Good evening, everyone. This is Nitin Gupta from Emkay Global. I would like to welcome all to the Berger Paints India Limited Q2 FY 2026 results conference call. 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 Sayantan Sarkar, GM Finance and Accounts. I shall now hand over the call to the Management for opening remarks, post which we will proceed with the Q&A session. Over to you, sir. Thank you, Nitin, and good afternoon to all of you. We start the second quarter. Results analysis. It was a tough quarter due to excessive rains. We had a high single-digit volume growth with low value growth. Growth was impacted by inclement weather and heavy monsoon. Alongside sustained competitive intensity. Marginal dip in gross margin. The gross margin dipped by about 0.8% due to lower sale of exterior emulsion products and downtrading to economy segment to an extent. The operating margin moderated much more due to subdued value growth, which resulted in lower operating leverage and higher spend on brand building. Company continues to invest in expanding dealer network and adding stores in urban pockets to strengthen market reach. Looking at the volume value growths which we registered for the second quarter and also the first half. In second quarter, the volume growth was 8.8%. The value growth 1.1%. In the half year, it is 7.1% and 1.6% for the standalone results. As I mentioned, we delivered high single-digit volume growth despite unusually extended monsoon and flooding across key markets, including Andhra Pradesh, Kerala, West Bengal, Northeast India, Gujarat, and Maharashtra. Sales momentum revived in the latter half of September as weather conditions stabilized. Value volume gap driven by mixed dynamics. Higher contribution from products like tile adhesives, admixture, and putty, and lower sales of high-value products such as exterior adhesives and roof coating resulted in an increase in the volume value gap. Protective and infrastructure coatings saw muted value growth impacted by monsoon conditions, as most of the painting gets done in the exterior conditions, were not suitable for painting. Auto and powder coatings registered mid-single-digit growth in both volume and value. As far as volume CAGRs are concerned. Volume CAGR for two years is 7.5%, for three years is 8.9%, for four years 12.6%, and for five years it's 16.9% if we look at the half-year performance. In quarter two, also in very similar trajectory, the slightly lower rate 6.2%, 7.7%, 8.4%, and 10.8%. The value growth, however, is quite different. As you can see. In terms of five years, value growth in the half year is similar or slightly higher than the five-year volume growth. But in the last two and three years, it has been much lower than the volume growth. Two reasons for it. One, of course, is the price drop which we had. Which had an effect for the last one and a half years. And this year, it has been more of a higher volume of these types of items like tile adhesive and putty selling more, and the high-value items selling slightly lesser quantities, especially in the second quarter, which impacted this growth rate. If you look at the gross margin, the gross margin has been relatively much more stable for us. It's been in that hovering in that range of 39%-41%. And that's where we have been even in this quarter, in spite of deterioration in the mix. We are still at 39.6%. Actually, it would have been higher. There was some raw material price advantage which was there in this quarter. Unfortunately, it got negated by the mix, which was inferior because of the excessive rains. We could not sell, and especially in our key states of West Bengal, Kerala, Northeast, there were excessive rains ending right up to September, and it carried on. Therefore, much more of the exterior category, which drives up profit, got impacted to a large extent. Therefore, the mix deteriorated. Otherwise, the gross margin would have been higher. However, the operating profit margin shrunk to 12.7%. That is a big drop which happened. Typically, the second quarter, it is always lower than the first quarter for us. It is more so. Traditionally, that has been the case. This time, also, it is the same way. The growths in advertisement, the growths in overhead could not be absorbed by the softer sales, which is the main reason for this deterioration in the overall operating profit margin. Also, the mix, as we saw, the gross margin going down by 1%. But this overall growth rate is down, or overall operating profit to sales ratio is down by a much higher amount. As I said, much of it is due to the scale effect. We did continue to invest in advertisement brand promotions in a normal way, not increasing, not decreasing. We did invest a little bit extra in terms of the urban markets where we continued to invest in manpower resources. That, of course, did not yield fantastic results in the second quarter because of the rains. The projects, it is a little bit project-oriented market. The urban markets, and it got impacted because of the exterior conditions. We expect that to revive in the third quarter. We will see more positive results in the third quarter, as we have already indicated earlier as well, that third quarter will be better. Fourth quarter will be even better. We hold to that statement earlier made. In terms of the standalone results, total income from operations, 1.1% growth, and operating profit minus 18.8%. As you can see, material cost actually went up by about 0.8% only. The employee cost, this is a scale effect, went up from 6.8% - 7.4%. The other expenses, as I explained, the branding and the expenses in terms of off-roll manpower in the urban markets, which we have invested in, resulted in an increase from 17.8%- 19.5%. Now, a part of this in the third quarter, because of the increased sales, which always happens in the third quarter, the scale effect will neutralize to a large extent. We are expecting decent growth, and therefore, this will be much better once we go forward into this quarter. Standalone results on a half-year basis, 1.6%. Again, if you see, material cost is 60.2% last year and 60.2% this year. So there is no great. Fall there, even though second quarter we did slightly poorly here. Employee cost has gone up largely because of muted sales from 5.9% - 6.4%. Other expenses have moved up again because of the increased advertisement spends and spends on the urban markets not getting neutralized by the sales growth. That is something which is primarily the scale effect, which we hope that once the volume and the value becomes better in the third and even more in the fourth, this will get neutralized. As far as decorative business is concerned, we delivered muted value growth, as I had mentioned earlier, due to extended monsoon conditions impacting all our premium markets. Marginal shift from premium luxury to economy emulsions in both exterior and interior segments. Construction chemicals business registered robust growth. Wood coating segments also registered good growth. Steady retail expansion with focus on urban pockets. Store network now exceeds 1,600 outlets in line with our annual targets. Tinting network rollout remains on track. Over 5,500 + machines have been installed by us so far in the first half. This will ensure that we cross our target of an ambitious 10,000 machine installation for this year. We had introduced certain innovative products. Roof Kool & Seal being one of them. It is doing quite well. Of course, in the monsoon, it got impacted a bit. We are expecting after the monsoons, because of it, it is excessive monsoon. This is, in fact, going to pick up much faster. We have full range of construction chemicals now, and we keep expanding on this. The range keeps going up. As far as two more recent product launches which we did, one was Kolor Plus, which is in the premium emulsion segment. The other one is the Luxol Metallic, which is the metallic gold, silver, and bronze. Both of these products are doing quite well in the market. We expect the momentum to keep moving upwards going forward. Net cash on a standalone basis on March 25 end was INR 670 crore. In September 25, this remains at INR 636 crore in spite of the fact that we did make a dividend payout of INR 443 crore during the quarter. As far as consolidated results were concerned, revenue was higher at 1.9%. Largely driven by BOLIX and Nepal. Operating margin more or less same as that of a standalone. Here again, if you look at raw material cost, RMC is more or less stable vis-à-vis last year. Other expenses, employee cost went up. Other expenses, as we saw, much more of it is scale effect, which we cannot avoid because of the weather conditions in many, including Nepal, where there was, in addition, there was some turmoil there in that country. We still managed to grow because the bases were lower. We had a good growth in Nepal. On a half-year basis, we are at 2.8% growth on the console level. With a PBDIT growth or degrowth of - 7.9%. BOLIX, Poland had strong top-line growth. Profitability muted due to pricing pressure. BJ and Nepal, strong revenue growth on a low base. Profitability slightly muted due to seasonal mix impact, the same reasons which we had of monsoon. STP, soft top-line impacted by temporary shutdown at Jamshedpur plant. We are expecting this plant to start operations this month. Gross margin improved on account of favorable product mix. SBL Specialty Coatings Limited had muted sales growth and profitability. New factory opened in Basawali, Punjab, fully funded through internal accruals. Berger Becker Coatings, healthy growth in both top-line and profitability. This is the coil coating. The sales of this division do not get added. Only the profits get added after that. It is not reflecting in our sales figures. