Everyone, this is Nitin Gupta from Emkay Global. I would like to welcome all to the Q2 FY25 results conference call of Berger Paints India Ltd. I thank Berger Paints Management for allowing us to host. We have with us today Mr. Abhijit Roy, Managing Director and CEO, Mr. Kaushik Ghosh, CFO, Mr. Sujyoti Mukherjee, Vice President Finance and Accounts, and Sanatan Sarkar, GM Finance and Accounts. I shall now hand over the call to the Management for opening remarks, post which we will proceed with Q&A session. Over to you, gentlemen. Thank you, Nitin. And a very warm welcome to ladies and gentlemen. And we also convey our festive greetings to you. Welcome to Berger Paints India Ltd. Q2 FY25 earnings call. The management presentation has already been circulated, and it is already updated on the website. I would request Mr. Roy, our MD and CEO, to walk you through this presentation, followed by your questions. So over to you, Mr. Roy. Thank you, Sujyoti, and good evening to all of you, and a belated Happy Diwali. I'll take you through the quarter two results. Top line was muted, as you would have seen, remained almost flat on a year-on-year basis, impacted by extended monsoon and flooding in some key markets. However, some traction was seen at the fag end of the quarter towards the end of September. We believe that we have continued to gain market share in quarter two in spite of the muted performance. Product price increase of about 2.3% undertaken in the quarter. Highest gross margin of 40.4% in the standalone and 41.7% in consolidated in the last 10 quarters. Operating margin remained within the guided range of 15%-17%, and company continued to maintain its net cash positive position at the end of the quarter. Volume growth for quarter two, 3.6% on a half-yearly basis at 7.8%. Value growth, 0.4% negative, almost flat, and 1.1% positive on a half-yearly basis. The company recorded single-digit volume growth. There were two major impacts: unusually extended monsoon, and excessive rains and flooding in many parts of our key markets like Andhra, Kerala, West Bengal, Gujarat, and Maharashtra. Sales picked up towards the last part of September. Volume-value gap, which existed because of the price drop which had happened last year, was partly mitigated through product price increase undertaken in this quarter and improvement in product mix, especially greater sales of premium and luxury products and much lesser sale of basic products like putty distemper. Protective and infrastructure business recorded good growth in the quarter. On a standalone basis, on a half-yearly basis, if we look at it, volume sales growth, two-year CAGR is 9.8%, three-year is 14.5%, and four-year is 19.5%. If we look at the value sales CAGR percentage, two-year 3.8%, three-year is 13.8%, and on a four-year basis, it is 22.2%. So the volume-value gap, as you look at it on three- and four-year basis, three-year is very close to each other. Four-year, in fact, value growth is slightly higher. It's only in these last two years, due to the price drop, that the volume-value gap has gone up, which will start weaning off in quarter three and quarter four. Maintained strong compounded growth consistently over the past three to four years. The last two years, volume growth has been moderately okay, but value growth, because of the price drop, has been suffering. Highest gross margin in the last 10 quarters, 40.4% was registered. As you can see, we were hovering around 35%, 36% earlier, and then it went up to 39%, 40%. We have been at that point in this quarter two, slightly ahead of everything, you know, 40.4%. Last year, quarter two was at 40%. Now, the gross margin expanded in spite of the price decrease impact on the back of improvement in product mix in the quarter. As I mentioned, double-digit volume growth in premium and luxury products and flat or a degrowth in mass products like putty distemper, primer, and enamel. Sustained improvement in margin of industrial business on account of raw material price drop also helped in improving the gross margin. Operating margin was lower on account of higher manpower addition for urban initiatives, which we have taken up, and construction chemical and waterproofing business. This is an investment which we have made and which will come out very useful for us in the coming quarters. Conscious call to maintain higher advertisement spends as well. Operating margin, however, remained in the band of 15%-17% as guided earlier. So operating margin, as you can see, on an average, has been hovering between 15% and 17%. There's one aberration of 18.8% and another one on the lower side at 12.9%. But otherwise, it is in that range. And this time too, it was at 15.8%. As I said, though the gross margin was high, we did spend on increased manpower cost. Conscious call has been taken where we have added some manpower for business growth in the future. And at the same time, advertisement expenses were maintained at a good level. Financial results quarter two, this is how it stands. Sales growth minus 0.4%, EBITDA minus 4.9%, and PBT at minus 5.9%, PAT at minus 6.1%. YTD at 1.1% growth, EBITDA at minus 5.4%, and PAT at minus 6.3%. Decorative business for quarter two recorded single-digit volume growth affected by the weather conditions. Premium segment did well in the quarter. Construction chemicals and waterproofing and wood coating products had a robust performance. Mass consumption products had either flat or negative growth rate. Aggressive network expansion continued. We added 2,200 retail touch points and installed more than 2,000 ColorB ank machines in this quarter. Differentiated products, we have a large range of this now: Anti Dustt, Easy Clean, Seal-O-Prime, Long Life 15, Long Life Flexo, Waterproof Putty, and a new one which we have added, Roof Kool & Seal. All of them did very well, registered strong double-digit growth. That has helped us also to improve our margin overall. In the construction chemical category, we have added a few more products. The range is being constantly expanded. We now have almost a full portfolio, almost 80%-85% of the major products in the construction chemical range we have already introduced, and we will continue to fill the rest of the gaps as well. In terms of media, as I said, we continue to spend reasonably well, both in television and also digitally. Mostly in digital media, we spent heavily on Express Painting, lead generation, etc. On the television front, we had major advertisements on Anti Dustt, Easy Clean, and