homes. We have an execution mechanism in terms of the Beautiful Homes stores. Last year we had about 29 stores. We have added about 7 more stores this year, and we have now 30 stores which are functional across the country. This is a one-stop decor shop which is there to that extent, where the customer is going through almost a phygital journey, which is physical plus a digital journey in terms of what we offer. Coupled with this is we have a Beautiful Homes service, which is a personalized interior design to an execution kind of a service, which we now offer in 11 cities. I think the whole foray is kind of very clear, right from inspiration to execution to really turnkey arrangement in terms of making the beautiful home come alive at your home is something which is what we look at. As I said, today, the Beautiful Homes houses all the categories, whether it is lighting, whether it is furniture, whether it is rugs, whether it is from the point of view of furnishing. All categories, flooring, everything kind of really comes in this category in terms of what we offer very strongly. This is the whole, the engine which runs the Beautiful Homes overall as inspiration for people to come in and get inspired in terms of what they want to kind of do with their homes overall. The Beautiful Homes Service, which basically helps people to really convert what they are thinking, what their choices are into the actual, you know, actual home, what they want to that extent. I think this is something which then augurs very well from a point of completing the loop completely. In this, you are aware that we had announced, you know, acquired two companies. One was White Teak and the other one was Weatherseal. White Teak was a complete lighting solution which is there to that extent in terms of the decorative lighting, which goes in terms of chandeliers, pendants and other lights which come. We have introduced some functional lights as well in terms of this thing. Weatherseal was all about the UPVC doors and windows which were there. We have now looked at strong synergies in our Beautiful Homes stores and Beautiful Homes service with this and both the businesses, I am pleased to kind of report, have done extremely well, when we look at from the point of view of what they had achieved in the full year last year and what they have achieved today overall, when we see from the H1 perspective, or even from the Q2 perspective. I think both businesses doing very well, both from the point of view of top line as well as bottom line as we kind of look at in terms of going forward. When we look at the two businesses which have been there for us for some time, the kitchen business and the bath business here, both the businesses overall from a top line perspective grew overall. Today, when we see the Q2 in kitchens, we grew at about 14% and in bath we grew by 11%. At a half yearly level, we grew at about 35 and 51%, which is a strong growth at a half yearly level in terms of what we see overall. In terms of the bottom line, as we see, the kitchen business was slightly, I think, affected because the components business, which is a substantial part of the overall business of kitchen, I think did not do too well to that extent. The kitchen business is something which the full kitchen business is doing extremely well. There is a little bit of a loss which is showing with respect to the bottom line in terms of the kitchen business overall. I think we are confident that this is something which we should be able to take on when we look at Q3 and Q4 going forward. When we have overall the bath business, the bath business overall, in Q2, had a breakeven kind of overall delivery, but at a half yearly level there is again a profit of about INR 5 crore, which is kind of coming overall. I think relatively, if you see from the top line perspective, the businesses have done fairly well overall in terms of how we kind of look at. Coming on to the whole international business, this is just showing you the countries where we are represented across the globe to that extent which is there, along with the various brands which we have across these geographies when you look at it. When we look at the performance, the performance has been very, very strong as we see it overall to that extent. If you see, the performance, coming overall, when you see the, you know, the Q2 levels, we have grown by almost about 15.5%, which is there, and so as well as at the H1 level. The businesses have been strong as we look at from the overall perspective of overall growth, which has kind of come in. From the geographical point of view, I think all the geographies have done quite well when we look at obviously the geographies, at Africa kind of stand out to that extent. Overall, even Middle East has done quite well and Asia has done, well, despite the fact that some growths have been pulled off by the, Lanka condition, which is there, as you all are aware. Overall, the geographies have done well, even from a point of view of overall profitability. It's been a very strong performance where the PBT growths have been strong. We have got about INR 43.5 crores against a INR 16.7 crore loss last year to that extent. Even at the H1 level, the numbers are very, very strong in terms of a PBT of about INR 81.4 crore against a loss of INR 28 crores last year. I think the international business has done very well. Some of the areas like even Indonesia and all has kind of performed fairly well in terms of both volume and value growth in quarter two in terms of what has come about. Going forward, when we look at our industrial business, it is divided into 2 JVs, which is there. What you see is the range of work which we do for any object or any auto or any surface to that extent in terms of the range which we have. This is divided into two JVs, which we have, the PPG AP and the AP PPG, which are the two JVs with PPG of U.S. In both the JVs, I think there has been a spectacular performance in the quarter in terms of what we see. As you're able to kind of see that PPG AP, if from a quarter perspective, when we see they have grown at about 25%, at a half yearly level at about 40%. I think strong revenues kind of coming in there. Similarly, if you look at AP PPG, the growths there also have been fairly substantial with the overall, when we look at from the point of view of quarter two, we are growing at about 25% and from an H1 perspective, we have grown at about 39%. If you look at both businesses, comparatively doing fairly well in terms of this thing, and I must say that the AP PPG business has been doing this kind of a performance consistently for the last about 8 quarters now to that extent. Even from the point of view of today when we look at the PBTs overall, I think the growths are very good in terms of what we are looking at and substantial increase in terms of gross margins and overall profitability, which is kind of coming in the two businesses, which you can see from the graphs, which is in front of you. I think in all, again, a strong performance coming from the industrial business overall in terms of what we see. I think just to kind of explain, and I'm sure there are gonna be a lot of questions with respect to margins and what's really happening there to that extent. When you look at the trajectory, obviously, I think the margins have been doing a little bit of a sinusoidal kind of a thing, dependent on in terms of how we are seeing the inflation kind of going in the market. I must point out that necessarily the price increases have not kept in pace with all the inflation which has been happening on quarter-over-quarter. Even I think if you go back and look at Q3 FY21 21.45% margin is a little bit of a, you know, a little bit of an over delivery which is there. Normally, I think the range which we have seen is about 40% in terms of the overall margins at an average level to that extent. If you see, we are at about 35.6% in quarter two. Please remember, there was inflation of about 6% in quarter one, and the larger effects of that have been seen in quarter two because of the fact that we already carry a certain amount of inventory which is there. The actual effect of any of these inflations actually come in a subsequent quarter to some extent which is there. In addition, we had a material inflation of about another 2% which happened. Quarter one plus quarter two put together, there's almost like about 8% kind of inflation which is there against which we have taken an increase of relatively about 3%. There is clearly a 5% kind of a deficit which is kind of coming in to some extent here. Even if previously you were to calculate from the overall inflation which has happened, there we have not really taken all the price increases really matching the inflation. There has been a gap of about 3%-4% there as well from the last year inflation kind of numbers which is there. I think what we are trying to say is that today, what we feel is that, as a leader in the market, we don't feel justified that we should kind of pass on all these sinusoidal trends of the inflation immediately to the customer. We need to have a considered view. Therefore, I think the market also has to see it with a certain level of maturity in terms of how the margins are behaving, because today, traditionally, quarter two has been a quarter where basically you have seen a relatively inferior product mix as compared to the other quarters, as I said. It all depends in terms of how the Diwali dates are and some of the kind of sales kind of occur according to that. Therefore, the quarter-to-quarter sequentially is not really comparable to that extent. I'm talking of normal quarters as the basis here to that extent and not the COVID basis here to that extent. In effect, what you see is that from the quarter two of last year to now, actually there is a 0.6% margin improvement which is there, although sequentially from 37.9% it has come down to about 35.6%. I think going forward, what we are very clear is that, you know, we are already seeing a trend of a deflation happening, and we definitely see that going forward. You know, a 3%-4% margin correction would happen by virtue of the fact that there is a deflation which is coming and the fact that the inflation was not so very high in terms of the Q2. Obviously, as we see, I think the best effect of this will come in quarter four going forward to that extent as we look at it. I think, for us, as we see, I think the gross margin story is not a worry. We think this is a phenomenon in a time which is happening to that extent. As we go forward, possibly this is going to improve very strongly and the business is fairly steady and very clear in terms of what the premiums we are enjoying in the market. This is something which we very clearly feel has no impact in terms of going forward. When we look at the overall standalone financials, I think the story is very strong. If you look at the net sales going up by 20%, the gross margins going up by about 22%, the PBTID has gone up by about 28%. Therefore, the similar story on PBT and PAT in terms of the overall growth which we are seeing to that extent. Over and above, as I said, a double-digit volume growth which has kind of come in, which is definitely encouraging from point of view as we see the industry trends overall to that extent. When you look at H1, obviously the numbers are even far higher in terms of what you see as the overall delivery, which kind of augurs well for us very well, especially when you see the PAT numbers at about a 47% increase overall to that extent. From a point of view of PBTID margins, you know, what we see quarter comparable possibly in terms of when we look at to last year quarter. It has really improved from 14.4 to about 15.2. Similarly at the H1 level, there is an improvement. Similarly, when you look at PBT, okay, overall basically the growths are pretty strong in terms of what we are seeing. Obviously there is a one-off of other income which kind of comes into that calculation. As a standalone, the 23% growth is pretty good in terms of what we are seeing. When we come to consolidated, again, the story is very strong. In fact, the story from a bottom-line perspective is even stronger because of a very strong performance on the bottom line from the international business, which has kind of come in. If you see the top line is 20% here, and PAT is at about 33% growth at the quarter level. At the half year level, obviously, the numbers are very, very strong, with PAT growing at almost about 56%, which is really definitely one of the highest numbers in terms of the PAT growth, which we are seeing here to that extent. As I see it, I think the overall