Hello, good evening, everyone. Welcome to Asian Paints Q1 FY 2027 investor call. I'm Lak Sharma from investor relations team. It's my pleasure to welcome you all. We are joined by senior members of our management team, including our MD and CEO, Mr. Amit Syngle. Our CFO and Company Secretary, Mr. R.J. Jeyamurugan. Our AVP Finance, Mr. Parag Rane. I would now like to invite our MD and CEO to share with us his opening remarks. Over to you, sir. Thank you. Hello, everyone. Welcome to the investor conference for the Q1 of FY 2027. Great to have all of you here. It gives me pleasure in terms of really looking at what we need to share with you. All of you are aware that since 1942, we have been looking at existing to beautify, transform, and preserve all the spaces and objects, bringing happiness to the world. That is something which is the core value in terms of what we have professed for a while, in terms of what we have been taking. In all our actions, this is something which is visible in terms of what we do in the market. As a standard disclaimer for all of you in terms of whatever we are going to speak about. I think if you look at from a point of view of what we have started this year is clearly looking at taking a very strong journey ahead, talking of six big areas in terms of what we want to really propel the organization forward. I've spoken earlier in terms of saying that today, I think Asian Paints prides itself in terms of really looking at making a brand in the commodity market. We really look at continuing to really add credence and saliency to this brand as we go forward. That is something which is going to be a big and a massive effort, which we will continue to make as we go ahead. The area of innovation, I think is something which is very important. That is something which possibly is the area of differentiation which we are looking at as we keep on going ahead. Really be ahead of the curve in terms of looking at newer prepositions, newer areas for the customers we can bring in. Along with it, we are really taking the whole area of premiumization, which means that we want to upgrade the consumers to a better product, where again, there is value which comes in from a point of view of what customer seeks from us to that extent. The third area is pressing the whole accelerator in terms of the areas of servicing regime. Services is something which we have been appropriating. It's a big differentiator, which we think we have been able to carve out and services, which talk of a certain stature and not basically just existing in terms of, from a point of view of really serving the customer. The fourth area has been about the whole area of regionalization. We think today as India emerges, that's a very big story, which is there, where you can't take India as one whole, but start looking at what is it that we can give to various regions, which is slightly different and married to the culture, the whole area of how people live, and to the homes of that region in terms of how it comes about. The B2B area is a big space given the urbanization, and the industrialization which is taking place, and the huge amount of expenditure which is coming from the government, and that continues to be a very big bet for us in terms of what we are doing. Finally, I think at our scale, we think that backward integration is a big piece in terms of what we need to invoke, which will possibly give us a treasure chest to keep on investing in the market and really looking at profitable growth as we go forward. Coming to some of these issues, just to give you a glimpse. This is not very exhaustive, but I think it just gives you a glimpse in terms of what we have been doing. For example, we have introduced this entire product called the Anti-Damp Technology in our Tractor and Ace Emulsions. This is the first time in the world someone has introduced this kind of a technology at this price point. We think that is something which is very strong because this is a genuine concern which the customer speaks about of saying, and this principally speaks of no watermarks, both for interior and exterior. That is something which we have launched with a lot of good response from the market, which has come in. The second area is that Asian Paints always has been appropriating color in a very strong manner. Therefore, we have taken this whole area of looking at that color is not only for protection, it is for beautifying, but color is so much long-lasting that it becomes your real address of the house. That is something which we have really taken a very big area in terms of what we are working on. Coupled with this, not only it is the delivery of the right color, it is the delivery of a color which is long-lasting and anti-fading, and at the same time, offering people a visualization of their homes in terms of colors, which they will really remember in terms of what they can do for beautifying their home spaces. I think a lot of work around this, and this is the first time we have extended the warranty platform to color warranty as we look at it. The third big innovation which has been done is that we have brought in all this area of waterproofing and coupled it with also the very big need of the customer in terms of saying that it also cools the interiors from where it is coming from. We are talking of not only a protection which is against water, but it is also a protection against the heat and therefore, it kind of creates a difference between the outside temperature and the inside temperature, which not only saves energy, but also kind of gives you a lot of relief in terms of the way the Indian homes are structured. That possibly this becomes a very big proposition in terms of what we offer, along with a 10-year warranty, which kind of comes in. Kind of taking the battle to the luxury area, we have launched this top-end product, which is basically from an Italian collaboration of ours, which we work with, and this is a top-end product, which is what we call as the WoodTech Emporio, which talks of giving you a very strong area of not only gloss, but it also talks of a warranty, it talks of best-in-class film clarity and lot many other things which come in. Again, a first one in the world in terms of invoking some of these innovations which come to play. As I spoke of the regionalization, this has been one imperative where we are taking the packs in such a manner that they become really loved by the customers in terms of what they see. Today, when you kind of walk into an Asian Paints shop, you will find that the packs are adorning the whole area and kind of attracting the customers to the culture which they know, the culture they are familiar. For example, in Rajasthan, we celebrate the whole area in terms of core elements of the Rajasthani culture, which kind of adorn the packs, and they can use the QR code to kind of really get into more to kind of really