then Roof Kool & Seal. The new initiative for the urban markets which we have taken, the urban initiative that I have mentioned, we added manpower, and a new team is in place from the month of August onwards. This has been fully operational to increase our focus on the urban markets. Various strategic changes, own stores, franchisee store, a lot of project work related manpower has been added, have been initiated to improve brand visibility and penetration. Results will be visible in the coming quarters. Industrial business, protective coating business continued its good performance with a double-digit volume growth and a mid-single-digit value growth for the quarter. Automotive, general industrial, and powder coating business line had a flat growth on the back of suppressed demand from two-wheelers and commercial vehicles for quarter two and home appliance industry. In October, of course, the two-wheeler industry did much better, and the growth was restored in automotive. Net cash, March 2024, we had begun with INR 341. We had gone up to INR 692. Then we had a lot of dividend outflow of about INR 400 plus crores. Now in September 2022, we are at INR 242 crores. October collection has been very good, and we expect that the net cash position will improve substantially by end of December. Financial results for consolidated for quarter two, total income from operations 0.3% and PAT at -7.9%, operating profit -8.3%. On a YTD basis, total income from operations 1.2%, operating profit -7.2%, PAT at -3.7%. Consolidated performance in Poland had a robust top line growth in the quarter. However, profitability suffered on account of certain one-off costs on project business in the third quarter. That will not be there. So there will be possibly a good strong double-digit value growth and a profit growth in quarter three. Company's overseas subsidiary BJN Nepal had another quarter of degrowth, both on top line and profitability as the credit crunch in the economy continued. However, the cash flow has improved significantly towards the end of the quarter, and we expect substantially better performance in quarter three. In fact, last month we had a double-digit value growth, and the coming current month, because of the low muted base, we will have substantially higher growth, probably in the tune of 40%-50% growth in Nepal, so we should have a good equation as far as quarter three is concerned in Nepal. Company subsidiary STP had a quarter of soft top line growth. However, profitability suffered on account of higher raw material cost and some of the one-off items in employee cost which we took in quarter two. SBL Specialty Coatings had a marginal degrowth in top line due to deterioration in the mix, expecting better growth in coming quarters. The joint venture Berger Becker Coatings had a healthy growth, both on top line and profitability on a muted base. The company's joint venture Berger Nippon Paint Automotive Coatings had a small top line growth and a robust profitability growth aided by gross margin expansion and cost restructuring. The business outlook, decorative business likely to show better growth in second half on the back of uptick in demand sentiment and channel inventory reduction as presently seen. The volume-value gap is expected to decline in quarter three through price increases implemented in quarter two to the tune of almost 2.5%, coupled with the waning of price decrease impact taken in November last year. Further improvements can be seen in quarter four once the impact of price decrease taken in January 2024 is negative. Moderation of inflationary trend post-normal monsoon likely to shore up rural demand. Urban initiative program taken by us to shore up volume growth in the urban areas in quarter three and quarter four. Industrial business outlook seen better on the back of increased government spending on infrastructure post-state elections. Auto, especially two-wheeler, is also looking up. Both Nepal and Bolix is likely to deliver strong double-digit sales and profit growth in Q3. Some impact of raw material price decrease will show in Q3 on account of the inventory effect, improving profitability marginally. Overall, business prospects look encouraging. Geopolitics may pose some risk, though. Thank you. And we can then go to the question and answers. Thanks, Abhijit. So we will now start with Q&A session. I hand over the call to my colleague, Pinky Mahto. Q&A session. Over to you, Pinky. Thanks, Nitin. Those of you who have questions can raise your hand. We will announce your name and unmute your line, also which you can ask questions. Please highlight your full name and the organization you are representing. The first question is from the line of Aniruddh Joshi. Please go ahead. Hello? Yes, hello. Yes, hello. Yeah, thanks for the opportunity, sir. Aniruddh Joshi from ICICI Securities here. Sir, the question regarding now we have seen one of the MNC player in paint industry has its parent has kept the India business to sell. So what will be Berger's strategy in this case? Whether the acquisition will help strengthen the market shares, or we are seeing some of the non-paint players also bidding for that. So if something like that happens, then the competitive intensity might go up further. So question number one, what is the strategy of Berger in this regard? And question number two is now we are at the peak gross margin. Now in a sector where the competitive intensity is rising with almost every quarter now. So we are operating at such a high margins. So in a way, it's literally an easy invitation for competition to in a way gain some market share or margins from us. So what are the thoughts on these two things from the management? Yeah, that's it from my side. Thank you. So thank you. Yeah, better. Aniruddh, to answer your first question about what can we do about Akzo, first of all, Akzo has not made its intention clear as yet as to what they want to do in the first place, whether they want to sell the decorative part of it, whether they want to sell the whole part of it, whether they want to do mergers or joint ventures. It's all up in the air as of now. They being a very professional company, I'm sure they will come out with the full disclosure and what they want to do. Once that is clear, we will make up our mind as to how to react to that situation. As of now, I think it is very premature to say anything. There's a lot of speculation going on. This fellow will buy, that fellow will buy, but there is no surety as to what is