Ladies and gentlemen, good day, and welcome to the Berger Paints India Limited 2Q FY24 earnings conference call hosted by Emkay Global Financial Services. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star and then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Nitin Gupta, Emkay Global Financial Services. Thank you, and over to you. Yeah. Hi, good, good evening, everyone. I would like to welcome the management and thank them for this opportunity. 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. I shall now hand over the call to the management for the opening remarks. Over to you, gentlemen. Good evening, ladies and gentlemen, and festive greetings to all of you. A warm welcome to Berger Paints quarter 2 FY 2024 earnings call. And as you all know, we have with us our MD, Mr. Abhijit Roy, and our CFO, Mr. Kaushik Ghosh. B efore I hand over to Mr. Roy for his comments, followed by your questions, I would like to say that the management presentation on the performance has been uploaded in our website and on the exchanges. Just a standard disclaimer, that questions should be restricted to the performance of the quarter. With that, I'll hand it over to Mr. Roy for his comments. Thank you, Sujyoti, and a very warm welcome to all of you. And we will be discussing today the Q 2 and the half year results, which we have declared, you know, a few minutes back. As you can see, from the chart that we have already sent to all of you, the top line, which we registered in quarter two, was a bit moderate. We had a growth of about 2.8% on a standalone basis. However, we registered strong growth in the two or three-year compounded basis of 12.2% and 16.7% respectively. I n terms of the half year, the half year is better. We had a growth of 6.5% on a half-yearly basis in terms of value. I f you look at the two-year and three-year CAGR, they are at 20.7% and 29.9% respectively. If we look at the Indian operation, we, Berger Paints, and in the consolidated, we have two companies, STP and Saboo, which operates sites in India. If you add up all these three, the market share that we so far, these two companies have already declared, we are the third, and this is estimated for the fourth. Approximately what we feel is that we would have gained market share to the tune of about 0.7%-0.8% in half year of this year. W e had closed last year at about 19.3%, and we expect that the market share should be above 20% level at the end of half year of this year. In terms of the volume growth, we registered a volume growth in quarter two of 10.9%. The two-year CAGR is about 10.6, and the three-year CAGR is about 14%. On a half-yearly basis, it is at 11.8%, two-year CAGR is 18%, and three-year CAGR is 23.7%. Though we maintained double-digit volume growth for the quarter, the value growth was much lower. The extended monsoon resulted in low off-take of exterior and interior premium emulsion, and it was much more of the sale of economy category, in economy emulsions, primers, distemper, putty, which was the result of that, you know, that the value sales growth was relatively lower. We also sold much less enamel first quality in this quarter, which is a high ASP product, and therefore, the value sale looks little bit lower than normal. That's the explanation for the volume value differential, though we did have a decent volume growth given the situation, which was quite tough because the extended monsoon, due to the post movement of, you know, the season, you know, it is slightly delayed. A lso, of course, the fact that, you know, there was a relatively higher base because of the price increases which had happened last year. N ow if you look at, you know, standalone profits, we registered a decent EBITDA growth of 26.7%. On a half-yearly basis, it is even stronger at 32.5%. There was very strong growth in the gross margin. It is the highest now, you know, in the last few quarters at around 40%. Operating margin, however, expanded by 310 basis points. The margin expansion was somewhat moderated on a conscious call taken by us to increase ad spend, especially in the digital segment, which we have been working on diligently this year. In terms of the financial results, if you look at, you know, which we have posted there, we did a sale of about INR 2,439.84 for the quarter, with a growth of 2.8%. EBITDA grew 26.7%, and PAT growth of 27.9%. On a half-yearly basis, the corresponding figures were revenue growth 6.5%, operating growth 32.5%, and PAT growth of 34.1%. If you look at the decorative business, the decorative business growth, even though muted, was better than the industry average. Lower growth, as I have mentioned already, was on account of extended and sporadic monsoon, festive season, which has been delayed and some impact of a high base effect. Decorative business improved as the quarter progressed from July to August to September. Construction chemicals and waterproofing business had another quarter of very strong sales performance. Aggressive network expansion also helped to some extent and is going to help us further in the future. We added 2,000+ retail touchpoints in quarter two of this year and installed 1,700+ ColorB ank machines in this quarter. Some initiatives which we took on the digital side, you know, some very interesting work is going on. One of them is we introduced one app, which is the Berger My Colour app. AI-driven, very interesting, app, which has got very strong downloads already. The company is also working with Salesforce for