enjoy the area which they kind of stay in. Similarly, we've done something in Andhra, Telangana this year. Most importantly, first time in wood finishes, we are invoking something very distinct, which comes in from the craft of Chittoor Andhra Pradesh, which we are trying to build on the packaging. We feel that this is a big area which kind of improves the involvement of the customer with the category. We see now so many homes who kind of take this pack and really put the pack after emptying it in their living rooms. They are able to put a plant inside it. They are able to do so many things outside, so it becomes the pride of holding in terms of what really comes out. The services, I think we have been proliferating this very strongly. We have the world's largest home painting service, which we call the Beautiful Homes Painting Service. On time completion, the whole area of color guidance, the whole area in terms of looking at supervision. The fact that we look at a lot of mechanization which comes in. We are talking of a very high customer delight level which comes in, which is measured through an NPS exercise in terms of what we do. This is something which is going on very well now, spreading across towns, across the country. Therefore, this is something which possibly is a great area in terms of what we have kind of really embarked upon. The second area is Total Assure. This is a service which we kind of really offer in the B2B business, which is there. We offer it to the builders and CHS societies, where we are able to kind of give them this service, which gives them assurance that throughout the painting, they will kind of get a very strong experience regarding the paint completion or in terms of looking at the quality which is delivered and in terms of possibly the kind of products which kind of come in through the service. To that extent, this is another big area which we have kind of really transitioned on. The third area is SmartAssure, which is all about taking the expertise of Asian Paints in waterproofing and really assuring the customer that any kind of problem in terms of leakage is what we can really handle, and that's a very strong SmartAssure solution in terms of what we kind of really offer. Finally, we have something which is called the Metacare, which is the asset protection system. Today, you'll be happy to know that we offer this in B2B. Today there are so many premium factories which are kind of taking this service from us today, which is an anti-corrosion kind of a system in terms of what we offer. We take almost the warranty for the full factory in terms of what we maintain. Today, best of the names are kind of coming to us in terms of saying that today Asian Paints can look at providing this service to various factories and various institutions in terms of going forward. As you see, we are kind of extending this service interface because we truly believe that one of the big areas how the brand can be propelled forward is the service benchmark. That is something which we are really kind of moving so that the true area of customer centricity can be invoked in a very strong manner. The other area which we are kind of galloping is the whole area of B2B. I've been speaking about this over the last one and a half, two years. To that extent, we feel that that's a very big growth vehicle in terms of looking at capitalizing on the infrastructure growth which is happening. Various segments here, whether it is factories, whether it is hospitality, whether it is the government, all are very strong segments which are driving the whole B2B business, which earlier used to be largely builders and CHS only to that extent. Now I think it has evolved into a very big game, and that is something you find that whether it is airports, whether it is ports, whether it is bullet trains, we are all over the place in terms of what we are able to kind of offer from a point of view of various products and services which are there. In this, we also have something called the AP Juggernaut, where we kind of look at offering a lot many areas as one customer to basically whether it is deco or industrial needs of one key account. We have a huge number of more than 100 key accounts in terms of what we kind of look at as part of a juggernaut, where it is one AP getting all the kind of services of Asian Paints under one umbrella to the key account in terms of what we see. I think that's the last space in terms of what we look at from a point of view of looking. I spoke about the backward integration. We've already completed our white cement plant, which is now fully operational and working on very good capacities overall in terms of Fujairah, Dubai. The second state-of-the-art thing which is coming is what we talk of the VAM-VAE manufacturing ecosystem. This is the first time in India someone has invoked this technology. Worldwide, there are four or five players who really operate in this space. We are operating in this space by making some things which is very different, which is very core to our business in terms of what we want to do. This is a new gen emulsion. The first phase of this activity we are kicking off now by the August month, we feel that this is a very big area in terms of what we will get into. You can just see from the glimpse that basically this is a big investment which we have made with a lot of sophistication, where today you can control the entire plant through only one room in terms of what can be done, and it's really state of the art in terms of what we have put in. Overall, coming to the story in terms of how Q1 has been for us, I think it's been overall a good month in terms of what we see taking on from quarter four, which we were definitely doing quite well. Overall, we are at about a strong 9% volume growth in terms of what we have seen, the growth has been almost across the months in terms of what we have been able to garner in this entire quarter. I think it's been a strong volume growth. If you look at from the point of view of value, the decorative value has grown at a very good pitch of about 16.6%, albeit on a lower base. Overall, I think it has grown at a very good pitch overall, to some extent aided by some of the price increases as well in terms of what is there, possibly a weighted price increase of about 6.8% or so in terms of what is captured in it to that extent. I think overall it's been a strong month where we have looked at improving the product mix, looking at the whole area of premiumization very well in terms of what we have spoken of. If we take the industrial, that has also gone at the same pitch possibly, and both auto and general industrial has done well. If you take that, 16.5% growth, including industrial as well to that extent. I think both the businesses have done very well in terms of looking at where we are. Some highlights in terms of the performance. Overall, as I said, good volume growth, which we are seeing in terms of looking at it. We have seen that possibly some of the growths from the rural markets have been much better than as compared to the urban markets, which is what we have seen to that extent. This was a trend which we saw in quarter four as well, and the trend continues to strengthen in terms of looking at in terms of going. However, the B2B markets continue to be governed by good growth in urban to that extent. When we look at premiumization, we have been able to galvanize a lot of products from a point of view of upgrading the customer to a higher level, and premiumization has been the route, not only in terms of looking at premium, but also looking at luxury. I think that is something which has been a good focus, which has been delivered through a 360-degree action we have taken around whether it is in terms of product, whether it is in terms of marketing activities, but this has been a big focus in terms of what we have taken. The B2B business has been very strong. Again, I think it has sustained the momentum and all segments are performing well for us in terms of how we have driven this segment. There is obviously, I think, a strong foray continues that we continue to open newer counters, newer selling points which are there, and that possibly is something which is the credence of our overall distribution reach and network depth, which we'll keep on invoking as we continue to go ahead. If you look at overall, the innovation approach has really given us very strong point. New products basically from a portfolio contribute to 17% of our overall revenues. I think that's a pretty high number in terms of contribution, in terms of what we get. As I said, what will give it more credence is that when we have our VAE production as phase I starting now, which will strengthen the propositions even more in terms of the coming times as we see it. As far as decor is concerned, today we are the number one integrated home decor player. This is something which we have been working on for some time, and if you look at it, we have about 74 beautiful home stores which are under one roof. You can get all the decor items, lots of collaborations here, which is there. Overall, yes, I think we face a lot of competition here from the unorganized sector which is there. Our area has been more in terms of catering to customization in terms of what we believe is required. Overall, a mixed bag this quarter, again. Overall, we have seen that kitchen and Weatherseal revenues have been strong in terms of double digits. Whitewash and bath have been on a lower side to that extent. Therefore, even in terms of the bottom line, I think there is some tension which is still continuing to really exist. I think we are at it, and we are still believing that we want to really look at possibly furthering it because it adds to the whole area of home in a very big way, in which we want to really hold the sway as we go forward. Coming to industrial business, as I said, the two businesses which we have, PPG AP, which is the automotive OE business, which is there. The top line has been about 13% growth in terms of what we have achieved. We have got a strong PBT growth of about 5%, which is there. The PBT margins have been a little bit stressed here, about 15.7%, lower by 119 basis points. Overall, I think, the business continues to do well, especially the auto, marine, and the packaging business continues to be kind of good in terms of what we have been able to do here. When it comes to the general industrial business, I think there the growths have been fairly strong. 21% is the overall growth in terms of what we have been able to do. We have not been able to take so many price increases in the market. It has been also very competitive, therefore, the PBT margins are about 6.9% for the quarter. A little bit lower than what we had basically achieved, overall compared on year-over-year basis to that extent. There is still about a 4% growth in terms of PBT in terms of what we have got. Globally, I think these are the geographies where we are present all across the world, this is the geographies which possibly we have kind of enhanced our work. All of you are aware that given the overall conditions in terms of what are existing, I think all geographies in Middle East have been a little bit stretched. Both from a point of view of inflation and from the point of view of the overall demand. Overall, I think we have been able to do a strong job in terms of what we have been doing. We have made the innovation story very big in these markets. We launched a top-end luxury product called Royale Stellar, and this product has been launched at various markets, including UAE, Bahrain, and Oman. We've also launched a product called Acrycoat Novi in Egypt, which is there, which is again an ultra-premium product, which kind of comes with lots many properties. We are also launching our Nilaya brand today in UAE, Bahrain, and Oman because that market is a luxury market for us, and really want to kind of take on competition in terms of making our mark in the luxury markets. We have extended some of our areas in terms of our strengths in the Indian market, in terms of whether it is waterproofing, whether it is premium products, or whether it is in terms of some of the luxury products in terms of the emulsions as well. That is something which we have launched in Nepal. I think we continue to kind of leverage our overall innovation in terms of the Indian markets and kind of trying to really make the global markets go and take a premiumization space there. I think, this has yielded results. We have grown at about almost 27% in quarter one here, and this has been a very strong performance, and the performance by and large is across regions in terms of what you see. Okay. Overall, obviously, a lot of units have done well in terms of Egypt, UAE, Nepal, Bangladesh. All of them have done quite well overall to that extent in terms of where we are. The PBT growths are also very strong. Overall, the growths have almost doubled in terms of the overall global environment. If you look at various countries, every country across basically, except for Africa, where we had basically Ethiopia, there were some problems in terms of overall currency and devaluation and so on and so forth. I think overall, otherwise we have done fairly well in terms of across various regions across to that extent. That's something which is a good story, which comes in with a PBT margin of about 7.9%, which is higher by 275 BPS points. If you look at from a standalone perspective, the overall gross margin trend has been also fairly strong. A little bit of pressure on gross margin. We were at about 43.8% from overall 45.6% in the last quarter to that extent. We are still possibly higher than if you look at from the point of view of the preceding year-on-year quarter in Q1 of FY 