to be put on the table, and unless that is clear, I don't think anyone has got a clarity as to what needs to be done. They have only made a statement that it can be any of these possibilities. We have to wait for the final shape to emerge, and only then we can take a call. As far as the second question is concerned on the gross margin front, the paint industry has always been very, very competitive. Earlier too, there has been intense competition both from foreign and local players, and we have seen this happening. Whether it is paint or any of the FMCG category, gross margins have always been reasonably comfortable in India. The leaders always command sort of a premium in the market, and we are able to maintain the gross margins. We believe that we should be able to therefore carry on with our margins. In fact, we will try our best not only to retain, but to improve further on this by launching more and more differentiated products and making them more successful. Yeah, understood, sir. This is very helpful. Yeah, thank you. Thanks. Thank you. Next question is from line of Aditya Bhartia. Please go ahead. You spoke about. Hello? Yes, Aditya. Carry on, please. So my first question is on the urban initiatives that you spoke about. Firstly, I wanted to understand what was the need or the rationale of undertaking any changes in our urban strategy. And secondly, what exactly are we doing? You mentioned some own stores as well as franchise stores. So if you could just kind of throw some more color on that. Yeah, so these urban markets, specifically more so in the key metros, we have had a very weak presence. Our overall share may be around 20%, but in these major metros, our share hovers around 10%. Like Bangalore, Mumbai, Pune, Ahmedabad, Chennai, Hyderabad, these are markets where it's completely dominated by the leader currently. And there is a lot of, therefore, possibility of growing. This is a pretty large size market. The key markets alone have about INR 15,000 crore potential. And we are barely scratching the surface with about 1,400-1,500 crores of sale. The objective is to have a much higher presence in these markets. If we in other markets in our country and in smaller towns, we can have a good share, there is no reason why we cannot have a better share in these urban markets. Now, it's been a difficult one because these markets, you need distribution, you need contractors, you need equation built up with the builders, etc. And therefore, that needs a special focus. So we have got a separate team now, first of all, to cater to this requirement so that the tendency is that if you get higher sales in the upcountry markets, your focus shifts in that direction because this is more difficult. And hence, the team tends to focus on the upcountry markets rather than on the urban market. We have separated them completely so that the focus comes onto the urban markets because their life and death depends on the success of their urban performance. The second is the strategy change because urban market requirements are quite different. If you look at any of these cities, whether it is Bangalore or Mumbai or Hyderabad, it is all multi-story buildings. There are no houses of individuals as such. And so therefore, the strategy is quite different for these markets, which are required to be implemented on the ground compared to residential houses and bungalows in the upcountry markets. The strategic change calls for a different type of thinking as well. And therefore, the go-to-market strategy differs, which is why I said that there will be stores, etc., which will be there in these urban markets. We have initiated some of these changes already, and we should see positive action on this and positive results coming out of it in the quarter three, partly, and quarter four, slightly more. Going forward, we will persist and continue to strengthen our presence in the urban markets. Understood, sir. That's very, very helpful. My second question is that you had spoken about some one-off costs, especially in international subsidiaries. If you could just spell out what exactly did they pertain to, what kind of projects are we speaking about, and what could be the quantum? So this was in the Bolix subsidiary that we had in the UK. There was a project which was going on in which partial completion of the job had happened. We had booked that in terms of revenue. And then there was a little bit of a dispute with the party concerned. And hence, the partially booked revenue had to be reversed. That part, once we are very sure or rather hopeful that this will get resolved very soon. And once that happens, we will get back our revenue again. So that's how it happened. Understood, sir. So could you also quantify the number? It was about INR 12 crores, which was booked at that point of time. So not very meaningful, but on the console, it makes an impact. Sure, sir. Helpful. Thank you so much. Thank you. Next question is from line of Mihir Shah. Please go ahead. Hi, sir. Thank you for taking my question. I hope I'm audible. Yes, you are, Mihir. Hi, sir. This is Mihir here from Nomura. Firstly, on the demand environment, post the heavy monsoon, etc., how are you seeing the demand environment shaping in the coming quarters for the third quarter and fourth quarter? Would it be fair to say that double-digit volume growth is still a target that we would be trying to gun for, and maybe it's in an achievable range, a double-digit volume growth? Mihir, to answer your question, we see it improving in quarter three. Quarter four, it will be improving further. As far as quarter three is concerned, we will possibly be close to the double-digit volume growth rate. My expectation is between 7%-10%, anywhere in that range for the volume growth. In the fourth quarter, there will be definite double-digit volume growth, which will happen. As of now, half-yearly, we are sitting at about 7-point-something%, near about 8%, you can say, in terms of volume growth. And I think if we do well in the fourth quarter, as I envisage we should be doing, we should be very close to the double-digit volume growth rate at the end of the year. As far as value growth is concerned, as I have indicated in the quarter three, there will be some relief from the 5%-6% backlog that we were having because of the price drops, and 2.5% of price increase, plus about 1%, which will happen because of the price decrease effect going away. So we will bridge this 5%-6% to about 3.5%-4%. So 2% gap will still remain between the volume and the value in quarter three. And in quarter four, value should be 1% ahead of the volume growth. So therefore, the value growth will consistently improve in quarter three and then further in quarter four. Got it, sir. Understood. So secondly, on the exit of AkzoNobel and now with the entry of Grasim, so it seems to be there is a balancing off that is happening. Can one assume that this is a positive move and the fear of competitive intensity impacting the entire paints? Yes, I mean, normal competition will be there. But that the disruptive competition that was expected is no longer visible. I mean, did you see any disruptive competition in the festive? And so would one say that with the exit of Akzo now, one can safely assume that the fear of extreme competitive intensity can be behind? I mean, would you relate it in that way? I think that fear is built up too much, I would say, in the minds of the analysts much more. I do not see that as a big fear existing. Yes, there is competition intensity and has gone up a little bit. But that was expected. And with Akzo announcing that they may look at an exit, it's not very clear as of now, as I had mentioned earlier. Unless they clarify what they want to do, we don't know for sure what they are up to. But overall, one player has come. If another player goes away, so we are back to the normal levels of four major players in the marketplace, one getting replaced by another. The competition would have been there, but as I had always insisted that the impact won't be so high that it will be disruptive for the industry. It's a healthy, good competition. Keeps you on your toes, helps you to improve as well. So I would look at it from that perspective. Got it. Thank you very much, sir. Wishing you all the very best. Thank you, Mihir. Thank you. Next question is from line of Mrunmayee. Please go ahead. Hello. Hi, sir. I hope I am audible. Yes, you are. Yeah, hi. This is Mrunmayee from Asit Mehta Investment Intermediates. So, sir, my question was regarding the urban initiative. So is there any specific target attached to it, like any number of dealerships that you would like to reach or any timeline with respect to this? And the second question being that the increased employee cost with respect to this, can you quantify the impact of that? What we are planning to do is we are currently at around 10% in terms of market share in that particular urban zone, if you look at it. We want to improve it in the short run to about 12%-12.5%. In two and a half to three years, we should be around 15% in these markets. That's our aim to gain a little bit of share first in three years' time frame, reach at least at around 15% in these urban markets. That's one part. That is what we aim to do. As far as manpower is concerned, for all of these markets, we have put in manpower there, both managers and on-the-ground field. Overhead, also, some of them will get added. As time progresses, more investment will be made in manpower in these markets. So as of now, it's difficult for me to quantify exactly because that figure will keep changing as the months progress. Okay, sir. Got it. Thank you. All right. Thank you. Next question is from line of Karthik Chellappa. Please go ahead. Yeah. Good evening, sir. Am I audible? Yes, you are, Karthik. Okay. Thank you very much for the opportunity, sir. Three questions. The first question is, this quarter, the premium and luxury have actually grown double-digit, and they naturally carry higher realizations. Despite that, the volume-to-value gap is still about 4% odd. So I'm just trying to get a sense of the degree of decline in the distempers, enamels, and the degree of price cuts there because I would have thought that this favorable mix would have narrowed the gap even further. That's my first question, sir. Okay. So yes, you're right, Karthik. This actually, if you look at it last quarter, the gap was very high, much higher than. Even I think 7% plus was where we were. And therefore, that has got narrowed down to 4%. A part of it is 1% is coming out of the price increases that we have taken this quarter too. The rest is primarily due to the mix change which has happened, right? So there has been a mix change, and that is why the gap has narrowed. This will narrow further in quarter three because furthermore, impact of the negative impact of price decrease, part of it will go away. And the full impact of the price increase of quarter two will come into play. We will still have a gap of about 2% between the volume and the value in quarter three, which will reverse in quarter four. We will get a positive impact in quarter four between volume and value with about 1% value growth higher than the volume growth rate. And sir, your underlying assumption in all this is the economy segment volume continues to remain challenged, right? It's just that the mix improves and the price increase anniversaries, and so that becomes a favorable base. It's a choice we have exercised, Karthik. So it depends on the competitive intensity and pressure on pricing of especially items like putty, where we have deliberately, we have gone negative in putty this quarter because we found the prices very challenging and unnecessarily so. And therefore, we stayed away from negative gross margin wherever, in whichever markets that was happening. So that is why we suffered a little bit. But that is something which is dependent on whether this will continue in the future. If it doesn't, then possibly we will have a little better performance in some of these basic products. Got it. Thank you very much. So my second question is the observation made in the presentation that we believe we have gained share in the second quarter. I'm just curious to understand how you have actually computed that market share because the Grasim numbers are not yet clearly available in the public domain, and the market leader has also yet to report. So I'm just curious to understand the background of this observation. This is a market feedback that we keep taking from various. We have our own way of getting it. And so suffice it to say that you will see the results, of course, when it comes out. My understanding is that in terms of top line, we would have done better than most of the companies, at least the industry, whatever is the average, we would have done better than that, and that will give us a market share gain. As far as Grasim is concerned, we are not considering them as of now in the entire kitty because that share is, as of