sales has been pretty robust to that extent, and I think, had the rains possibly stopped in September, it would have been definitely much, much higher to that extent. I think overall, still delivering a volume growth has been strong. What we are seeing is even in consolidated, the overall, you know, gross margins have really improved over the last year by about 1.3%, and that has led to a higher PBTID margins as well, up to about 1.7%. I think that's how the overall business is, and we are pretty happy about the fact that it is still a very strong performance in terms of the way it has kind of come about. When we look at the dividend, we have declared a dividend of about INR 4.4 per share. Just to kind of remind you, last year, the payout ratio was about 58.6%, and the dividend payout last year as an interim dividend one was INR 3.65. I think the overall, interim dividend also is going up to a good thing, which is a good signal to the shareholders. When we look at the immediate outlook, we think that today, while I think it has been raining in October as well, but I think there is, we are seeing some good demand, which is kind of coming, which is the festival demand. Actually what we do is that we don't rely too much in terms of just this demand because the actual season kicks in after that, to that extent. There is a strong wedding season which is coming in. The project business looks very good because a lot of construction is picking up. The real estate is kind of really picking up overall to that extent, despite the fact that the interest rates have kind of gone up to that extent. Good monsoons, by and large, some deficits in some states overall, but I think which kind of augurs very well for the rural demand, which is already good for us, and we think that is something which will kind of pick up. Obviously, I think the party spoiler here could be the geopolitical situation in terms of it kind of taking a very different turn to that extent. The other area is that, obviously, I think the rupee depreciation and the dollar strengthening is kind of really impacting, you know, some of the areas to that extent. We hope that that is something which should not be a party spoiler as we kind of go ahead. Nonetheless, we think that overall, from a demand point of view, I think it should be a good quarter ahead. This was the business point, and now I wanted to kind of just share some other things which we are kind of very strong and very happy about. First of all, for the core business. Now, we are really strengthening the core business in a very strong manner. We are now looking at acquiring a nanotechnology player, basically, Harind, which is a specialty chemicals company, and it has the next gen nanotechnology as its core. This is a technology which is something which is really kind of growing overall across the world. It has been there for some time, but the innovations are now happening from a next gen level in terms of the properties which you are able to kind of bring in to that extent. Therefore, for us, I think it becomes a very, very strong opportunity that with this acquisition, our R&D will really kind of spiral up in terms of able to offer some next gen products which can come in the market, which can be very, very helpful for the consumers and some real new innovation can come in. We are at the moment taking about a 51% stake in Harind at about INR 12.75 crore, and additional stake of 39% will be acquired over the next five years. Overall, we think this is a very, very strong move from the point of view of bolstering the overall technology at Asian Paints, and this will kind of give birth to a lot of innovation coming in emulsions and waterproofing and lots of other products to that extent, and this is something which we are very excited about. That's part one. Let's look at what else. We are also now looking at a very, very strong area of backward integration. Today, some of you would know that Asian Paints always has been making their own emulsions. An emulsion is a very strong binder into the overall formulation, which really holds the real formulation together in a very, very strong manner. Today, as part of an extension of that strategy, we decided to possibly really invest into a technology which is absolutely the futuristic new age technology of the world. This is a technology which is basically what we call as the Vinyl Acetate Ethylene emulsion, which is there to that extent. It is an environment-friendly emulsion, which is there to that extent. It has a very sweet smell, and basically it is something which gives special properties to the paint in a very strong manner. We are already using VAE in our products, but at the moment, we have been importing this entire thing from the world players. There are very few players in the world who have both the VAM, which is the Vinyl Acetate Monomer, which is a raw material which goes in terms of making the Vinyl Acetate Ethylene emulsion. I think we are putting a combined plant, which is the first. No one in India has this technology to that extent. Worldwide, there are only about three-four players who have this technology, which is there. We think that this would be really a game changer in the market in terms of what we look at it, in terms of what we are offering here. Here, the investment is substantial. We are putting almost about INR 2,100 crores over the next three-four years for setting up an installed capacity of 1.5 lakh tons per annum for the vinyl acetate ethylene emulsion, and 1 lakh tons for the vinyl acetate monomer, which is the key ingredient going into the vinyl acetate emulsion to that extent. We have done a strategic collaboration here with Kellogg Brown & Root LLC, which is a billion-dollar, multi-billion-dollar U.S.-based firm with the right kind of technology licenses and so on and so forth, which is there, which is going to help us put up this plant, which is going to come up to that extent. We think this is really getting into a very big area, which can give us a sustainable competitive advantage for future, and that is something which we are investing in. This is a technology of future, which will remain for the next 50 to 100 years as we kind of go forward. That's the second area which possibly we are announcing now. The third area is that now we are looking at another area of backward integration where we are getting into the manufacturing of white cement. This is a joint venture which we are doing in UAE, in Middle East to that extent. Now, white cement is a very, very key ingredient in the putty which we make. It is almost about 19%-20% of the putty, which is, you know, where the white cement goes to that extent, and that is something becomes very key this thing. The putty has been overall a strong initiative at Asian Paints, and we have been growing strongly in this over the years overall. We want to be clearly putting a lot of energy in terms of looking at getting the best product to the market and really looking at incorporating what are the kind of properties which we can do in terms of really looking at modifying the white cement which kind of comes in. What we are doing is we are putting up a JV with a 60% majority ownership by APL to put up almost about a 2.65 lakh metric ton per annum capacity of white cement and white cement clinker plant in Fujairah in UAE. This is something which we are doing with Riddhi Siddhi Group, which has a good access to the limestone mines and so on and so forth, which is a very key input for the white cement per se. I think overall, this gives us a very strong advantage into a growing business, which is there to that extent. Overall, what we also see is that today, the entire distribution points of paint industry, which is into hardware, building material and so on and so forth, they are also selling white cement as a very key ingredient for repairing, tile fixing, marble repair and so on, so forth to that extent. Therefore, it gives us an opportunity to even seed white cement into our network, which is basically buying all the paints from us to that extent. Therefore kind of really plugs in one gap, which we had never had overall to that extent. I think this is a strong backward integration measure in terms of what we are seeing as a key ingredient which goes into a putty. I think this will kind of really augur very well in terms of really supporting our overall growth as we kind of go forward. The investment here is about INR 550 crore in terms of what we are doing, including some of the clinker grinding units, which we will set in India very close to our putty making units overall, so that we have synergy there in terms of the overall cost being minimized as we kind of go ahead in this entire venture. I think this is another great kind of strategic investment in terms of what we are making, which can give us gains for years ahead as we kind of look at it. I think this was the overall plan in terms of the three big businesses we are putting, and you must be wondering in terms of what are we really planning overall. I would divide our overall investments into two parts. One is the overall expansion of the manufacturing footprint. Today, we operate at almost about a 75% kind of a capacity utilization overall to that extent. We are looking at increasing the entire manufacturing capacity by more than 30% to about 22.7 lakh KL per annum, which is for our own manufacturing capacity in terms of what is there other than the outside processing in terms of what we use. This is something which possibly is in line with our overall growth in terms of what we are seeing in the coming next three-four years overall, that we will require this kind of capacity to come in overall to that extent. Basically, we also look at it from the point of view of the backward integration that it will really help us. If you look at only the capacity enhancement part, we are looking at almost about an investment of INR 3,400 crores, which possibly includes the investment of the CapEx in terms of this year and going forward in the next three years. The backward integration, two things which I spoke of, which is the VAM, VAE and the white cement, which is there in terms of what we have spoken, is about another INR 2,550 crores. The acquisitions which we have already made earlier in terms of, White Teak, Weatherseal, and now Harind overall. This is about INR 800 crores. This is a total outlay of almost about INR 6,750 crores in terms of what we are committing for the next three years, which would be a big kind of really step in terms of Asian Paints, which is taking to really see that we are in line with our overall aggressive growth for the next three years. Plus the entire thing of a sustainable cost advantage, which really comes in from the backward integration. At the same time, furthering our overall core business and home decor business with some key acquisitions, which we are taking to that extent overall to that extent. I think that's the overall plan, and I think we are pretty excited in terms of taking this ahead as we look at it. Thank you so much for listening to it, and we are now open to questions. Good evening, everyone. Requesting all participants joined via Zoom video platform, please use the Raise Hand feature to ask a question to the panelists. Kindly unmute when given a chance to ask a question. Please mention your name and the company name before asking your questions. Kindly limit your questions to only two. Participants connecting via Zoom video platform can post their questions on the chat box too, and we will ask on your behalf. Participants joined through toll-free number, please press star one to ask questions to the panelists. Please mention your name and the company name before asking your question. Kindly limit your questions to only two. Our first caller is Mr. Abneesh Roy. He has joined us through teleconferencing. You are now live and can proceed with your question. Yeah. Thanks. I have two questions. This is Abneesh Roy from Nuvama. My first question is on the backward integration big projects. So first is, VAE and VAM, does it also mean in adhesives you will get aggressive? Because you are mentioning VAM is a raw material for VAE, so wanted that clarification. And when you say emulsion of future, what is the opportunity? What exactly is the future? Is it five years, seven years, that timeframe? And similarly, on white cement, why now? Is it because a cement player is going to enter paint? And what could be the margin improvement because of the white cement, CapEx? That's the first question. Okay. Great, Abneesh. Good hearing your voice here. Now, I think when we are talking of the VAM/VAE technology, which is kind of coming, yes, it would be helpful for us in the entire area of adhesives, rightly because the VAM kind of goes into the adhesives in a strong manner. It will give us strong impetus in two ways. One, in terms of improving the kind of quality of adhesives which we can give in. And second, from the point of view of margins, which would kind of come in strongly from that point of view. It, I think it makes us entire area far more competitive and you can expect some aggression there coming in from us. The second area which you asked, yes, it is a futuristic emulsion, and this emulsion, as I see it, holds promise you know, even for the next 40-50 years, as we see it. It's not a question of just a dip for the next 3 years or 5 years, because this is an emulsion which possibly we will have to get into expansion after some time, for sure, to that extent, given the kind of overall consumption it can happen and take it. What this emulsion does is that, one, it has very low VOC, which is the volatile organic compound which is there, as compared to any styrene acrylic emulsion which is there overall to that extent. It offers a very huge leap to companies who are on the bandwagon of environment-friendly paints in a big way, which anyway, I think, most of the organizations are something which are looking at in a strong manner. The second thing it does is it basically imparts some very good properties in the paint in terms of scrub resistance, in terms of stain resistance, and also from the point of view of, you know, some other areas which kind of coming, which enhances the overall durability of the product when we look at from the overall interior paints perspective point of view. I think, as a combination, it works very well. Not only this, as I said, it kind of really offers you a strong, kind of, advantage with respect to the overall margins in terms of what it will improve as we kind of go ahead. Second question on white cement, which you said. Now, obviously, I think, this white cement, we have been kind of looking for at some point or some time in terms of investing, because this is not because of any other entry which is happening into the paint market, but more from the point of view of a purist, backward integration initiative where we feel that if we have to really sustain our aggression in terms of going into the undercoat space. Because please remember that we are into powder products across, which are not only from a putty perspective, but also in terms of textures, in terms of tile adhesives and lot many other areas, where white cement becomes a key ingredient to that extent. Therefore, we have been exploring this for quite some time, and we think that this is a very good move we are making so that today it kind of offers us a huge advantage which kind of comes in. From an overall perspective, we can say that even in terms of some of our products, it can give us a boost in terms of at least about 5%-7% gross margins overall to that extent going forward. Sure. There was one follow-up on the white cement opportunity. Could you discuss that? How big will that be? Already we put it a bit, but when you are saying that you'll target the tile finishing, joining, et cetera, also and white cement. How big is that opportunity for you? Overall, when we look at the Indian market, that I think is about close to about 7-8 lakh tons kind of a market in India in terms of the whole repairing and other segment to that extent. It is growing at almost about 15%-20% overall. I think that is also a big opportunity, and 80% of that is sold by our network to that extent. It becomes a fairly big opportunity in terms of selling in retail packs and look at possibly taking that market, especially when we are also into bath tiles and sanitary. Sure. My last question is on H2 growth. Three things there. In Q1 you had mentioned downtrading in economy end. In Q2, you are mentioning in luxury also there is some level of downtrading. In H2 you had very high pricing growth starting in Q3 itself last year. Of course this time the festive. If I put all this together, would you say that in H2 the pricing growth and volume growth, say, double digits as of now is looking very tough? No, I don't think so because, see, I think it's a function, Abneesh, of, how the overall product mix kind of augurs. To that extent, when you look at, this quarter, as I said, largely, you know, there is a little bit of an inferior product mix in terms of what we have got. As we get into Q3 and Q4, traditionally the product mix is quite, good overall in terms of what we would kind of see. We also saw that, the retail kind of demand got affected because of the, monsoons which were there, and also the exterior kind of, season got affected in a very, very big way. I don't think so that should be the case. We are still looking at possibly going forward. I think the volume growth should be healthy and so would be the value growth, coming in the listing. Because please remember, we have also taken some price increases now, which will start kind of giving us some effect as we kind of go ahead. Amit, just one last follow-up and I'll end there. Last year in Q2 and this year in Q2, your margin has been a negative surprise. You also mentioned the mix deteriorates in Q2. Is it because exterior paints is a higher margin business? Because that is the only seasonality I see in terms of demand. No. See, what happens is that largely, if you look at quarter two, September is a strong kind of this thing for all the products, whether it is wood finishes, whether it is emulsions, whether it is kind of waterproofing products also to that extent. Whereas July and August are largely stocking months, which really happened to that extent. I think to some extent possibly that has kind of toll with respect to it. The gross margins over the last year quarter have actually gone up from 35%-about 35.6% this year in quarter two. That's all from my side. Thanks a lot. Thank you, sir. Our next caller is Mr. Avi Mehta joining through Zoom video platform. Hi, sir. Am I audible? Yes, you are. Thanks, sir, for the opportunity. First, I just wanted to kind of understand from the integration in the back end that you've kind of contemplated. Could you share what has triggered this expansion, given typically raw material availability has not been an issue? I mean, does this not kind of weigh on return profiles? Because typically, you know, backward integration has meant return profiles taking a hit. Would love to hear your comments on these two aspects. Thank you. Actually, I think Asian Paints has been into a backward integration earlier as well. As you know, a lot of emulsions we are making ourselves for quite some time, whereas a lot of companies do purchase all the emulsions from outside. To my mind, you know, the emulsion making has given us a very big boost with respect to our overall margins and profitability to that extent. I think for us, the backward integration has kind of augured quite well with respect to the overall increase in margins and overall kind of really flexibility in terms of procurement to that extent. The other thing which I see is that these investments are fairly unique and these are not generalistic to that extent. The VAM-VAE is really kind of a protected technology worldwide in terms of what is there, and it is the technology of future. To that extent, which we feel that, this is a backward integration which really helps us from the point of view of, not only increasing our margins substantially, but also from the point of view of, imparting some new customer-facing properties, which can give our products a new kind of turn in the market from the point of view of how consumers see it, and how they see the performance of the products coming in. Similarly, the white cement one is pretty strategic because of the fact that today what we see is that if there is a raw material which is kind of contributing to a significant contribution in the formulation, and today we have a control in that thing, we can really vary various properties at the manufacturing stage, which helps us possibly giving qualities in the finished product. At the same time, I think the margin gains kind of really change because in some of these products, these powder products are fairly low-end products to that extent. Any kind of improvement in margins can be really very benefiting for you. I think it's fairly strategic, and we think, I think, that cost and really the differentiation in the market are two very big kind of pillars in terms of what we are riding as far as the backward integration is concerned. Okay, sir. Okay, I hear you. The second bit is just a clarification. Would it be fair understanding that our margins are going to move to around 39.5%-40.5% by Q4, is what you indicated. What I wanted to understand, you know, because you highlighted degradation in the painting demand. Does that not kind of be a risk? Do you see that as a risk or are you fairly confident about still reaching that target, in the Q3, in the second or Q3? No, I don't see any risk because if you've seen that, you know, we were at 35% last year in quarter two and then we kind of came to about 39% overall as far as quarter one is concerned. I don't see anything. I think this is just a quarterly phenomenon which has happened more from the point of view of the inflation which we are kind of seeing in the market and little bit cyclical to that extent. We're very confident in terms of looking at saying that the band possibly going forward would still remain at, you know, 39%-40% in terms of the overall gross margins as we kind of go ahead. I think it is just a phenomenon of the quarter in terms of what we are seeing. Going forward, I don't see any areas, I think, where possibly the margins would kind of stay at this level. Second, I think the downtrading and so on and so forth is possibly just incidental which happens because you must remember that today, you know, some of the price increases, which we have taken have an immediate impact. Over a period of time they normalize to that extent because this is a consumption market and this is not a market where people have too many alternatives or they could defer their overall demand, indefinitely to that extent. Even in COVID we have seen that people, whenever normalcy has come in they have kind of really gone and splurged in terms of doing up their homes to that extent. I see no reason in terms of why possibly it will not jump back. Got it, sir. Thank you very much and wish you luck. Thanks a lot, sir. Thank you. Joining us on Zoom video platform. We request you, sir, to please mention your name and your company name and proceed with your question. Thank you. Yeah. Good evening. This is Shirish Pardeshi from Centrum. Amit, congratulations for showing that kind of aggression in the market at this time. Two things. One is that on the Riddhi Siddhi joint venture, what are the timelines? Do you think, I mean do you mean that you will bring the limestone to India and probably towards near the port? The related question on that, what is the reserve and what are the rights Riddhi Siddhi has for the mines? Okay. First of all, see the limestone reserves are in Fujairah as I said, and Riddhi Siddhi actually has the rights for, you know, a very long time, I think over 50 years to 100 years as we see it in terms of the overall limestone market which is there. I think that is not a concern. We are putting up a clinker manufacturing unit right in Fujairah. That is something which is what we are planning. This would kind of come up in the next about 24 months in terms of what we see in terms of this thing. We are taking so that kind of come into that extent and which could align with our putty locations overall to that extent. I think the whole area is where we are able to conserve cost the maximum. At the same time what we are able to do with the formulations so that we get advantage in our product. Okay. That's helpful. Second question on the capacity expansion which you have mentioned. How soon, how quickly, which are the locations you have finalized or if not finalized, this is primarily going to be on decorative emulsions or the capacity expansion is going to be related to something else also? Yeah. The overall capacity expansion is with respect to our decorative because that is the key category which has been growing at a very, very strong pitch. What I showed you with respect to the overall volume growth quarter on quarter to that extent and largely with respect to our entire initiative on water-based products to that extent. We are looking at certain brownfield projects as well overall to that extent. Our entire Ankleshwar plant is