2026. Obviously, I think the pressure came in from a huge amount of inflation. While we have taken price increases in the month of April, May, June, the overall weighted average price increase is possibly around 7% to that extent in terms of what is there. The material inflation was still very high to that extent of about 25%. That is something which possibly is an area which we will have to look at from a point of view of going forward, that how does it really impact us in terms of going ahead. In summary, if you look at the standalone financials, overall top line growth of about 17%, which is there. You see the PBDIT growth, the PBT growth, and the PAT growths all above 30% in terms of what comes in. Again, very strong PBDIT margin of 22%. Okay. Looking at the overall growth which have come in, I think the bottom line has also been very strong and healthy in terms of what we have been able to deliver. Consol almost follows the same route in terms of what is there. In fact, it gets bettered to about an 18% top line in terms of what we see. Overall, again, PBDIT, PBT, and PAT margins are higher than the standalone numbers in terms of what we are able to see, given good growth across businesses in terms of what we have been able to garner. PBDIT margins stand at about 20.6%, almost 240 basis points higher in terms of what we have seen to that extent. Overall, I think it's been a strong position in terms of what we have been able to drive the consolidated financials also. Obviously, something which you are eager of in terms of what really happens, what is auguring ahead in terms of what we look at. I think our top worry is the whole area of the renewed conflict, the volatility in raw material prices kind of continues, and it really puts a lot of pressure on the supply chain logistics, which are coming in, both from a point of view of freight availability and the fluctuation of prices which are happening across to that extent, given the fact that the paint industry is largely dependent in terms of crude and crude derivatives to that extent. That continues to really worry us in terms of looking at how we really look at possibly fighting this whole area of the volatility in terms of going ahead. That's something which possibly we are really handling it as we handled in quarter one. When we look at overall, I think our priority is very clear that can we maintain the growth momentum, which we have seen today in the last few quarters, which we have been able to really look at. The competitive intensity seems to be all-time high. I don't think so there is any leeway, which we think in terms of which is there. Our whole attempt is that the whole area of consumer connect, the emotional marketing, and the technological disruption and innovation. What we look at is the key points in terms of what we profess as we go forward. When we look at quarter two, the whole area of agility is very important. We look at possibly speed and discipline coming so that we can sustain this growth momentum in terms of what we are taking, and we can be one above in terms of looking at how we propel these growths going forward. We are looking at the brand-building part, as I spoke of, looking at deepening the consumer relevance, looking at sharpening the differentiation story, and strengthen our market salience going forward. I think cost is a very big area. We have launched a real strong initiative around cost, and which we benefited in quarter one as well. Whether it is in terms of sourcing, formulation efficiencies, this is going to be a big thing. Today, I think we will kick off our VA also in quarter two. I think all those will give us some benefits in terms of looking at what we are able to do to keep the cost under check, and giving us possibly a good area in terms of saying how we can deal with the inflation, which is going on. Thank you so much for hearing what I had to say. Thank you, sir. We will now open the call for question and answer session. We will wait a few minutes for the queue to form. We request participants to limit themselves to two questions each, and return to the queue if they have any additional queries. To ask a question, please raise your hand using the participant tab on the screen. The first question is from Mr. Abneesh Roy from Nuvama. I request Mr. Roy to kindly unmute, and please ask your question. Sure. Thanks. Am I audible? Yes, you are. My first question is on the innovation. 17% of the revenue is coming from innovation. That seems very high. How do you define innovation? What time period of launch you're considering here? Will this be largely in construction chemical and waterproofing? Versus your overall gross margin, say, of around 43% and EBITDA margin, say, of 20%, where will these innovations be currently? I guess gross margins will be ahead of this, but if you could tell us in terms of EBITDA margin, where would these innovations be at current juncture? Overall, our definition is that we look at products which have been launched, and it takes time to really launch them nationally. Something which is in a three-year timeframe is what we look at in terms of defining our new products, which is there. A lot of these new products are not only in the waterproofing construction chemical zone. A lot of them are in the emulsion zone, as I spoke of in terms of what comes in. It would also include absolutely new customer prepositions in terms of what we are launching. Also in the premium and the luxury segment, which is there. Given the fact that a lot of them are coming across various categories, especially in premium luxury, they possibly, I think, corroborate our overall margins in terms of what we look at in terms of getting. Therefore, they would be a propellant in terms of keeping our margins overall healthy in that space in terms of how we look at. Sure. I had one question on the demand side. You have done quite well on the profitability. Congrats for that. On the demand side, will you be happy with the 9% volume growth on a soft base of last year? I do understand a lot of moving parts. Initially, when price hike is so sharp, there will be a preponement of demand. The price hikes happened in March, April, May. If you could tell us, overall, was there a negative impact or a positive impact of the price hike on preponement of demand? Second is, of course, Indian customer is extremely value conscious. A lot of customers will very happily delay their painting by a few quarters. Was there an adverse impact of that? Was there an adverse impact of Bengal election, because I think every Bengali painter went back to Bengal for his SIR and vote and all that. Was that a big problem, if you could highlight? Overall, what is your view on the demand? Are you happy with the 9% volume growth? Overall, I think, as an organization, you would like to achieve more and more. I think happiness is a relative state in terms of what you speak of. I