now, small, so of course, we have a fairly decent idea of how much they have done, possibly, so that's something which will impact, but not so much as of now. Got it. My last question, sir, is on a year-on-year basis, what was the increase in the headcount? Well, exact number is not very clear, but the overall manpower growth has been budgeted at about 17%-18% growth, so that's substantially higher than normally what we do. Correct. So I'm just trying to get a sense of how much of this is pure headcount. Out of that, 8%-9% is incremental growth, which means about which we give as increments, etc. And the 8%-9% is an addition of manpower. Okay. Excellent. That's all from my side, sir. Wish you all the best for the remaining quarters. Thank you. Thank you. Next question is from line of Amit Purohit. Please go ahead. Yeah. Thank you very much, sir, for the opportunity. Am I audible? Yes, Amit, you are. Go ahead. Yeah. Amit here from Elara Securities. Sir, just one on the overall industry trend. Like you highlighted the Q2, you would have done. But what would have been the industry growth, either in volume or value? What's your best estimate on this? See, my guess estimate will be it will be probably around -1%-1.5% overall for the industry in terms of value growth. Volume is anyone's guess because it depends on the mix of products that you have. If you sell a lot of putty and tile adhesive and products like that, the volume growth can go up. But that's not the way of looking at it. I think it's better to focus on the value growth. And I think that's the reported number as well. And that's something which I'm saying that that's probably going to be around that point. Sure. And sir, just on your comment that you've seen some pickup now in the October month, any regional trends you would like to highlight in Q2 and now? Is there any divergence in growth, whether south, west, north? If you could highlight that. So east, which was underperforming a bit, has bounced back a bit in the month of October. Parts of south, for example, Kerala, we did fairly well. And that's because the bases are low from October onwards in Kerala. Last year, the bases started slipping from October. So we are likely to continue to grow a bit in that market. These two are important markets for us, so it will have a positive impact as far as we are concerned. And at an industry level, it suffices to say that the growth has picked up across regions, or there will be some divergence in growth? No, there will be some divergence, I think. Some places are still a little bit struggling, but some other places, it has picked up. So, would that reason which are struggling would be? Is it south or west, or how does one think generally just to get a sense? Sorry, what to? Parts of like Andhra Pradesh and Telangana still a little bit underperformance going on there in those locations. Primarily in the south and the west, where Gujarat is still a little bit underperforming. But otherwise, yes, other places are reviving. Okay. And that would be largely to do with the rainfall which has continued. Yeah. Upcountry, for example, Bihar did quite well, actually, in October. So other upcountry, Madhya Pradesh. So these are the rural belt seems to be doing reasonably well in October. Sure. And sir, just on the point that you highlighted with respect to increasing your focus on urban, so one line of item is the employee cost you indicated. Would there be any increase in the other expenditure also likely? Because when I look at your first-half performance, I mean, broadly, I haven't seen a significant increase in other expenditure. So your thoughts should be expect that this should be now slightly higher than the revenue growth is the assumption to look at it, or? No, other expenses will be kept under control. I don't think there will be too much of an overspend there. The overheads will be under control completely. In fact, we will try and squeeze it a little bit. But in terms of manpower expenses, we will continue with our budgeted strategy, and we will continue to invest there. As far as advertisement is concerned, we will again continue there. So these two areas, I don't think we are looking at in a short-term way. We will continue to invest wherever required. Sir, last question on the consolidated minus standalone. So the subsidiary part, I see other expenditure has gone up significantly. Your run rate has been about INR 45-46 crores. This quarter has been INR 68.8 crores. Is that, I mean, the INR 12 crores that you highlighted is coming in the other expenditure, or is it coming in the lower getting deducted from the revenue? So part of it is basically that Bolix episode which happened, which is why you are seeing that expense going up. That is a one-off issue, and it will wean off in quarter three and quarter four. Will not be there in quarter three and quarter four. And the amount is INR 12 crores that you? That's right. Correct. Okay. Okay. Okay. Thanks a lot, sir. Thank you so much. Thank you. Next question is from the line of Avi Mehta. Please go ahead. Hi, sir. Am I audible? Yes, you are audible. Sir, hi, Abhijit. I just had two questions. First, I just wanted to understand the new entrant behavior. See, in particular, where I'm coming from is they have not taken a price increase. Have you seen any pushback from trade to give higher discounts because of this? Would be useful to understand that part. Yeah. So as of now, they are just establishing themselves. There is a little bit of a price differential which was always there. It has gone up marginally because we took up a price increase of 2%-2.5%, approximately between 2% and 2.5%. So that I don't think is a major play on the ground. It does not make too much of a difference. There has been no pushback from the retailers asking for a higher discount because the brands in which we are investing, the differentiated products, it doesn't matter at all because they don't even have equivalents. And in the products where the branded products exist, where we are advertising, and there, the price of 1% or 2% makes no difference. So that does not actually come into effect at all. Got it, sir. So in a sense, there is no sorry. In a sense, there is no hello? No, there has been no pushback and no effect so far from the channels. Okay. Perfect, sir. So it is kind of not suggesting that there is possibility of pricing being cause of concern from competition. Fair enough, sir. Not really. So the second bit is on the urban initiatives. Now, I understand where you're coming from, but historically, this focus has also required, I mean, at least reading your history in rural markets, you saw a J-curve emerge where the brand was known, you invested in brand development, and over time, it resulted in a sharp uptick in sales. Now, the benefit is that in urban India, I'm assuming that that investment is not required. Is that the right understanding, or do you think these urban would need marketing spends as well in some extent? No, marketing spends will be much lesser. So the brand is known, unfortunately. Like for in Bangalore, for example, just to give you an example, our brand is pretty well known. There are a lot of people who settled down from West Bengal, who settled from Kerala, who settled from Andhra Pradesh, and they are very well aware of our brand. It is strongly represented there in these states, right? So they are familiar with the brand. However, availability is an issue. And the other problem is we don't have enough contractors and painters to execute the jobs on the ground. So we have to do the basic, and that is where we run into problems because the existing lot of dealers and painters don't seem to align with us because they have already tied up with the existing companies. So we are trying to create our own sort of network in these markets, which will enable us to bypass this strangled hold on the dealers and painters by the existing players. And sir, you see this benefit not taking a lot of time because you said Q3 is when we should start seeing the benefit itself. Some benefit will come in quarter three, a little bit more in quarter four, and the next year, we should see much better benefit coming up. So lastly, sir, bookkeeping, we are reiterating. We have been able to maintain our 15% to 17% kind of expectation. I'm assuming there is no reason to revisit that range either on the upside or on the downside, right? I just wanted to reconfirm that. Yeah. I'm reconfirming very clearly that it will be within that range, at least in the foreseeable short-term future. Perfect, sir. Thanks a lot, sir. This is very helpful. Thank you and congratulations on this one. Thank you. Thank you. Thank you. In the interest of time, please restrict your question to two per participant. Next question is from line of Abneesh Roy. Please go ahead. Yeah. Am I audible? Yes, Abneesh, you are. Sure, sure. Thanks. So first is you did mention on the miss in Q1, Q2 because of the extraneous factors. So Q1, there was the heat wave and elections. Q2, there was the impact of 8% higher rains. Do you see this pent-up demand coming back at some stage, not asking Q3, Q4? Because currently, there is a very high food inflation in urban India. But ultimately, the demand which was not met has to come back. So would you see that coming back, say, either in H2 or FY26? Marriage days are very high. Now we have lakhs of marriages in the next few weeks. That also should help. So what's your prognosis on the pent-up demand? Yeah, Abneesh, we feel that it has happened in the time of COVID also. Demand always in paints doesn't get destroyed. It gets postponed, as you rightly said. And we expect that this postponed demand to come up. Now, when will it come up? Whether it will be this quarter, next quarter, or the quarter after is a difficult thing to say. However, we did see that in October, there was a very good traction. We did not get the full month because for Diwali, we had to close it around 28th of October. But in that short period, the collection was very robust, which means that secondary sales would have been very strong. We had the highest collection in that month. So all that pumping in of stock that we had done in the months of August and September got liquidated. Plus, we were able to cover the base of October fully, which means that market was quite positive as far as October is concerned. If this trend continues into November, December, we should be able to register decent growth in the third quarter, and in fourth quarter, it can be even better. Of course, as you rightly said, again, urban areas, there is some sort of restriction in terms of consumption, which we are seeing in the FMCG company's figures, but we are actually a small player, and with our urban initiative, we should be able to counter this comfortably, is my feeling, especially a little bit in quarter three and much more so in quarter four. Second question is you mentioned competition is more in the minds of analysts. So my question is, last two years, Pidilite has launched in few markets in internal deco, interior deco. Similarly, other players' names, I won't take, everyone knows that. My question is on your remark that this phase has been a healthy learning for you, and you have taken some improvements. So if you could talk about one or two examples of specific improvement you have done in your business, that is one question on competition. Second is you did mention that in Putty, negative gross margins are being done by some players. Now, why would any player or any industry have negative gross margin? That is very rare, right? This is a very stable, large industry. So I'm sure that's related to the new competition because they are very large in Putty, and now they have come into paints. Could you discuss that part a bit, why that's happening, where that's happening? So, Abneesh, as far as competition is concerned, you mentioned Pidilite, you mentioned another. So the Birlas have also come in, and so there is competition building up, definitely. But Pidilite so far has been lukewarm. They haven't been very seriously impacting anywhere in the paint business as yet. As far as the Birlas are concerned, they have installed a large number of machines across the country. And also, in terms of their effort on the consumer and painter front, they have been persistent on that. So far, the impact has been not very strong. Our estimate is that we would have lost about 1.5% of our growth. I had estimated about 2.5%-3% loss, which should happen to us. And that has to be compensated through other areas of growth. And that's what something which we are working towards. The strategy is very clear. There will be some amount of skirmish, some amount of value growth loss on account of competition, but that we should be able to recover from other areas. And on the Putty? On the Putty, actually, it is unnecessary, I think, as you are right, that why should anyone do it? But it is happening in the marketplace. Some of the markets, possibly the intensification of