something which we are revamping and really kind of doing and putting some solvent-based additional capacities which are going to come in there to that extent. As you kind of go ahead, we have the second phase of our certain investments coming in some of our plants going forward. I think these are all coming from the point that we are sitting at a certain capacity utilization and these will all come in the next, as I said about three years in terms of what we want to kind of put which takes our capacity to a certain level, as was pointed. My last question on the demand side, I think, the raw material prices are falling down. Is that the growth which is tapered or the inventory by the trade has lowered? Obviously the rains has little prolonged but generally the sense which I'm getting, that even trade is also expecting a very sharp drop in the prices. Is that the fear or is that you have already implemented or communicated to the trade? See, I, you know I am a firm believer that the, you know you can't really play with the prices, as if you're playing on a stock exchange, okay. This is something which is really a strong imperative that as a leader you need to have responsibility that you can't be erratic in your behavior in terms of just increasing and decreasing the prices at your whims and fancy in terms of the way it kind of comes in. I think we have a larger onus towards the consumers in terms of seeing how demand augurs to that extent. I don't think so we are getting immediately in terms of looking at any decrease in prices despite the fact that there would be a raw material decrease which would kind of happen. We would love to kind of really let things stabilize over a period of time and then take a concerted call in terms of what is there. Because we are all in favor in terms of seeing that to us the consumer demand is sacrosanct and we would like to continue to kind of really see that we are growing handsomely in the market and overall gaining share. Okay. Thank you, Amit. I could see the bandage on your hand, so please take care. Thank you. Thank you, sir. Our next caller is Mr. Percy joining us through Zoom video platform. Request you to unmute yourself and proceed with your question. Hi sir, am I audible? Yes, you are. Two questions from me. One is, what is the total price increase that has been taken between 31st March of this year versus what it is now? That is the first one. Second one is, your difference between the derived pricing, that is the volume you give versus the sales, and the announced price increases if we add up on a YOY basis, the difference is quite high this quarter, maybe about 13, 14 percentage points. The derived is, 10%, which is 20 minus 10. The announced price increases are close to about 24%. Where do you see this stabilizing? See, we have always had some amount of difference between the derived and announced price increases. This quarter it is definitely on the higher side. Would you say that into the future, say into FY 2024 or something, we would still have something close to a 10% difference in the derived versus the announced pricing? Sorry, yeah, those are my two questions. No, I don't think it is that simplistic the way you are kind of putting it. But first of all, I must tell you that, between 31st March and now, we have taken about approximately a 3% price hike over a total inflation of about close to about 8% in terms of what has happened in quarter one and quarter two, to that extent. That's in terms of the price increase numbers in terms of what you were asking. The other is from the point of view of this derived number in terms of the volume and the derived value growth in terms of what you are kind of speaking of. See, this is a larger function of too many factors which kind of come into play. One is the whole area of the product mix in terms of how the product mix is auguring out and how which products are doing, because the margins on various product categories are very, very different in terms of what it kind of really looks at. The price increases we have taken are also not uniform across the products. The price increases vary from product category to category. In some categories, the price increases have been far higher, in some categories, the price increases have been strategically kept low overall to that extent, so that we don't kind of really upset the elasticity of pricing at the consumer level to that extent. I think going forward, some of this difference will kind of continue. It is very difficult to really kind of put a number saying will it be stabilized at 10%, will it stabilize at 8% or 12%. I think some variability will look, I think it is best to kind of really look at this thing stabilizing and seeing that in terms of where do we settle in terms of this kind of a derived growth in terms of what you're talking of. The reason I ask is, even if we assume that volume growth going into FY 2024 will remain robust, say at around 15%, but FY 2024 we will have very little price increases, assuming that the materials stay at the current level. If this implied pricing differential is to the extent of 10%, then we will dip into a single digit value growth in FY 2024. Is that calculation correct? If not, where am I going wrong in that? No, it's not correct because, you know, what can happen is that when the volume growth goes up, what I was explaining to you, if it goes on a certain category of products where the possibly the increases which we have taken are fairly high to that extent, okay, it would kind of really increase the value growth to that extent in terms of overall to that extent. Now, if it kind of really doesn't kind of get onto those product categories and the growth is coming from some of the other growth product categories, then the differential would kind of get maintained overall to that extent. I would say that, possibly going ahead, you know, our aim would be that, possibly we are able to focus on the right set of products overall, which kind of gives that kind of a value growth and overall gross margins and profitability to that extent. As I said, I think, the correct way to possibly kind of look at is that you can't put an algorithm or a trend onto it, that it will remain like this. It kind of really would kind of augur from the point of view of, how the product mix, kind of, shapes up. Second, please