think overall, the demand conditions have been decent in terms of what we have seen. As I said, all three months, I think the demand has been decent. Yes, because of the pricing action, there could be some bit of extra pipeline inventory, which would have come in to that extent. Overall, we see that the demands have been decent. Yes, we would have loved the demand conditions to be a little bit more vibrant with respect to the T1, T2 cities, where we have seen possibly a lower growth rate as compared to the rural cities in terms of T3, T4 cities to that extent. Therefore, possibly that could have been a little bit more, but it got compensated by good growths in T1, T2 in the B2B sector to that extent, whereas where a lot of government kind of expenditure which is happening across cities to that extent. I think in all, possibly we could have really looked at touching a double digit, overall, we seem to be quite happy in terms of what we had predicted last quarter, that we should be in that band of about 8%-10%. Sir, last quick question. On the two industrial segments, when do you see margins normalizing? Currently, around 120 pips drop is there in both the segments. Volume growth seems to be a bit low in the first one. If you could elaborate how much was the pricing growth? Are you again happy with the volume growth in both the segments of the industrial? Actually, if you look at in industrial, the price increase action comes in a little bit more deferred, and therefore the entire pricing action will not reflect here. Because what happens is with some of the B2B customers and key accounts, the whole process of price increase is something which basically takes a bit of time. It's not like in the decorative market that you can announce a price increase and basically from the next day it is implemented to that extent. It takes a bit of time in terms of looking at the industrial segment. In that also, what we see that segments which have really done well is the whole area of auto OE, which has done extremely well in terms of both volume and value, in terms of what we have been able to grow. Similarly, the whole area of marine and packaging which has done well. Some of the areas like refinishes have been a little bit slow. Again, from a general industrial business, if we look at, I think the value volume growths have been strong in that area in terms of what comes in. Overall, what we feel is that the margin impact is because of the later call in terms of the price increases which is coming. Overall, my belief is that industrial will continue to grow at a higher pitch than decorative as we look ahead. Sure. Thank you. That's all from my side. Thank you. For maximum participation, we request everyone to kindly limit themselves to two questions each. We now move on to the next question by Mr. Avi Mehta from Macquarie. I request Mr. Mehta to kindly unmute. Hi, team. Am I audible? Sorry. Am I audible? Yes, you are. Yeah. Hi, sir. Sir, I just wanted to first start with the demand side. We've seen 9% volume growth. Could you share your thoughts on how should we look at FY 2027 volume growth, especially because as we go into the later part of the year, the base turns adverse. Any thoughts on how should we look at the full year would be useful. I think definitely how we are looking at is that today, the demand conditions we are looking at as we look at quarter two. Overall, we are entering also a festive kind of quarter where there is definitely the month of September becomes good enough in terms of, from the point of view of some festive sales which are coming in. As we look at even quarter three, quarter four, overall, I think we have given a direction that we should stay in the volume region of about 8%-10%. That is something which I think we should really look at because we do not know at this stage how would the second half of the year auger from a point of view of overall price volatility and so on, so forth. As we go ahead, possibly some of those indications will also look at that whether there would be price changes would happen in the second half, which could trigger up demand even further in terms of looking at it. I think at current stage, we are looking at more like the band of 8%-10% for the full FY 2027. Perfect, sir. Perfect. That's very useful. The second bit is just on, related to what you highlighted about the input cost environment. Could you help us appreciate how from a going forward basis, do you see input cost pressures panning out? You did highlight low-cost inventory, but then logically 2Q might be lower than 1Q, but for the full year, how should we look at it? Any thoughts over there, if you could share, that would be helpful. That's all from this side. I think overall, what we have seen is that quarter two has traditionally been a little bit of a lower margin because of the mix in terms of what we sell in quarter two overall to that extent. I think given the fact that we are taking a very strong drive in terms of premiumization, how we want to really go ahead from a point of view of overall mix in terms of looking at it. I think we are still garnering around that the guidance of 18%-20% in terms of our PBDIT margins holds in terms of what we are taking. We are making a lot of effort with respect to both looking at saying, how do we galvanize demand? How do we look at in terms of premiumization? Third, how do we looking at our cost structures far more strongly, especially with respect to backward integration and some of the cost efficiencies we are building through our formulations and sourcing. Got it, sir. Thank you very much for this. Thanks a lot. The next question is from Mr. Mihir Shah from Nomura. I request Mr. Shah to kindly unmute and please ask your question. Hi, sir. Good evening. Thank you for taking my question, and congrats on a great set of numbers. Sir, first, I wanted to understand the mix and the gross margin expansion surprise that we have seen this quarter. The difference between the value and volume, it seems that the mix is a positive one versus minus four that was indicated in the last quarter. When one links this to the gross margin expansion, which saw the start of high raw material prices, it seems that sales from putty, et cetera, have been negligible. Would this be a fair reading or would there be higher sales from exterior paints and premium paints that is leading to this better mix improvement and gross margin expansion? I wanted some understanding on this. That's question number one. Okay. As I said that there has been a lot of focus in terms of looking at premiumization, a lot of focus in terms of driving a better mix in terms of what we have looked at. Therefore, I think that has been principally one of the reasons in terms of how we have driven, basically, today the overall margins in terms of what we have been able to achieve. At the same time, I think there is obviously some