Ladies and gentlemen, good day and welcome to the Q3 FY2023 results conference call of Berger Paints India Limited, hosted by Emkay Global Financial Services. We have with us today Mr. Abhijit Roy, Managing Director and CEO, Mr. Kaushik Ghosh, Vice President and CFO, and Mr. Sujyoti Mukherjee, Vice President, Finance and Accounts. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference, please signal an operator by pressing star 0 on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Naman Bagrecha of Emkay Global Financial Services. Thank you, I hand over to you, sir. Thank you, Vivin. good evening, everyone. I would like to welcome the management and thank them for this opportunity. I shall now hand over the call to the management for the opening remarks. Over to you, gentlemen. Thank you and a very warm welcome to Berger Paints India Limited earnings call for Q3 of FY23. We really appreciate your participation. The management statement and the performance have already been uploaded in the website for your information. Before I hand over to our MD and CEO, Mr. Abhijit Roy, I would like to make a small disclaimer that questions should only be restricted to the quarter only. I now hand over to Mr. Abhijit Roy, our MD and CEO, for his comments on the performance. Thank you, Sujyoti. Good evening to all of you. I will take you through quickly through the presentation first and then, you know, look forward to the questions from your side. I hope you know you have received this presentation well in time and have gone through it. Just for the sake of repeating whatever has been put up there. The decorative business showed decent growth in the quarter in spite of extended monsoon, very high base effect and a short festive season compared to the corresponding quarter last year. The growth progressively improved with a double-digit growth in December. Every month we had some growth. In December we had a double-digit growth. Some mixed impact on account of higher stocking of premium products by retailers on the back of steep price increases in the corresponding period last year and lower sale of exterior emulsion due to extended monsoon. On a YTD basis, decorative continued its healthy growth. If you look at the figures on a standalone basis growth rate, this year, quarter three, the volume growth was 6.6%. Last year it was 11.2%. Compounded three-year growth rate has been 15.3%, which is fairly healthy. In terms of the value growth for the same quarter, this year we had a 7.2% standalone value growth. 21.2% was the figure last year. Again, on a three-year compounded basis, our growth rate has been a strong 17.2% in terms of value sales growth for quarter three. If you look at the YTD figure, the YTD this quarter, so far, we have a volume sales growth of about 17%, which is, you know. Then last year, if you look at it was 27.5%. Three years compounded is 16.9%. In value sales term, 25.3% is this year's figure, 37.6% was last year, and three years compounded growth is 17.3%. In terms of both volume value, whether you look at quarterly or in terms of the YTD figures, the compounded growth rate is pretty strong. This quarter it has been slightly on the lower side, and there are good reasons which we explained at the initial stage. And that is why the growth rate has been at around 7.2%. If you look at, you know, overall, what has been happening in terms of network expansion, for the year, we have added 8,000 retail outlets and 4,300 Color Bank machines till date. We expect to, you know, close at about 6,000 Color Bank machines by the end of the year, and maybe around 10,000 odd, you know, retail outlets, which is beyond the machine counters. We also add a few retailers on for various other businesses that we have along with paint and those are non-machine counters, which we will have about 4,000 added in addition to the 6,000 Color Bank machines. Construction chemical segment registered strong growth in the quarter, we expect to gain market share going by the industry growth trend so far. We are reasonably confident that we will add to the market share this year. In terms of new product launches, we introduced one product called Long Life 15, which comes with a 15-year warranty with a new type of technology. This is for the exterior wall coating. We also introduced one coal tar-based solution for rising dampness being used for new construction. This is popular, you know, down south and used for, you know, basements of new constructs. On the industrial business side, GI and Auto business showed good growth in this quarter. Progressive and infrastructure business continued its double-digit growth, aided by infrastructure spending. We continue our leadership position in this particular business line. Further price increases were realized in the quarter and powder coatings business line had significant degrowth on account of lower sales to the fan industry. This particular category, you know, a large dependence is there on the fan, and there were some changes in rules in the fan industry, which has really impacted us and we went badly negative in powder coatings this quarter. Things have, you know, revived in January onwards, we are back to normalcy. In terms of profitability, we declined this quarter, mainly on account of four factors. The primary factor is of course, the carrying stock, finished goods and raw material, which we were carrying of the pre-prior period, which is at a high cost. Due to capacity constraints, you know, which we had till we are now about to start the Sandila factory from the sixth of February. Till that point of time, we normally built up the stock just before the season. In March, we normally used to build up our stock, and in September again, we did the same thing. This time also, we had built up the stock in order to be able to service the market fully in the season period. This is a high-cost inventory. We anticipated a good festive season. Unfortunately, rains continued, you know, for some time, and then it didn't take off, therefore, to the extent that we would have loved. The inventory lasted throughout October, November, December. We got no benefit out of the raw material price drop which had happened. That benefit is going to come only in the fourth quarter, most of it and almost all of it will start coming from only quarter one of next year, but we will get a significant benefit in Q4. Q3 we got zero benefit out of the RM price drop due to this reason. Mixed impact on account of lower sales of exterior emulsions due to extended monsoon. Real impact on overheads due to lower than anticipated growth in sales. There was a little bit of mark-to-market impact of exchange depreciation. All these four reasons combined to take it down to the level of -9.1% or -9.4% this quarter. Overall on a YTD basis, though we are still growing at about 15.5% this year, this quarter has been in a sort of a muted in terms of the profit growth. It's negative and largely due to, as I mentioned, the finished goods and raw material carrying cost of high-cost inventory. On the profitability front, further softening of rutile, monomer and solvent prices have been observed, and that is likely to help us in Q4 and then going forward in Q1 of the next year. Commencement of commercial production in Sandila plant will also lead to lower inventory holding and working capital improvement. As I mentioned, we normally used to stock up because we had an issue as far as the total capacity was concerned and our ability to service at the season time. Therefore, you know, this will be taken care of. We are starting this from the 6th of February, as I mentioned. Mixed improvement likely in quarter four on the back of increased sales of exterior wall coatings and waterproofing items, which have high gross margins. We are starting this Sandila factory in Uttar Pradesh. Estimated outlay was more than INR 1,000 crore. The installed capacity is 33,000 metric ton per month. Our existing capacity is about 62,000-63,000 metric ton per month. That adds up another 33, so we become 95,000 metric ton per month. This should suffice our requirements for the time being, you know, and therefore, it will help us and we need not stock up and build our stock before the season anymore. On the financial performance side, as I had mentioned, the standalone 7.2% with -9.4%, PBDIT. PAT growth of -6%. YTD basis, we are far healthier, of course, you know, at 25.3% in terms of sales growth, and operating profit growth at 15.5% and PAT growth also at 15.5%. Details of the raw material cost has gone up actually from 63.99% - 66.18%. This is what has impacted our operating profit. If you see or observe, that's the line which has created all the impact. Otherwise, we have kept all other costs under control. In fact, there has been some improvement in some of the other areas. Overall, we went negative in the operating profit side this quarter. YTD basis, we are growing at about 25.3%. Again, you know, there too, the material cost has actually gone up. In spite of that, because of the strong sales growth, our operating profit growth is there at about 15.5%, which is a healthy growth. What we could have done better at the raw material to sales ratio being better. Income from operations growth standalone over the last few quarters has been shown 24%, 53%, 96%, 26%, 21%, 7.3%. Again, 53.7%, 22.5%, 7.2%. These are, you know, COVID-affected. Sometimes it goes up. We have been more or less hovering at a pretty steady figure. If you see, most of them are in the 20s. You know, two quarters we are at the 7% range, and then two aberrations at 96% and 63.7%. On the gross margin, it had been rising steadily up to Q4 of 2021 from 40.2% to 42.3%, 43.7% and 43.8%. These were, you know, those years where those quarters where actually the RM prices had dropped to abnormally low levels, so everyone benefited out of it. Since then, you know, it has, the prices have been going up. You know, we have been lagging behind in terms of passing on those price increases, especially on the industrial side. It has come down to about 37%-38% level. This quarter it has dropped to 33.8%, I'm very confident that in Q4 it will again go back to this 37%-38% level, which is where, you know, we have been steadily been there right through, till, you know, these raw material prices have dropped or it has risen, you know. We will go back to this 37%-38% gross margin level. Consolidated quarter three figures is 5.6%, which is lower than the 7.2% in the standalone which we saw. That's largely on account of, you know, three businesses which, you know, had, you know, negative growth rates this quarter. One is Nepal, which went very badly down. It was impacted by, you know, two, three factors. One of them, of course, is the very high inflation there. There was this, you know, interest cost, which has risen substantially. You know, money flow had become a problem. We took a conscious call not to extend credit into the market too much. That did impact our sale and we went negative, therefore, you know, substantial negative sales in Nepal. We are back in January, they close on the 15th actually. That January 15th closure, we had a positive growth, so we are back onto normalcy in Nepal, and things are okay now. In Bolix also we had a negative quarter in Q3, largely because of again, you know, similar Ukraine war is affecting Poland quite a lot. The inflation has gone through the roof. You know, Europe situation is not good. Therefore, you know, we had a negative quarter in Poland. The U.K. operations continue to grow, but Poland had a big negative. Therefore, overall it was a negative from Bolix. These two pulled it down. The impact has been, you know, about... though STP and other companies did well and grew well. Because of these two entities, you know, the growth came down from 7.2% - 5.6%. The PBDIT obviously because the sales lower, sales growth also got impacted. It is minus 10.8% in this case. Consolidated, if you look at it, you know, the sales growth is 23.6%, PBDIT at 13.6%. Again, you know, if you look at, the reason for it, primarily, you know, raw material to sales, you know, going up. In the case of consolidated because of the value sales being slightly on the lower side as well, this impacts, you know, on the other areas as you know, and hence there's a little bit of increase in the employee cost but margin. YTD basis we are at 23.6% growth in consolidated and PBDIT growth of 13.6% is where we are as of December end 2023. Again, if you look at, you know, over the quarters how have we been faring, more or less reflects the standalone performance. 24.9%, 49.5%, 93%, 27%, 28%, 53.4%, 20% and now at 5.6%. I've already mentioned about, you know, the various performances of the subsidiaries. STP continued to grow well in sales and profit and there's an all around improvement there. Saboo Coatings had a marginal degrowth in the top line. Profitability improved on account of higher price realization and softening RM costs. Nepal had a large degrowth, as I mentioned, both in top line and profitability. You know, there was a problem as far as Nepal is concerned, but back to normalcy now. Company's Polish subsidiary had a degrowth both in top line and profitability impacted by the Ukraine war and high inflation. Company's joint venture Berger Nippon Paint Automotive Coatings had a strong improvement on top line and profitability, aided by the growth in auto sector and cost improvements which they have been working on diligently. Company's joint venture Berger Decors Coatings had a degrowth in top line and profitability. The outlook is, you know, brighter. Demand outlook looks good in the coming quarter, which is in Q4. Mix improvement likely in the coming quarters, supported by increased sale of exterior coating. Industrial fields outlook remains strong on the back of upturn in auto sector and government spending in infrastructure. However, exchange depreciation on account of strong US dollar may be a concern. Thank you. We can take the questions now. Thank you. Ladies and gentlemen, we will now begin the question and answer session. Participants who wish to ask a question may kindly press star one on your touchtone telephone. If you wish to withdraw yourself from the question queue, you may press star then two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Abneesh Roy from Nuvama. Kindly proceed. Yeah, thanks, Abhijit for the opportunity. My first question is on the gross margin and the inventory raw material which you discussed. Yes, I take your point. Last three quarters it has been stable in the 34%-35% range in terms of gross margins. Yes, we are seeing the correction in titanium dioxide, definitely monomers and packaging costs crude related. Asian Paints are almost 300 basis improvement quarter-on-quarter. I wanted to understand when you mean capacity constraints led to inventory build up, what exactly happened and in the future if similar thing happens, what improvements can prevent such a thing? Right. Abneesh, you know, let me explain it to you know, thanks for the question, though. You know, we normally, we had a issue as far as the full capacity. You know what happens in the paint industry, it's slightly seasonal, and in the seasonal months the demand tends to move up substantially. In non-seasonal months, however, you know, sometimes, you know, it remains at a slightly lower level or a much lower level at times. Typically in the months of April, September and October, the demand tends to move up beyond the normal. Because normally 100 it can become, you know, 140, 150 in these particular months. What happens therefore is we as a company, we did not have the full capacity to service this 140, 150. We used to stock up material, you know, in the month of March and in the month of September, August, September, in order to service the seasonal months requirement. Then again, you know, it will come down and then the factories will be able to give the material as is required month on month. This build up resulted in some of these old price, you know, material. In the months of July, August, the prices were on a much higher level. You are carrying this inventory at a much higher level, you know, and that carried on right through till the month of December, which is why, you know, we did not get the advantage of the raw material price drop at all. That is what we are likely to get in Q4, which is why it delayed the gross margin expansion, which should have happened this quarter. Thanks. I understood. In terms of, say, the best industry practice, say in terms of forward covers or say in terms of a better understanding because a lot of these are global raw materials. Do you think there is an area of improvement there? Or was it that you thought maybe crude will go further up, so that time the call was taken and calls can be wrong or right in hindsight only. Is that the issue or there is an improvement area in terms of say forwards and say long-term contracts, better understanding? Because clearly the market leader saw an improvement in the same context. They have been able to manage it better. Wanted to understand. No, there are two things here. You know, one, you know, sometimes it works in your favor, sometimes it goes against you. It is very difficult to predict whether the prices are going to drop or increase. Had it increased, we would have been a gainer. We would have actually shown a far better improvement than the market leader in this case, right? You know, when the prices goes down, you are on the reverse cycle, then you get caught on this issue. We had no choice, you know, because now with the Lucknow plant coming up, we need not build up the stock at all. That's one advantage, you know, which we will have in terms of being able to play the game. After that, we need to take a call whether we feel that if the prices are going to go up, we may still stock up. If the prices are going to go down, it may be a wrong call or a right call because it's very difficult to predict these things. We need not stock up out of compulsion. Now, we had no choice but to stock up. That's, you know, if the prices dropped because, you know, the prices did drop, we were sufferers unnecessarily this quarter. Sure. My second and last question is on the demand side. Yes, December double-digit growth. I think market leader also saw good recovery in December. Your question essentially is to would you be worried on the urban slowdown, which I think some of the other non-paint but discretionary companies are pointing towards because there are job losses in IT sector, startups and all that. Plus the high base which you are having on the last two, three years. Most quarters you have a high base. I'm not necessarily asking on Q4, are you now a bit more sanguine that instead of, say, a high single-digit or double-digit volume growth in the core paint, we should now start building a bit lower in terms of our numbers because of these two reasons? No, I think we are quite confident and comfortably we can tell you that, you know, Q4 we will, possibly, you know, reasonably, you know, unless something goes wrong seriously, we should have a double-digit growth rate, both in volume and value terms in Q4. Okay. Related question, because now gross margins are improving. On the discounting by market leader, earlier you pointed out some quarters there has been slightly more aggressive behavior. As of now, are you seeing that? No. You know, there has been. This was an aberration which was there the previous year and in Q2 and Q3 specifically. You know, there was an unusual aggression. That is not there anymore. We are back to normal, you know, rebating and normal structure as it existed earlier in the paint industry. Yeah. Thanks, Abhijit. Thanks a lot and all the best. Thank you. Thank you. Thank you. The next question is from the line of Avi Mehta from Macquarie. Kindly proceed. Hi, Abhijit. Thanks for the opportunity. I wanted to understand on the, you know, firstly from a broader sense, from the market scenario right now, we are going to see a huge capacity addition by many players. Would you, I mean, given your experience, would you be worried about this essentially hurting profitability in the near term? Because you have a new player also putting significant capacity addition. Whether it is in profitability or return profile, how do you see this? If you could kind of give us your thoughts on the same. Yeah. Avi, you know, thank you for asking this, you know, because this has been coming up for the last few quarters, you know. Since they come in and start actually operating in the market, I think, you know, repeating the same question and the same answer possibly is not going to make any difference. My view is, again, you know, that this capacity addition is not going to by itself result in a problem. It has to be seen and observed, you know, what type of pricing price points they come with, you know, what do they do. And this is only one addition which is coming. There are many players who have expressed their interest to come in. And I don't think, you know, that's very worrying for us. Yes, you know, one of these players, you know, is starting up, you know, large capacity. Now we need to see how it shapes up. You know, as I have always said, in any industry for that matter, you know, especially in this category like paint, you know, which is, which has many other claimants of, you know, actually the sale happens through various means, right? You know, it is not only that you go direct to the consumer, do something and, you know, you win the battle. There is this, you know, dealer, distributor, you know, then you have the painter, then you have the interior decorator, then you have the consumer, and you have to get all of these aligned. So I think, you know, it takes some time and effort. We are not unduly worried on this count. Yes, there will be competition. We expect, you know, that, you know, there will be some sort of, you know, effort from the party concerned, to improve their sales and performance as well. It will impact us, but we are taking our own, you know, whatever measures we need to take from our side and be better prepared for the battle ahead. We don't see any major, you know, changes happening. It will be, you know, some change, but that will be, you know, possibly if we are able to become more efficient, go more closer to the