increasing the efficiency in lead generation and better customer management. Express painting service, which was there earlier, you know, in all the major towns, is now being extended across many more smaller towns and, you know, upcountry markets, and we expect very quick results in this as well. As far as, you know, products are concerned, you know, we have introduced some interesting products in the last quarter itself. Silk Glamor Dazzle, which is doing quite well in the east, specifically. WeatherCoat Long Life 15, with a 15-year warranty. HomeS hield Elastoseal, you know, WeatherCoat Anti Dustt, which continues to do well. Easy Clean, which continues to, you know, be a leader in its segment. WeatherCoat Long Life Flexo, which we have started advertising. Of course, you know, in construction chemical, we have Dampstop, which we have been advertising very heavily now, both on the TV and the digital media as well. Even in the cricket matches, you will get to see that. Of course, you know, we also participated in the festivities of this year with Durga Puja in West Bengal. We have a very interesting program called Berger Priyo Pujo, which we sponsored, you know, and, which just got concluded, and, you know, we are now onto the Diwali period now. The Diwali season is coming up. So far, it looks quite good, as far as the Diwali belt is concerned. Sales has been quite good. Protective Coatings maintained a steady, consistent growth in the quarter. Automotive and general industrial business had double-digit growth in the quarter, even against a high base in the corresponding quarter, due to the growth in commercial vehicles and two-wheeler industry, which has improved from what it was earlier. Powder Coating business line showed a turnaround with robust double-digit top line growth, aided by some uptick in the fan industry. If you recall earlier, you know, this has been a troubling factor in the powder coating business. So now the situation has reversed, and therefore we are getting stronger growth. As far as the gross margin is concerned, I had mentioned that it is in the last few quarters, the highest at 40%. However, the PBDIT is at 16.5%. We had given an indication that it will hover around the 16%-17% range, and that is where we are. Deliberate spending on advertisement, especially in the digital media, will continue in the future. As far as consolidated business is concerned, that is actually it has outperformed the standalone on the back of strong double-digit top line growth and even stronger profitability growth across all subsidiaries, except BJN Nepal. Nepal has been struggling, as you know, the country is going through an economic downturn, you know, for the past few months, and I don't see that improving immediately. So that Nepal remains, you know, a negative zone, but all other areas are doing very well, all the other subsidiary companies. If you look at the figures, you know, the top line has grown by 3.6% in the consolidated business. EBITDA growth is 30.1%, and PAT growth is 33.1% for the quarter. For half year, it is 6.7% top line growth, 34% for the EBITDA growth, and 36.7% for PAT growth. Company's overseas subsidiary, Bolix Poland, had another quarter of strong top line and profitability growth, driven by good performance in the UK business. Company expects to show good growth in quarter three as well. Company's overseas subsidiary, BJN Nepal, had another quarter of degrowth in top line, as I mentioned earlier, as the slowdown in the construction sector continued in an inflationary environment. However, it recorded modest profitability growth, aided by gross margin expansion on the back of improved RM pricing. Growth likely to remain negative in quarter three as well. Company's subsidiary, STP, showed healthy double-digit top line growth. It also recorded very strong profitability growth and operating margin expansion, aided by improvement in gross margin due to softening raw material prices and substantial improvement in product mix. We expect double-digit value growth to continue in quarter three, financial year 2024. SBL, which is a specialty coating, had a strong double-digit top line growth and a robust profitability growth, aided by higher product realization and softening RM price. We expect double-digit value growth to continue in quarter three of financial year 2024. The joint venture, Berger Becker Coatings, which doesn't get consolidated in terms of sales, et cetera, experienced a decline in both its revenue and profitability, primarily, this is attributed to the capacity limitations resulting from a fire incident which happened, as you know, in our main manufacturing facility in Goa in the fourth quarter of financial year 2023. That is being restored, and we should see back to normal work there in quarter one of financial year next year. Company's joint venture, Berger Nippon Paint Automotive Coatings, had another very strong quarter of robust top line growth and profitability growth, aided by uptick in passenger car and SUV sector. We expect the strong growth to continue in quarter three of financial year 2024 as well. As far as capacity expansion is concerned, work of the new plant in Panagarh will start in the next six months, investment one for industrial paints and construction chemicals, with a capacity of about 3,500 KL/ per month. Expected completion is by end of 2025 or beginning of 2026, maybe. Further greenfield facility to come up near Bhubaneswar in the state of Odisha for manufacturing of both decorative and industrial paints, we've just been allocated land. Expected completion by end of 2027. Some brownfield expansion in existing facilities in Ballabgarh, Delhi, Hindupur, and Visakhapatnam to be completed in financial year 25. Company expects improvement in decorative demand in Q3 on the back of extended festive season and improvement in rural demand, aided by a normal monsoon. Automotive business expected to continue with double-digit growth in quarter three on the back of sustained demand. Protective coating business to do well on account of high government spending on infrastructure. General Industrial and powder coating business is to show strong double-digit growth in quarter three of financial year 2024 again. We maintain double-digit growth outlook for quarter three. Profitability expected to sustain in quarter three on moderation of raw material prices. However, impact of geopolitical situation on commodity prices can be a concern. And thank you, and now I can get to the question-answer session. Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 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 we have from the line of Abneesh Roy from Nuvama Institutional Equities. Please go ahead. Yeah, thanks. Congrats on double-digit volume growth in standalone and 10-quarter high gross margin. My question is on the 20%+ market share. I f you could tell us in this very competitive industry, what are the two, three steps main steps, which are driving this? S econd is 10-quarter high gross margin in a quarter where the emulsions, both exterior and interior, are low, which are the higher margin, plus you did say that lower end grew faster. H ow come the margins are higher than Q1 and Q4 also? Because broadly, last two, three quarters, raw materials are in a tight range. Right. You know, so, the 20% market share first, you know, primarily, three areas of, you know, which we are looking at, you know, which is helping us. Number one is in terms of distribution, expansion, the network expansion itself, as you saw the figures, it was quite strong, and this has been going on for some time now. Expansion of network is one of the major drivers for us, and I think, you know, even now, there is a lot more scope to improve on this area, because there are a lot of gaps in many states where we can do much, much better than what we are doing. The second part, of course, is, you know, in terms of the construction chemical business, which is growing at a rapid pace, which is helping us to actually accelerate our growth. Because now it has reached, you know, a level which is significant, and, you know, growth on that is helping us to overall, it is helping the overall growth criteria. T hese two major areas which are, you know, definitely helping. Of course, you know, some of the new products are doing well. In certain pockets of the country it has picked up momentum quite a lot, and therefore, that is also adding to the overall gain in market share. Now coming to your second question, which is a very relevant one, that you know, how come that, even though the luxury emulsion sales or the premium category sales has been a bit muted, how have we delivered on the Gross Margin? There are two or three reasons for it. One of course, is that the raw material prices, you know, have reduced, you know, and the benefit of it, it is coming to us a bit late. I had mentioned in the last quarter also that the full benefit had not come in the previous quarter to us because we were carrying a bit more inventory, and that is, you know, old inventory at the price, old prices, you know, which is helping us. The second is in terms of the low sale of enamel. Enamels are typically a very low-margin product. As I mentioned in my comment, this time, you know, enamel sales have been considerably muted, which is why the value sales actually, you know, did not rise to the extent of the volume growth, b ut it has a very low margin. In fact, enamels are negative in terms of profitability, and therefore, the gross margin tends to move up when enamel sales are on the lower side. The third reason is some of the products, as I mentioned, some new products are doing very well. Two of them, you know, which is Weathercoat Long Life 15 and Glamor Dazzle, Silk Glamor Dazzle, you know, these are very highly profitable, and they are growing at a very rapid pace in certain markets, especially in the east, which has helped us to shore up the margin. Sure. Understood, Abhijit. Very helpful. My second question is on the competitive intensity, and this is not from the market leader. My question is, last 2 years, a lot of few cement players have acquired small, small paint companies. A ny ramp-up till now? Second is, in FMCG, 5-6 categories, we are seeing local players become more aggressive on advertising spends and promotions. In paint industry also, the gross margins for the entire industry is at a 2-3 years high. I n terms of local players, and you said local, lower end is growing faster. I f you could tell us, in your key markets, the local competition, is it higher versus, say, last 2 years' average? W hat are you doing in terms of being proactive? The cement companies which have already come. I'm not referring to the big daddy, which will enter in Q4. I'm referring to Astral of the world and some of the paint companies which have acquired small paint companies or cement companies which have acquired. Right. No, so as far as the cement companies or other building material companies which have jumped in, we haven't seen, you know, much of an impact so far. Maybe it may have an impact later on, but as of now, it hasn't impacted us. Some of these companies that you mentioned, like Astral, you know, which they acquired Gem, their main market is in Karnataka. We are not a very strong player in Karnataka. I won't be able to comment, but it hasn't impacted us in any which way, in any of the markets where we operate, you know, or we have a stronger presence. The second part of the question which you asked is related to the unorganized players and, you know, how are they doing? In certain parts, they have revived, especially in certain products like, you know, primers, water-thinable primers or solvent-thinable primers, which is in the lower end of the spectrum. There is some amount of revival from these local players. A t the same time, we have got competitive products now, in this price range, both in terms of the emulsion category and also even in the primers. T hough they may have revived and some gain might come to them from other companies, as far as Berger is concerned, we have remained more or less, you know, unaffected so far by this organized segment. Sure. Understood. Last quick question, and which is a bit negative in terms of numbers. I f I see volume growth versus the value growth, there is an 8% difference. And here you have mentioned that economy segments grow faster. W hat is your take on economy segments growth in H2? Because generally, what we are picking up, rural slowdown is still continuing, but you have mentioned that in H2, because of whatever reasons, you expect the rural should recover. Second reason seems more of a Q2 only, because that was linked to the monsoon, the emulsions are not selling well. I n Q3, when the emulsions issue will not be there, would you expect that the 8% gap will be a much lower gap, say, insignificant kind of a gap between value and volume? Yes, you know, so in short, you know, the volume value gap will get much reduced in Q3, and it will be very clear when the results come out. Definitely, not at this level, because, you know, luxury category tends to sell much more in Q3 and Q4 as well. T herefore, you know, the gap which you are seeing, also the normal bases are not that strong in Q3 or Q4. So therefore, you will tend to see a much closer volume value equation. T he growth rate or value growth rate will go up, even though the volume growth rate may not climb so much. So thanks. That's all for me. Thanks again. Thank you. The next question is from Avi Mehta from Macquarie. Please go ahead. Hi, sir. Thanks for the opportunity, and congrats on the performance. Sir, I just wanted to build up on the last question asked by Anil. If we are seeing a mix improvement that would pan out, would it be rational to also argue that it would flow through to gross margin as well? As I explained, you know, you know, it is difficult to say like that. I don't think, you know, there will be too much of an impact on the Gross Margin, because, you know, there are two things which will happen, you know? One is that there will be an improvement in the mix, you know, which is for sure, b ut at the same time, you know, the annual mix which had decreased quite a lot, you know, corresponding to where if you look at, it was not doing well, will do slightly better in this quarter, a nd overall, therefore, I don't see the Gross Margin, you know, increasing too much. It will be hovering around the same point. Of course, the raw material prices also is impacted a little bit because of the climb in the oil prices to some extent. There were two increases which were announced, you know, in the oil prices, you know, earlier in the MTO prices. T he raw material prices had gone up. Luckily, it has been reduced again day before yesterday to some extent again, giving relief, b ut there is still an increase which has happened from what it was earlier. The second is in terms of we have a fairly substantial basket of imported items, and the rupee has depreciated somewhat from earlier levels, so that will also impact negatively. So I think overall, the margins will be at similar levels to what we were at in Q3 in gross margin terms. Got it, sir. Got it. Fairly clear, sir. Thank you very much for that. Sir, the second bit was on the subsidiaries. Now, from your comments, it, it did suggest that the performance was more of a mix improvement and there's genuine recovery. T he profitability pickup has been much sharper and very healthy. Would it be fair to say this is something that will continue? Because maybe, you know, the mix of STP doing well has improved the way I should look at the different standalone income statement, or is there anything that is more one-off? I'm just trying to understand how I should look at this quarter from a template point of view. Is this what I should kind of- Yeah. See going forward or what? Thank you. Indian subsidiaries, you know, it sort of, you know, going to remain, I think. You know, the improvement that we see is likely to continue. The STP, there is a mix change which is happening in the positive direction. They were in more into the determined category, but now much more into admixtures and, you know, more waterproofing products and repair products, which are much more profitable. T herefore, you know, that is going to continue. T he margin improvement will remain, as far as STP is concerned. It may not increase from here on by, you know, huge amounts, but it is likely to remain at this elevated level, and marginal improvements from here can really happen. As far as powder coatings is concerned, industrial raw material prices have decreased, and that has helped, you know, it to restore it back itself to the earlier higher profit margin level, a nd if the raw material prices remain at this level, it is likely to behave in a similar fashion. Got it, sir. Perfect. And even for the international, sir, in Nepal. In the international, Nepal, you know, the value growth itself is, it's negative this month, this quarter also. I don't see this improving, you know, the way things I'm hearing from the team there. I don't think, you know, it's going to improve much. I t's going to remain muted. A s a result, you know, margins also. Margins are there, you know, which is fairly decent, but it will not improve for sure, because, you know, when such a situation arises, people tend to relate and try to get sales. I don't think, you know, margins are going to improve there. As far as, you know, the international operation of Bolix is concerned, that will have a margin which will be similar to what we had in Q3. But the sales will be a little bit muted than what we were having in Q3. Perfectly. Very clear, sir. S ir, just a last bit from a bookkeeping question. You know, you have now been aggressively adding capacities. Is there any CapEx plan or number that you could share with us, which we could kind of build in for the next few years? Or is this something that is not very materially brownfield expansions? CapEx plan is not very heavy in the immediate future. One is the brownfield expansion, which, you know, is well within, you know, whatever we are, cash we are generating. It will take care of both the Panagarh and the brownfield expansion. T hat's very easily, you know, done, and I don't see that impacting us in any which way. As far as the Odisha plant is concerned, that work will begin year after next. A t that point of time, it will be better, I'll be in a better place to tell you how much investment is there. As of now, it's little bit maybe less. Got it, sir. Perfect, sir. That's all from my side. Thank you very much, sir. Thank you. The next question is from the line of Aniruddha Joshi from ICICI Securities. Please go ahead. Yeah. T hanks for the opportunity. J ust one question. We had tied with the UltraTech to sell paint through its certain cement dealers. W hat was the revenue collected as% of total sales from these outlets? A ny outlook on, you know, these kind of sales now? How do you see the competitive pressure building? Means from your internal assessment, in which regions we are seeing the maximum impact of the competitive pressure? T hese are the two questions. Yeah. Thanks. Right. A s far as the UltraTech association was concerned, we had a relationship with them under the UBS store concept, where we were the paint partner for them. We were working jointly in many of these accounts. It was a very small turnover, minuscule in terms of, you know, contribution. W hen those dealers where we had, you know, sales, we have gone direct, with them, and then we are doing business. W e don't see any major impact as far as, or even moderate impact or significant impact or any type of impact which is material as far as this part of the business is concerned. As far as competitive intensity is concerned, it remains quite strong even today. Everywhere, you know, the premises are always on, but some of the markets are doing little bit, you know, is not performing, for the last 1-2 months. One of them is Kerala, and I don't know why and what is going on there, but Kerala seems to be slightly down. It's definitely not competitive intensity which is weaker, but the market itself seems to be, you know, on the downturn. Okay. Thanks. Thanks for that. I meant to say, basically, UltraTech means Grasim probably through UltraTech, it has introduced multiple products, including the waterproofing and distemper, plus I guess some basic paints are also, cement paints are also introduced through UltraTech. D o you see... So in a way, there is already some entry done by Grasim into the paint business or paint market itself. A ny feedback or any impact on Berger because of that, you see? Or any maybe color on that competitive angle if you can share anything? Yeah. Thank you. You know, actually, UltraTech, you know, through their Birla White has been on this for quite some time. You know, in fact, they have introduced this primer type of a product, in which even J.K. Cement had done earlier, which is a cement-based primer, which they tried to push. Then they came with a primer itself, but it hasn't, you know, worked so far because of the incomplete range and, you know, piecemeal approach. It doesn't help. You know, they have been selling primarily putty in the counters and not much of these other items that you spoke about. I t hasn't impacted so far. The Birla paint group, of course, has introduced one product, which is wood coatings, in some of the markets, but, you know, it's too early to say anything about it because, you know, not much has happened on the ground so far. Hello? Thank you very much. Yeah. Thank you. Thank you, sir. That's very helpful. Thank you. The next question is from the line of Shirish Pardeshi from Centrum Broking. Please go ahead. Hi, good evening, Abhijit. Thanks for the opportunity and congratulations for good set of margins. I just have one hypothetical question. Though there are a lot of news