benefit of the inventory in terms of what we had, which is basically a low-cost inventory to start within the quarter to that extent, which has added to possibly the overall area of the margins in terms of what we have been able to garner. That is why I think the pricing which we took has been a fairly calibrated pricing in terms of what we have maintained. Going forward, I think this imperative of looking at premiumization, looking at some of the newer innovations in terms of what is going on so that we can get higher margins and really get the premium for the brand in terms of what we are, is going to be the effort in terms of going forward. Understood. That negative 4% mix, would that assumption be required to be revisited, sir? As I see it, going forward, for some quarters till the time, basically, we don't take pricing corrections, okay? I think value and volume gap possibly would be on the positive side as you are seeing in this quarter. The difference might not be too much in terms of what we would see. I think till the time we really get into pricing corrections, the value would continue to be higher than the volume. Understood. That's one. Second, I wanted to check about the average pricing of 7% that is there for this quarter. When you speak to the dealers, we believe that there is a pricing raise of 13%-14% that is put through till the month of June. Would that be the pricing growth that one should look forward for from 2Q onwards on the pricing front? Secondly, you highlighted that rural is doing much better than urban. There shouldn't be any impact on the product mix because of higher sales from rural in anticipation of this, right? Overall, see, given the rural growth being better, I think we've seen a certain product mix, which has kind of really we have gotten to that extent. Therefore, possibly even when I say rural, I think there is a classification of certain T3, T4 cities we look at. Therefore, possibly we are able to push some bit of good premium products there. Today, if you look at from a point of view of trend data, some of the auto sales and some of the other things are also happening very well in some of these T3 cities which are there to that extent. Therefore, we are able to push some premiumization in some of those markets. Therefore, we feel that possibly, urban markets from here would only grow higher as it really achieves. Therefore, from the point of view of product mix, I think we should be able to maintain that kind of a overall zone in terms of looking at what we want to really look at going. What was the second area you had asked? The pricing growth, about 13, 14% would be fair- Yeah For 2Q onwards? I think overall the weighted average has been about 7% in terms of what is there. Overall, it won't be that it will be total, it depends on the product mix in terms of what is there, because there is a differential pricing which has happened on each category in terms of what we have taken. Therefore, I think the product mix will govern in terms of looking at what is the total impact of the pricing which will come. Possibly, it would be in the range of about 8%-9%. Understood. Last question, a bookkeeping one, if I may. When one sees the change in inventory, it seems like there has been a material increase in the change in inventory. This is usually on the low cost, or it would be the average cost that we book out here. How should one see the change in inventory? Would you have a higher finished good inventory booked at lower costs than the benefit of that can come through in coming quarters? See, if you look at from an inventory point of view, in fact, I think we have done better from a point of view of overall number of days of inventory in terms of what we are holding. It's just that basically a lot of raw material inventory, which has come in at possibly a higher cost to that extent, which is there. Which is where you are seeing basically a blip in terms of the overall inventory which is there to that extent. That is something which possibly will partly really be affecting some kind of margins as we go into quarter two. Got it. Thank you so much, wishing you all the very best. Sorry, Mihir, just to sort of add to that. Most of the low-cost inventory benefit on finished goods, I think has seeped through in Q1. Yeah. Here onwards, we will see the pricing inflation sort of coming in. Yeah, you've already taken price increases, no, Parag? Yeah. We'll have to see how the mix also behaves, and therefore Q2 bases that. Got it. Thank you, gentlemen, and wishing you all the best. I request everybody to kindly stick to two questions each for maximum participation. We now move on to Mr. Manoj Menon from ICICI Securities. Mr. Menon, kindly unmute and please ask your question. Yeah. Thank you. In fact, most of my questions were answered. Only one clarification, if I may, Amit. Noted the outlook for Q2. Now, I completely understand the volatility part of it, but conceptually speaking, and also practically based on historical experiences, in fact, times like these, which are very difficult, tend to favor larger formal players, right? Isn't it? Secondly, for a full year basis, I understand the price part of it, but if I heard you correctly, you are still talking about a 10% volume growth, right? Yeah. I've spoken of that 8%-10% as an overall volume band for the entire year in terms of what is there. What you said is right, that today, I think in quarter one, we would have definitely got some advantage in terms of some of the smaller players, in terms of what is there, because the supply chains were pretty volatile from what it kind of comes in. Therefore, given the fact that our supply chain was far more robust to that extent, yes, some advantage of that will kind of seep in both for quarter one and quarter two going ahead. Thank you. All the best. We would now request Mr. Percy Panthaki from IIFL to kindly unmute and ask your question. Hi, am I audible? Yes, you are. Sir. Firstly, just a question on this quarter. The volume-value gap, which is approximately about 7% this quarter, could you give some kind of flavor on further breaking this up into a pure price increase and a mix change? Overall, as I said that the contribution of the premium products has been definitely much better in this, basically there is definitely almost about a 3% impact, which is coming higher because of the better mix in terms of what we have been able to sell to that extent. Today, I think there has been still a decent performance from a point of view of overall the mix of economy products as well to that extent. On a longer run, if we say that the product mix is definitely much better from what conventionally we have been selling in various quarters. Given the fact that there is a premiumization drive, there is also some of the newer products which have kind of come in. All that have given us that benefit in terms of making the mix a little bit favorable from a point of view of premium products. Okay, it's a plus three on mix. Got it. Secondly, just wanted to understand in terms of the pricing. Now I know that you have several input costs and they have their own demand, supply, functions, et cetera, and it's not just linked to crude. I understand that. But just as a very rule of thumb kind of a calculation, the price increases that you have taken thus far, they are sort of benchmarked to what kind of crude levels? Or rather, if you want to maintain a margin in the middle of the 18%-20% kind of a band, with only the current price increases, at what crude level does this equation sort of set in? I think, again, it's a slightly more difficult question to really answer because the pan of raw materials is something across. It is not that every raw material, because example, TiO2 is something which is not linked to crude at all to that extent, and it's the largest value consumption in terms of the paint industry, in terms of what it kind of comes in. Similarly, if we look at a range of additives and stuff like that, which is there, is not really linked to crude to that extent. I think going forward, overall, the current estimate in terms of what we see is that the crude band has been very volatile also. It is very difficult to put up a saying that at 90 this will happen and at 100 this will happen. That correlation becomes very difficult to justify because of the fact that the raw material purchasing will happen from time- to- time. It is literally the weighted average, which really counts in terms of what we would have kind of really bought at to that extent. Therefore, the direct correlation with crude at this point of time is very difficult to kind of say that if I were to kind of benchmark to a certain level of crude pricing, then my margins would kind of land at that. I think it is a very difficult thing. What we can definitely take in, the point is that I think that 18%-20% guidance is a good guidance to take. If the input costs, whatever relative, irrespective input costs, whether it is TiO2, monomers, polymers, whatever it is, supposing they maintain in future at today's prices, would you need any kind of pricing, either increase or decrease, to stay within that 18%-20% band? Again, as I said, I think the volatility as we speak also, there are some prices which are going down, some prices which are going up. As we have seen that some prices had started coming down in June as well. Okay. I think the volatility is so much that you can't take anything at a constant in terms of saying that, in quarter one, this was the constant parameter which we have taken, which if it remains in quarter two, will give us this kind of margins. I think we'll have to live with this fluctuation, which has started that some of the prices, for example, we have seen that the TiO2 prices were fairly stable, but it has started to going up. Okay. That trend, basically, we saw it in end of June, which is starting to happen. Some of the prices in terms of monomers have started to come down from where they were at earlier levels. Very difficult to really benchmark and say that we can correlate it to it. Finally, it would kind of really matter in terms of the overall material index, which it comes to when we look at the overall set of raw materials to that extent. Got it. Last question, would you be able to give some kind of idea of the benefit of the low-cost inventory this quarter? Would you be able to quantify it in terms of basis points of gross margin or something like that? Again, difficult to kind of really put a number to it because, see, today we have seen that, normally, you will not keep too much of inventory also. There is a mix of newer kind of inventory, which has also kind of come into that extent in the months of about 30 to 45 days in terms of what we would have sold the inventory. Possibly a lot of inventory, which we would have sold for the half of the quarter would have been possibly based on some of the old raw materials and the finished goods. Okay, sir. Thank you so much. All the best. The next question is from Mr. Aditya Bhartia from Investec. We kindly request you to unmute and ask your question, please. Hello, am I audible? Yes, you are. Sir, given that low-cost inventory was contributing to our sales for roughly half of the quarter, could you give us some indication about how profitability may have changed in the first half of the quarter versus, let's say, the second half? When we think about second quarter, if prices broadly remain where they are, costs remain broadly where they are you thinking about taking more price increases, or could there be a potential of margin compression versus Q1 levels? As I said, typically you see that quarter two, relatively speaking, the margins are a little bit lower as compared to what we get in other quarters, given the product mix where we kind of speak of. Today, I think any price movements will depend on only the volatility which we will see in the market. Right now, it's very difficult to say that today we will take a price increase. Ideally, we would not like to take any increases going forward unless basically the situation really becomes alarming in terms of what we need to do in certain categories, if it kind of really comes to the point in terms of doing so. As we see it, overall, I think definitely going ahead, I think the whole idea is that we can still maintain a band in terms of what we have been operating on. Understood. The reason, sir, that I was asking this is because you have shown that costs have gone up by almost 25%. If we consider that costs broadly remain where they are, and the price increase has been to the tune of 9%, 10%, or 11%, then does that mean that we are bracing for gross margin compression? Of course, keeping the seasonality aspect aside. As I said, today what's happening is that we are also seeing a lot of prices also coming down in the market to that extent. I think what is really happening is that the volatility is really also helping us in a way that possibly that if you are able to manage your overall sourcing and logistics very well, I think it can basically be also an area of advantage in terms of what you kind of look at in terms of going forward. Today, what we see is that while there is a gap between overall increase we have taken and the overall inflation, I think there is also a little bit of a deflation in terms of what we are seeing in a lot categories, which are basically the input cost to that extent. I think that mix, married with the mix in terms of what we sell in quarter two, would really kind of govern in terms of possibly where we lie. As I said, obviously I think, to some extent, a large part of this inflation effect definitely will kind of really come in terms of looking at going ahead in quarter two. Perfect. That's helpful, sir. Just one clarification. We've been quite aggressive on putty and low-value emulsions and have gained significant market share. Just wanted to understand, what is our strategy going to be around these products? Is it that we are incrementally going to focus a lot more on premium and luxury and reduce our focus on these products, or is it that we just had some possibly mixed benefit this quarter because of pre-buying at the premium and luxury end? See, the strategy going ahead is that basically we kind of really get growth in every segment which is there, because as is the overall premium segment important to us, the economy segment is also large, and that is also very important in terms of what we are able to grow. Putty is a starting point in terms of paints, in terms of what is there to that extent. That segment is also important because it really signifies that that's the first purchase a consumer is doing as far as painting is concerned to that extent. I think as we go ahead, where we are going to maintain is the focus is going to be definitely maintained that in each of the segments, we have a decent growth in terms of what we are able to make. At the same time, there is a lot of imperative that we are able to upgrade The consumer, one from the unorganized industry to basically organized, and second, from the levels of eco to premium, to premium to luxury. I think those imperatives in terms of our overall strategy will remain. Understood, sir. Thank you so much. The next question is from Mr. Jay Doshi from Kotak. Hi, thanks for the opportunity. I have a few questions on VAM/VAE backward integration project. First is the understanding correct that VAE emulsion will be largely utilized only for premium and luxury emulsions? Actually, it's a technology which is quite future generation oriented. It talks of basically low VOC, which kind of comes into that extent, and it talks of giving some special properties in paint it can garner. It totally depends in terms of how you formulate the emulsions, because today the general market operates on certain standardized emulsions in terms of what really comes into that extent. Overall, when we look at this entire thing, the usage can be across any category of products, not limited to only premium. It can go into economy, it can go into other segments as well, which is like additives and powders as well to that extent in terms of what we look at. I think the overall consumption is fairly broad in terms of what we can look at it, and therefore possibly that's how we are looking at leveraging the overall output as it comes by. Understood. How should one think about this 150 million metric ton capacity versus your potential requirement at the current scale of business? Overall, it would depend in terms of how many products we are able to really get the whole area of VAE into, to that extent, which would really guide the overall consumption from that 150 metric tons which we have indicated. It also takes a little bit of time to really reach that kind of a capacity in terms of what is there. Our feeling is that possibly over a period of about two and a half years, we should be able to reach basically a capacity which is higher and closer to about 150 MT. The last one. At the time of announcement of this project, you had indicated that you expect this will give you cost competitiveness, which should help your gross margins by 400 to 500 basis point. I assume that would be pertaining to the part of the portfolio where you are utilizing this in-house capacity. Does that 400, 500 basis point, let's say for now, if I assume it's only premium and luxury emulsion, does that 400, 500 basis point still hold at the current landed prices of VAM or VAE emulsions versus that? Again, as a general rule, possibly I think there will be a certain band in terms of what we will operate upon. Very difficult to say that it will maintain at INR 400 or INR 500 or between INR 300-INR 400, because overall, it also depends in terms of possibly the kind of advantage which you are getting from a point of view of the current sourcing which you are doing, and also the kind of formulations you are really planning to make to that extent. Generally, I think, overall, it should for the category of products. From that point of view, I think it would translate into that INR 300-INR 500 kind of a band. Thank you very much and wish you the very best for the project commissioning. The last question is from Mr. Amit Purohit from Elara. Mr. Purohit, we kindly request you to unmute and ask your question. Hi. Thank you for the opportunity, sir, and a good set of numbers. Just on, one, on the industry growth, what is your sense on that? Second, I wanted to understand on the economy range. About two years back when the competition started to catch up, I remember some comments coming from industry players, largely around the economy segment being very competitive and all. Now, when I see your launches on the economy segment is slightly on a product differentiation. The mix change that you called out, is it much more structural in nature? One should assume that now most of the players, whatever on the pricing side, much of it is over and everybody is now focusing on premiumizing in every segment of the economy and all. First question is on the industry growth. Just to understand your market share trend, how it would have been for this quarter. Overall, what we see is that definitely some of the medium to large players would have got some benefit from a point of view of some of the smaller players to that extent. Therefore, what we see definitely is that, possibly to some extent, we would have grown slightly higher than the industry average in terms of what is there to that extent. Definitely that would be the zone in terms of how we look at the overall market. As far as the economy products are concerned, I think today, the competition intensity is all across, whether it is economy, whether it is premium, and whether it is in luxury. I think the competitive environment continues not only from one player or two players, but for across players, I think it continues to that extent. My estimate is that that will continue to remain as we go ahead to that extent. I think this competitive intensity will remain. I think the economy segment possibly, given the fact that there is a propensity that you can really convert a contractor much better in terms of looking at if you were to do higher discounting. I think the competition would remain slightly more intense as far as economy is concerned. I think the relative difference between economy and premium from a competitive intensity is not very much different. Sure. Thanks a lot. Thank you. Thank you, sir. On behalf of Asian Paints Limited, this concludes today's conference. Thank you for joining us. You may now disconnect your line and exit the webinar. Thank you, everyone. Thank you, everyone, for joining us. Thank you.