customer, then I think, you know, we should be able to weather this very easily. Got it. Got it. Second point was just on a near-term comment. You know, you did allude towards confidence in fourth quarter. I kind of take that point. In January, are you also worried of going, you know, specific month of January? You know, there's been a- Mr. Mehta, I'm sorry to interrupt sir. You know, people can't hear you clearly. Your voice is breaking, Avi. Oh, I'm sorry. Is this better, sir? Yes. Yes, now it's better. Okay. Sir, there has been a very aggressive winter this time. You know, typically when it becomes so cold, you know, exterior paint demand does take a hit. Do you see that hurting not necessarily a Y-O-Y growth rate, but, and the demand trends will continue to remain weak even in fourth quarter because of that? Maybe from a pre-COVID levels. Y-O-Y I, you know, I mean, there is a base aspect that also works, which is making it harder to kind of get an understanding. My question to you is from a three-year CAGR or from a pre-COVID lens, do you see the demand trends broadly, you know, now moving to a lower trajectory, probably around that 12%-13% odd levels rather than the 15%, you know, 17%+ trajectory in the beginning? Thank you. You know, it's not only the winter, you know. There are lots of other factors, you know, which come into play. The overall GDP growth, you know, how is the economy looking like. You know, all these factors combined and the demand is very difficult to predict, you know, what it will be. We have typically seen that it is very closely linked to the GDP number. You know, it's about 1.5, 1.6 times the GDP number. If the overall economy does well. If suppose, you know, the winter is hard, and as you were mentioning, first of all, that impacts, you know, the northern belt only. You know, the east, the west, and the south remain unaffected, you know, by harsh winter because, you know, there's really no winter in most parts of the world and, you know, therefore it doesn't matter so much. If only in the northern part of it, you know, where the winter impacts, you know, substantially more. Yes, it will have some impact, but, you know, as I said, you know, not as much as, you know, one would have feared. Base, of course, is one entire, you know, because last quarter base was much higher. This quarter base is more normalized. On that normal base, we should have a decent growth. Whether it will be 12% or 14% or 15%, only time will say. We expect that we will continue to, you know, grow at a faster pace than the industry is what we want to do, you know. For that, we have our own measures in place, we have our own plans in place, and we hope that we will execute it successfully. Perfect. Perfect. Just a bookkeeping, could you give the volume growth and decorative value growth in the quarter? That's all from my side. Yeah. I think I mentioned that, you know, but, just for, you know, repeating it, the volume growth that we had, the value growth is 7.2% and the volume growth was 6.6% for the quarter. Thank you very much. Yeah. Thank you. Participants, if you wish to ask a question, kindly press star one. The next question is from the line of Jaykumar Doshi from Kotak. Kindly proceed. Sure. Hi, Abhijit. Thanks for the opportunity, and thank you for comprehensive opening remarks. I've got a couple of questions. The first one is, it looks like since the last quarter you started gaining some share. At least on a Y-O-Y basis you're growing faster than the market leader, and especially in this quarter. In, you know, what segments or in which markets, you know, do you see a visible market share gain? Is this trend looking, you know, sustainable? Right. Yeah, you know, good evening, you know. Yes, you are right that, you know, we have this quarter's growth rate over the market leader, the gap has been the highest in the last 17 quarters in fact. Therefore, you know, the growth has been good. It's been, you know, across most categories, I would say. You know, little bit of improvement would have happened because I can't exactly pinpoint if there is any specific category. I don't know, frankly speaking. I think I presume that, you know, it will be across categories. I haven't seen anything, any specific category in which we have done exceptionally well. Overall we have grown at a faster pace. Whether it will be sustainable or not, you know, well, time will say. We hope so, you know, because that's what we want to do, that we want to gain little bit of market share, and then keep going at that. Understood. Can you provide some color on how your sort of recent trends are in emulsions? You know, a few years ago, I mean, the Berger story was all about improving product mix and that product mix improvement translates into gross margin improvement and profitability. We don't hear much about it anymore. Perhaps, you know, the focus has shifted to Grasim and other things. Can you just provide some color on how, you know, how you are seeing those trends? You know, yeah, that's a good question. You know, in fact, the focus is still there, you know, in order to improve the mix, because that's something which we have to keep working on. There is still some way to go. As far as the luxury category is concerned, we are a relatively weaker player there. We are present in a much stronger way in the premium luxury category, which is midway between the premium and the luxury category. In that we have two very strong brands called Easy Clean and Anti- Dustt, and they continue to grow in spite of the intensification of competition there. In the luxury category, we wish we can grow faster. You know, in the exterior luxury category we are doing much better. In WeatherCoat Long Life brand, you know, we are doing relatively much better. In Silk, which is our interior luxury, we can do better than what we are doing as of now. This is as far as the emulsion is concerned. The lower-end emulsion, which is Bison emulsion and Walm asta, that continues to grow at a decent clip. That's not, you know, something which is anything exceptional has happened. It grows with the market. As, you know, as much as the market grows, this category also grows. This is as far as the emulsions are concerned. I think, you know, overall, also in the same space, if you look at it, the waterproofing segment is also a relatively profitable segment, and that category we are doing quite well and that adds up to the profitability to some extent. Again, you know, overall this quarter was impacted, but I think going forward you will see a restoration of the gross margins level at the original levels where we were. Thank you. Just one final one on that. Look, our understanding is that you've not been very aggressive on selling putty and yet when I look at your numbers, the gap between volume and value is not any different from the market leader. You know, and when I mean, there is at least 7%, 8% pricing increase in a Y-O-Y basis in December quarter. What explains this? Hello? Yes, yes. Hello. Yes. I'm trying to understand. Yeah, I've got your question. Yeah, you know, let me see. You know, actually there was a 3.8% approximate increase in the price, you know, net price for the company purchase. Because then I can't give you the exact decorative figure or the industrial figure, but the actual figure was only 3.8% increase, which we should have got. Now, instead of that, we ended up getting about 0.6%, 0.7%. There were two reasons for this. One, the exterior emulsion category, which is, you know, quite profitable, has a good margin. Unfortunately, in Q3, again, you know, did not do well because of the prolonged rain or monsoon, which went on till 20th of October almost. Then the season ended because the Diwali was early, we get the impact that we should have got. On the other hand, last year there were price increases on exactly the same products, the more profitable products. The bases were much higher. We suffered a double whammy in terms of the rains impacting the sales. On top of it, the base, which is higher on these products because the price increases happened primarily on these products in last quarter. As a result of these two, you know, the exterior wall coating percentage came down. This impacted, you know, overall gap got reduced because of this. That's one reason for us. The other, of course, the industrial. We could not pass on fully the price increases. It keeps impacting our overall profitability. Though we persisted with our effort, we got some towards December, that will impact us in this quarter, you know. These are the two things which would have impacted. Thank you. Disclosures in the presentation on volume, value standalone, that's essentially decorative business, right? Or, is it at a standalone level? This is standalone basis. Total. it does include some industrial component or, understood. It includes everything. It includes industrial as well. All right. Thank you so much, and wish you the very best. Thank you. Participants, if you wish to ask a question, kindly press star one. The next question is from the line of Aniruddha Joshi from ICICI Securities. Kindly proceed. Yeah. Thanks for the opportunity. Sir, where are you seeing the growth higher in terms of rural, urban, east, west, north, south? Any region where we are seeing the higher growth? Also probably we would have gained some share. Have we gained share in any part of India? Also, around past three to four quarters, there was some loss of market share in North India. Has Berger regained that market share too? Yeah. Right. You know, coming to your first question, you know, where are we growing? We are growing across almost all regions. On a YTD basis, if you look at it's more or less across all regions. North, it still remains a bit of a concern for us. It's been mainly in East, West, and South. Well, you know, we were relatively weaker in the West and the South. Any performance there, you know, on a lower base, the growth rate seems to be on the higher side. That way, you know, the gains would have been higher in those locations. East has been consistently growing. We have a strong presence there, and we grow at a reasonably good pace. Not much of a problem as far as East is concerned. North, in certain pockets we are doing well. In certain other pockets, we could have done much better. We are getting our house in order in that, you know, in those few states where we aren't doing all that great. One of them we have restored and started performing reasonably well now already. The other one, the work is in progress, and we are hoping that, you know, we should be able to streamline that state as well. Then we should have a far better growth in the North as well. Okay. Thank you. Last question. Can you share the indicative breakup across the sub-segments of paints and putty as well as waterproofing? The indicative number for Q3 or nine months should be okay. Listen, I don't think I have those numbers and I can share with you at this point of time. We, you know, for the 9 months, you know, I have no clue, you know. You know, normally, as far as the industry is concerned, you know, we have a fairly, you know, representative, if you know the industry volumes or shares, we should be very close to those shares. Except that, you know, in our case, maybe the luxury category will be slightly lower than the industry or the leader, and it will be more oriented towards the premium and economy side. Okay. Lastly, if we consider the putty, waterproofing, all these products put together, whether it will be upwards of 15% of sales in standalone number? No, it's very difficult to say exactly what is the percentage, you know, but I can assure you that as far as, you know, putty growth is concerned, since, you know, that might be 1 of the questions you would like to ask, it has been a normal growth rate, slightly above the normal growth rate, you know. That's as far as putty is concerned. Waterproofing growth rate in certain segments we have done much better in terms of the growth rate there. That's how, you know, I would place. You know, exact% what they are, you know, I can't comment at this stage. Okay. Sure, sir. Thank you. Thank you. The next question is from the line of Shirish Pardeshi from Centrum Broking. Kindly proceed. Yeah. Thank you. Hi, Abhijit. good evening. Good evening. Couple of questions. When I look at the trend in the market and when we speak to channel, what we are seeing especially, in last quarter there was lot of downtrading in the low-end or economy emulsion. Is that the case which is also visible in your numbers and that's why the mix impact is also a little higher side? No. I explained this, you know, that actually what we were seeing, it's not a downtrading as such because, you know, the exterior luxury emulsion and the premium emulsion category which, you know, actually sells in this quarter, typically it is a very good sale because after the monsoon, you know, paint exterior painting happens and it's comfortable to paint as well. The season is very good for exterior coating. Did not materialize this year to that extent. You know, naturally the other product kept selling, but this particular category sold less. As a result of that you will see that, you know, the value realization, you know, per liter came down in this particular quarter. That's how it happened. You know, it's not as if, you know, the market has shifted or, you know, lot of downtrading is happening. Those who can afford in paint, you know, typically they go for the right kind of products. They don't mind buying the luxury products because at the end of the day, you know, they want to put up the better quality paint because labor cost is almost 50%, 60%. I don't think, you know, people will tend to move downward just because, you know, some paint cost has moved, you know, from say INR 4 - INR 3.50. You know, that's not, you know, how the shift happens for the paint part of it. It is the labor part of it which is a bulk part, 50%-60%. In Bombay it's maybe even 70%. It doesn't matter so much as far as the paint cost is concerned. There is no major downshift which happened. We have never seen that trend happening. Yes, there is some shift which can happen because, you know, economically if people decide that, "Okay, instead of going for the luxury, I might go for premium luxury, or instead of premium luxury, I might go for the premium." That much of marginal shift might happen, but it doesn't happen as if, you know, I was actually thinking of luxury and now I start buying the economy category. It never happens like that. That's helpful. My second question is on the project business. Of late we are seeing the project business is taking sharp momentum and that's where the local players are losing maybe on the pricing front because the builders lobby is also looking for the steady and maybe quality of the paints which is there. This is visible at least when we speak to the channel partners. In your case, if you can give some quantitative and qualitative comments what the business means for you in the near term. Yeah. The project business, you know, has been growing at a decent clip of late. That's largely because, you know, many of these buildings are coming up for completion and, you know, they need painting to be done. That is happening now and growth rate has been pretty steady. I won't say it's, you know, very buoyant as such, you know, but it's been slightly higher than the normal rate is. That's. If you look at it, you know, yes, it's growing at a slightly higher clip. It's about 8%-10% in terms of our total sales, it's not going to create that much of an huge impact unless, you know, it starts really growing at a fantastic pace, which isn't the case as of now. Okay. My last question is on the network expansion. You mentioned that you will reach about +10,000 stores. Now, when do you think this 10,000 stores will start contributing meaningfully to your volume and value? I mean, is there any timeline that if the scale-up will happen within 6 months' time or maybe 1 year's time? When you add the network, where do you start? I mean, is it that you start with exterior or is it you start with emulsions or you start with some low-end products? Right. You know, we are, we are adding 10,000, of which 6,000 are machine counters and 4,000 are non-machine counters. In the non-machine counters, typically it's the basic products we sell, you know, enamel, distemper, primer, you know, some amount of putty, little bit of, you know, white emulsion, you know, they take thinners and stain it. That's how it happens. You know, typically smaller shops who doesn't want to invest in the machine at this stage, and can become, you know, machine takers at a later date. That's about 4,000 and these will, you know, these are