around competition and all, to my understanding, paint is a low consumer involvement category. In that, the intermediary plays a lot of role, and that's why I wanted to understand, because about 2-3 quarters before, you mentioned and highlighted that there is a strong process, and there are a lot of recruitment which is happening on the project business. C ould you talk something about the project business, how it is shaping up, and what is it that we are trying to develop? S econd, in last 30-40 days, how the demand has shaped up? Because to my understanding, the sporadic rains has spoiled the first half of the quarter with it. Hello? Yeah. Yeah. You know, so you have, you have two questions which you've asked. Yeah. Hello, there's some disturbance in the background, you know. Not from my side. If you don't mind, if you can- Not from my side. If you can quickly repeat. Yeah. Hello? My, my first question was that, about two, three quarters before you mentioned about the project business, there is a lot of focus around it. Yeah. Right. What is the update there? How far that business has reached? Right. Second, I asked how that last 30 days has happened, because quarter two, first half was bad in term because of rains. W e understand the demand last 15, 20 days has picked up, and even the inventories has gone up in the system. M aybe on the demand side, how it is shaping up, if you can share? Right. Right. A s far as the project business is concerned, this is, you know, we have been at this game for some time now. S ince the build, you know, pickup has happened in terms of the building construction, the project business has been doing reasonably well, and then it continues to do well. Of course, it is a very smaller portion of the overall pie, and it, though it is growing at a slightly higher pace than the retail, it still remains at a low level in terms of the overall sales of the company. As far as the demand situation is concerned, the Diwali belt, as you rightly said, had picked up, you know, substantially in the last, you know, 20-25 days. We had a good October as far as the Diwali belt is concerned. The east was a bit muted because of rainfall and then the Durga Puja, which fell right in the middle of the month for four days. B it muted as far as east is concerned. South also did okay, but except for Kerala, which had some sort of a problem and which resulted in a downturn in Kerala. T his is the situation as far as demand is concerned. Taking a cue from this, do you think aspirationally everybody would like to grow double digit, but since things are in control and the festive season is also will have a strong effect because of the spread or between Diwali and Dussehra is longer. D o you think second- half also we will be able to do a strong double-digit volume growth? That inclination is to do that. I t all depends on how market shapes up. If, if east and south also starts batting, you know, well, at levels, you know, which is similar to the Diwali belt, then, yes, you know, I would say, you know, there will be a fairly decent growth rate in the quarter three, you know, of this year. Yeah. The reason why I'm asking, because your quarter three last year growth was only 7%. Yes. I think the pace is favorable. Quarter four, we have inched up from 7% to 14% growth. So that's why I'm saying, even if you maintain this kind of run rate in a weaker demand situation- Yes. If demand is stronger, you will be able to maintain a higher, strong growth. That is right. So that's what our expectation is. I only hope and wish that, you know, some of the Kerala or, you know, the southern market picks up momentum, you know, in November and December. Okay. All right. Thank you, and all the best. Thank you. Before we take the next question, a reminder to all the participants that you may press star and one to ask a question. The next question is from the line of Atharva Bhutara from Purnartha. Please go ahead. Yeah. J ust one question. In quarter four, how do you think the demand will shape up? Because we are having a long festive season in quarter three. D o you think that there'll be single digits of demand coming in quarter four year-on-year basis? That's, that's a very difficult, you know, question to answer at this stage. You know, I, I, frankly speaking, I don't think, you know, quarter three is going to impact quarter four in any big, you know, any, you know, significant way, because, the main season and month is, was October, and then part of November. I t's not that, you know, as if December is going to peak, and therefore it might impact Q4. Q4, on a standalone basis, whatever is, you know, which, whatever way the demand flows, at that point of time, based on that, our growth rate will come. But, you know, going by what we have been doing so far, I think, you know, we, we should have, a much stronger growth rate in Q3. That much we can predict compared to Q2. What will happen in Q4, only time will tell, but we expect that the demand should stay at this type of level, and we should have a decent quarter in Q4 as well. Okay. Thank you. Thank you. Before we take the next question, a reminder to all the participants, you may press star and one to ask a question. The next question is from the line of Varadarajan. Please go ahead. Good evening. I just wanted to understand, what has been the growth in the distribution network with respect to the previous quarter and compared to last year, a nd how are we trying to see that we have a reasonable growth, considering the competition in intensity increasing? Yeah. A s I mentioned, you know, we had added about 1,700 color bank machines in Q2 of this year, and about 2,000 retail touchpoints, which is, you know, a fairly strong number addition which has happened in this quarter. We expect that in quarter three also, we will add a similar number of machines and retail touchpoints. So thereby, you know, it is going to help us in this year and also going forward in the coming year. Competitive intensity is always going to be there, and it has always been there in the paint industry. Many players have come in, but, you know, we need to be focused on our approach. We should continue to grow-... We have to figure out ways and means of achieving our growth rate, and that's something which we are continuously working on, and we are reasonably confident that our growth rates will continue. Just, for understanding, how big is paint distribution network compared to cement distribution network, especially with Birla coming on paints and having the cement distribution network? This is, you know, not a very pertinent, you know, way of looking at it, you know, because the cement distribution networks, all of them are not going to convert into paint distribution networks. Only a small fraction of it will convert and succeed in selling paint. You know, it's not like that, you know, you can all the paint dealers will suddenly become cement dealers or vice versa. It doesn't happen like that. T herefore, you know, having, I don't know what the cement distribution network size is, but we have operated, as you would have heard earlier, that we were a partner with, you know, Birla in the UltraTech Business Solutions group, which was a cement network. And I don't think, you know, that network is very conducive for paint selling. Okay. Just a last question. How is the ROA for the distributor? What? Return on investment for a distributor. That varies, you know, from distributor to distributor, at what price point he's selling, what is the mix of products that he's selling. You can't have a fixed number there. It varies from, you know, one person to another person. It can vary anywhere between 15%, you know, per annum to maybe even 40-45% per annum. I t depends on the type of products that they are selling and, you know, what he's doing. Is he, you know, more into premium luxury product type of, you know, or is he selling completely commodity products? At what price he is selling, which part of the geography he is present in. I t has many factors. I don't think we can put one number there. Okay. Thank you. Thank you. The next question is from the line of Ajay Thakur from Anand Rathi. Please go ahead. Hi, sir. Thanks for taking my question. I had one question on the raw material side with the current crude oil prices. Can you just throw some light on how the you know, the crude linked derivatives are behaving? Also, what could be the impact of the same in the coming quarters? Right. Yeah. A s I mentioned earlier, the pricing had gone up a little bit, especially in, in the solvent side, but again, there's some correction which has happened in, in, day before yesterday, downward. I t is nearly back again to the earlier levels, as far as solvents are concerned. Some of the other raw materials are stable. There has been no major change in terms of the prices, but there has been, you know, a depreciation of the rupee versus the dollar. To some extent, that will impact, a little bit in terms of the gross margin. Okay, thanks. Thank you. The next question is from the line of Archana Menon from Morgan Stanley. Please go ahead. Hi, sir. Thank you for the opportunity. T wo questions on the capacity side. So how much do you think in your 12 lakh odd capacity increase to, including the brownfield capacity as well, addition? That was the first question. And the second part of the question is, how is your capacity currently split between north, south, east and west? Right. W e are currently pretty balanced as far as the north, south, east, west is concerned. There was a lack of capacity in the north earlier, which we put up the Kandla unit, which is operating at around 48-50% level as of now on a consistent basis, which can be therefore scaled up to higher levels. W e are quite comfortable as far as capacity is concerned. Most of our factories are operating at about 80% odd level, and except for this factory, which is operating at a lower level. A s of the brownfield expansion will be, you know, not very capital intensive and, but the capacity can go up, you know, quite a bit. It should be enough for us to last for at least two years going forward. A s I said, you know, a year from now, we will start planning for the Odisha plant, which will be a very big plant. That is a time when we will have to, and that will be phased out in 3 to 2 years of construction and, you know, setting up of the plant. W e will add up approximately another 30,000-35,000 metric ton per month capacity once the Odisha plant is set up fully. Got it. Thank you so much. Thank you very much. As there are no further questions, I would like to hand over the conference to the management for the closing comments. Please go ahead, sir. Thank you. Thank you all for coming and attending to this conference call. Wish you all a very happy Diwali in advance, and a great festive season. Thank you once again. Thank you. On behalf of Emkay Global Financial Services, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.