remember that the 3% increase in terms of what is there, which will also have some implications going forward to that extent, although nominal and not to the tune of what possibly it was last year. Right. Very helpful. Thanks and all the best. Thank you, sir. We request everyone to kindly limit your questions to only two. Our next caller is Mr. Jay Doshi joining us via Zoom video platform. Yeah. Hi. Good afternoon and thanks for the opportunity. I want to understand this INR 2,100 crore investment for backward integration of VAE a little better. You know, if I do some ballpark math, your overall RM cost, COGS is about INR 19,000-20,000 crore. So I'm assuming your emulsion purchase will not be more than INR 7,000-8,000 crore today. Is that right to understand it? No, as I said, we don't kind of really purchase too much of emulsion- Sorry. Mm-hmm. To that extent. We are making a lot of our emulsion inside, but as I said that, there is a clear pricing difference in which comes in from the point of view of, what we are using and what this possible technology will kind of offer to that extent. Currently, we might be purchasing some quantity of this emulsion from outside, which we are trying to make. Overall, when it kind of replaces the existing emulsions in terms of what we are using, it will also give us a lot of benefit. You talked about 500-700 basis points gross margin advantage for Asian Paints because of this white cement backward integration. What is the magnitude of gross margin improvement that this CapEx can drive for your rest of the decorative paints portfolio or emulsions portfolio? Overall, what we see is, in terms of the advantages would be much higher as we look at from the point of view of, the VAM-VAE coming in terms of what it kind of really, pegs us at from the point of view of overall margins. What we also have to remember is that we will also kind of see that, whether as we kind of use this, emulsion, going forward, whether we would like to kind of absorb those margins, or we would like to also pass some of them in strategic pricing overall in terms of as we go forward to that extent. I think the margins here could be even higher. Final one. How does this 1.5 lakh capacity compare versus decorative paints? You're targeting 22.5-27 lakh tons of decorative paints capacity. Will this be... Sorry, we lost you in between. Will this be- How does this 1.5 lakh ton capacity of backward integration compare versus your overall decorative paints capacity of 22.5 lakh, 7 lakh tons that you are targeting? Okay. I think what it does is that it kind of bolsters our overall water-based emulsions real capacity till about, I think, 2027 or so to that extent. After that, we might have to go for a further expansion given the fact that the way we are kind of growing and projecting. It would kind of definitely give us an advantage till about 2027, 2028, but we will then have to kind of get into expansion plans over this 1.5 lakh KL capacity which we are talking of. Thank you so much. That's it from my side. Thanks a lot. Thank you, sir. Our next caller is Mr. Varun Singh joining us through teleconferencing. I request you to please mention your name and your company name and proceed with your query. Thank you. Yeah, thank you very much. My question is on the new endeavors. In the decorative segment, sir, if you can mention some ballpark number with regards to how much margin accretive we expect these backward integrations to be at the overall company level, sir. Sorry, I couldn't understand your question. Are you saying that because of VAM VAE in terms of this thing? If you're hearing, the previous caller was asking exactly that. Yes, sir. I mean, white cement, VAE, VAM. Combine both. Any ballpark numbers that we should expect with regards to overall operating margin improvement for the company? No, as I said that overall, basically, I think individually both will affect the gross margins in terms of the product categories differently. Therefore, we will have to see from the point of their overall contributions in terms of the business as we kind of go forward what they're doing. Overall, as I said, in both the categories, I think the gross margin improvement easily to about 4%-5% will happen. Okay, sir. My second question is on waterproofing business. Where do we stand as of now? If you can give some objective understanding about the overall business. Waterproofing. Waterproofing you're asking? Yeah. What we think, we have been in the business of waterproofing for the last about eight years now. Overall, the business has been growing substantially overall and is now a significant contributor in terms of our overall business going forward. Both at retail level as well as from the point of view of projects, we have been doing extremely well. We think that as we look at from the retail market, we are easily one of the leading players in the market in terms of what we are. Our brand SmartCare has done extremely well. We have a slew of really differentiated products which we have offered in the market, which are performing very well overall in the market. Even from a projects point of view, we have kind of got into the whole backward integration of looking at making bituminous emulsions and HDPE bituminous membranes and HDPE membranes which are there, and specialized range with respect to the repair and construction chemicals. Today, I think our range is more than 200 odd products which we have, which come in the whole area of waterproofing. We think that today our positioning of being an expert solution provider is very, very strong. This is a business we think will continue to kind of do well for us. Okay, sir. Thank you very much. I'm good. Thank you, sir. Thank you all for joining. I now request Mr. Amit Syngle to give the closing remarks. Okay. I think it was extremely good in terms of taking at least some of the questions from you, and I think hopefully we have been able to answer some of your queries which have come in to that extent. We look forward in terms of your interest with the brand kind of going up again and again, and I can promise you that today, I think the whole area of excellence in terms of taking the brand ahead is something which we kind of really pursue very, very strongly. Wishing you a very happy Diwali and a strong festival ahead. Thank you so much.