competition between two players resulting in a little bit of price erosion there. And I think that will settle down to very soon comfortable levels because it's a short fight which is on. And in these two, three months, they will realize that no one is gaining in doing so because this price game, there is no end to it. Anyone can play this game, and it's better therefore to see what happens because it's a pure play commodity. So the moment you give price, one brand gets displaced by the other. So it does not make sense to gain in this way because it is not a sustainable thing. So from our perspective, we are very clear. If we see positivity, then only we play. Otherwise, we do other things around that space. So we can have different graded parties maybe launched or something like that to avoid this direct confrontation. Sure. Thanks, sir. That's all from my side. Thank you. Next question is from the line of Tejas. Please go ahead. Yeah. Hi, sir. Am I audible? Yes, Tejas. Yeah. Sir, thanks for the opportunity. Sir, the first question pertains to our urban initiative, and I'll try to ask this question as efficiently as possible. Sir, for a company which has been around for 100 years and then under the new ownership for 30 years, I'm assuming that we would have tried or pursued this urban market strategy in the past also, and then the route-to-market strategy that we are adopting, many FMCG companies have done it in the past, so what specific changes that we are making this time that kind of gives us confidence that it will be different from our past initiatives? I'm assuming that you made it in the past, and then what insight prompted us to kind of go urban at this stage where I'm assuming that the cost of this market share will be way higher than it would have been, let's say, three years back because of the new competition? Right, so first of all, we did not attempt the way we are doing it now. Earlier, what was there was a lot of other opportunities in many of the markets in the upcountry areas itself. There is still that opportunity which exists in many markets, so we continue. We have a good strategy for the urban upcountry markets, and those upcountry markets are growing at a good decent pace, and we would like to continue in that direction. However, what was happening, as I mentioned a little bit earlier, that when we have, say, a depot town and around it many upcountry markets, since we are relatively performing better and growing faster in the upcountry markets, the depot town or the major town like Bangalore or Mumbai used to get neglected by our people who were there because they found it easier to grow in the upcountry areas and more difficult to grow in the cities, so the attention used to get diverted. Now what we have done is divided this into two clear teams. One which is focused on the upcountry areas, and the one which is on urban is focused completely on the urban markets. So first of all, therefore, that brings more seriousness in the effort that is being put. And primarily because his life and death depends on the urban markets, he will put in that much more effort and consistent strong effort in that. Second is the nature of the market itself in the urban areas has changed over the last eight, 10 years. It's become completely verticalized, and many of the other markets will soon go in that direction. There is a dearth of land, and it's going vertical again and again. And in that vertical thing, if you look at typically Mumbai, most of you stay there. If you look at that, the decision-making for the exterior of the building is not done by an individual anymore. It's done by the society or the consultant who advises the society members. It becomes, therefore, important to go a different route in these types of markets. That's something which we are investing in consciously, knowing fully well that this is a different nature compared to the upcountry markets. Upcountry markets, dealer, painter, that type of dependency is much stronger, and brand becomes very critical. In the urban markets, brand is important. Our brand is already known in both urban and upcountry. But along with that comes project knowledge, execution skills. All of that becomes very critical. That is something which we are working on. We are developing special teams around that to work in the urban markets. Very clear, sir, and all the best with that. So second question, and this is slightly speculative in nature, but if Akzo were to decide, as you said, that they have not still announced, but if Akzo has to decide that they are planning to sell, and as of now, the street is assuming that only incumbents would participate in that transaction. But from your market read, do you see a chance or possibility that a new player like a cement company or an adhesive company can jump in and make this consolidation more of an expansion exercise rather than favoring the industry? So anything is possible, Tejas. But one needs to look at the valuation as well, whether it is worth it, whether one would like to spend the amount of money, and what do you get out of it? What is it that is up ultimately for sale? Everything has to be considered. A decision can only be taken once, first of all, clarity emerges as to what is up there. They are a very well-run professional company. I'm sure they will come with a lot of clarity once they decide and make up their mind first. Only then one can say what is to be done. But two factors are definitely important. The valuation and what do you gain out of it? Will it make sense, therefore, to go for it? Y eah. And so just associated question, if I may. Do you see the kind of frenzy that we are seeing around this asset now? Do you see that at least in near term? You spoke about margins that is defendable. But do you see that capital efficiency of the business or the industry will get compromised at least in the near term? So if someone acquires and pays a lot of value for it, against which they may not get the return, yes, the ROCE will get impacted for that particular company. That's for sure. And that's going to happen in case the type of valuation that exists, it might happen that way. Perfect. That's all from my side, sir. All the best for coming quarters. Thank you. Thank you. Next question is from line of Deven Kulkarni. Please go ahead. Yeah. Hi. Am I audible? Yes, Deven. Yeah. So my question is on the employee cost. So is there also any impact of higher competitive intensity on the employee costs in Q2? Because in Q1, we also saw employee costs grew by almost 15% for the market leader as well when the volume growth is flattish. So across the industry, we are seeing very high growth in employee costs. No. Deven, to answer your question, in our case, at least, that's not the case. As I said, about 8%-9% was on account of the normal increases which we give every year. And in fact, it's slightly lower this year. But the other part is on addition of the increased manpower for these two activities. One is the urban initiative, and the other one is the construction chemicals, and waterproofing, where we are expanding the range of products. And therefore, we need a little bit more number of people to take that forward. So from that perspective, it is additional manpower for future business growth. It's not so much from competitive intensity and therefore giving more increments to our existing people. Okay. Okay. Got it. Thank you. Thank you. Next question is from line of Vedant Mehta. Please go ahead. Hi. Thanks for the opportunity. I just wanted to understand what share of the revenues is contributed by differentiated products and what are the gross margins on these products? So it is upwards of 20%, which is the differentiated products. And the gross margin is typically higher than the average, obviously. Some of them are much higher. Some of them are slightly higher, but it's higher always. And could you share any numbers on the market share of these differentiated products? So differentiated products, some of these are not even copied. Some are copied, but we have a dominant market share in most cases. Okay. That's all from me. Thank you. Thank you. Thank you. Next question is from line of Lakshminarayanan. Please go ahead. Yeah. First question. How complementary is Akzo portfolio to us? And if we were to evaluate them for a strategic purchase or a joint venture or whatsoever? So Lakshminarayanan, I don't think we will like to comment at this stage unless Akzo comes out with clarity as to what they want to do. As far as. My question is, how complementary it is? It is because they are mostly into urban markets and mostly the luxury end of the products. It suits us in terms of complementarity. It is pretty okay, pretty good. That's for sure. Got it. And second is, what's the mix of premium, luxury, and non-premium in our overall revenue mix, So that we don't look at it. I don't have that distinctively. I can't give you the figures as well. But we have a fairly good representation in the premium luxury category as well, especially just below the luxury area. We are fairly, I would say, leadership roles are there in both Easy Clean and Anti Dustt. We are a clear leader in the market. In the luxury category, we will be number two in the case of exterior luxury and a close number two, three in the interior luxury category. Got it. One last question. In terms of opinions, how people buy paint, you mentioned in apartment complex, how people make decision. Can you just touch upon how in urban and maybe in the top tier two cities decisions are being taken in decoratives? Is it the housewife, the owner of the house, or it is still through the project people or the masons? I just want to understand how that is now and how it has evolved in the last two, three years. That's all. In the upcountry markets, typically the consumers play a very important role. They typically go to the stores themselves, get advice from dealers, from painters as well. But they decide primarily because it is their house, both the exterior and the interior. And they go for the better quality paint normally or value for money, whichever they think is suitable for them. So it is much more of a consumer play, of course, influenced strongly by the dealer and the painter. Got it. So just one more question, if I can squeeze. You mentioned that the high-end paints had a double-digit growth while the others did not have. Any reason why the monsoon, etc., did not affect the high-end/premium and luxury? No, it affected, but to a lesser extent. The effort from our side has also been consistently on this luxury and premium category. We do a lot of activities around that and promote these products strongly. So that is why there is better traction of these products than the mass products. Also, the premium luxury category customers are less impacted. They tend, from the inflation, they don't mind spending. So that is the trend which you will observe across FMCG that the premium category has grown much faster. The mass products are the ones which are suffering. Got it. Thank you, sir. Thank you so much. Thank you. Next question is from line of Jaykumar Doshi. Please go ahead. Hi, Abhijit. Thanks for the opportunity. And in case I was on and off on the call, so if my question has already been addressed, you let me know. I'll get back in the queue. Just one question from my end. You've been growing faster than the market and market leader for several quarters now, nearly two to three years, very consistently, maybe 200 basis points better. And now you're doubling down focus on urban markets. So should we expect this outperformance versus market to widen or expand? Or you think whatever initiatives help you grow faster over the last two, three years will probably taper off and that will be offset by urban focus? Yeah. Our expectation is that it will add a little bit more push to the overall differential growth. The upcountry growth opportunity still exists for us, and whatever we have been doing has been giving us decent results and will continue. But I would say a little bit of tapering might happen in the upcountry growth rate differentials, but that will be more than made up for by the urban growth rates now, which will kick off. Sure. And should we expect this benefit from December quarter or maybe, I mean, second half this year or next year? I think quarter four, you will see distinct benefit. Should have. This quarter also, a little bit of benefit will come through. But next year will probably be much better. Thank you so much and good luck with this initiative. Thank you. Thank you. We consider that as a last question for the day. I hand over to management for closing remarks. So thank you all for coming and spending time here and wish you a very good time ahead. Hopefully, for all of us, the market will become stronger and we will do better in the coming quarters. Thank you again. Thank you. Thank you. Thank you. Thank you. On behalf of Emkay Global Financial Services, that concludes this conference. Thank you for joining us.