small value transactions which happen, but some of them morph into machine dealers at a later date. The 6,000 machines that we plan to install, of which 4,300 odd we have already installed, these are good counters. They start from day one across the basic. It depends on location to location, where you are positioned. If it is UP and Bihar, it behaves differently. If it is Kerala, it behaves totally differently. They use very high-end, you know, premium luxury paint as well. It depends on the state where we are, right. Mostly, whatever is the, you know, full range of products we sell in those states, these machine counters will start off with this full range. That is how it happens. In our case also, this is the same trend. Let me harp little more on that to get little more depth. To reach, say, 150-200 KL per month for these machine outlets, it's sufficient for you to say 6-8 months' time, or they start with a month first itself? You mean 150 - 200 liters or KL? What are you saying? I don't understand. Liter. Sorry. liter. Right. You know, so they start with, you know, probably start slow and depends on the size of the dealer counter as well, right? You know, so if it is a big dealer counter in which we have managed to enter, we may start with a much higher volume right at the beginning, right? If it is a smaller dealer, he will, you know, start with a smaller volume. It depends on what type of dealer you have got into and, you know, what is his profile. If he's got a very good footfall, if he's got a good contractor base, if he's got, you know, architect connections, he may start with a slightly higher volume. It also depends on how he places you in his counter. It sometimes may be that you are a second bet and he feels that, you know, he needs a good company and he may give you due importance. Sometimes you might be the fourth entrant in his counter, in which case he'll give you only a little bit of space, maybe one or two products only which he will sell, which he likes. It depends on lot of these factors. It's very difficult to quantify, you know, exactly what will happen, and this is what is going to repeat itself in across counters. It varies from counter to counter. Thank you, Abhijit, and, thanks for your patience and all the best. Thank you. Thank you. Participants, if you wish to ask a question, kindly press star one. The next question is from the line of Ajay Thakur from Anand Rathi Securities. Kindly proceed. Hello, sir. Thanks for taking my question. Just had two questions. One was on the industrial and auto paint segment. Just wanted to understand how the growth has been trending in both the segments. Also, can you just give some color in terms of the margin performance in both the segment? I understand that also you have been sitting on a high-cost inventory, but if you were to adjust for that, can we expect, you know, margin of these segments actually being, you know, improved to at least near pre-COVID level kind of a, you know, margins? Yeah. As far as the industrial business, we have, you know, three broad lines, automotive and general industries, you know, protective coatings and powder coatings. The powder coating segment, you know, as I mentioned, is de-growing in our case. Need not be for others, you know, for us, you know, because we are slightly dependent on the fan industry for our sales in powder coatings, and that there were some issues with the fan. They were changing some norms and star ratings were coming in. They had stopped production for almost, you know, two months, and therefore the sales have been impacted. The profit in the case of powder coating remains stable. As far as protective coatings is concerned, the sales growth has been good. We are the leader there. Infrastructure spends are very high now by the government. You know, also in this budget as well, CapEx spend has gone up substantially. We are, you know, looking forward to this good growth continuing in the future. The margin, however, is a bit squeezed here. It hasn't gone back to the COVID days. If even if we adjust for the raw material, and then finished goods stock, you know, which we had carried forward, it will still be marginally below the pre-COVID period. Because the full extent of the raw material price increases have not been passed on in the industrial section, whether it is auto, GI or protective coating. Okay. Sir, secondly, I just wanted to understand on the growth, how it has been in Tier I versus the Tier II, Tier III towns. Some color on that front. We've been growing reasonably well in both these markets, you know, so far. Both the urban markets, we don't look at it, you know, from there. We look at it urban and non-urban, you know, and all our depot towns we consider as urban, including the major city. So from that perspective, you know, more or less the growth rates have been on equal terms. No great significant difference that we could see between the two. Thanks, sir. That's all my time. Thank you. Thank you. Participants, if you wish to ask a question, kindly press star one. As there are no further questions, I would now like to hand the conference over to the management for closing comments. Yes. Thank you know, for all of you for coming and, you know, participating in this session. I hope, you were, you know, whatever questions you had, we were able to answer those satisfactorily. Wish you all a very good health and meet you again in the next quarter end. Thank you. Thank you. On behalf of Emkay Global Financial Services, that concludes this conference. Thank you for joining us. You may now disconnect your line.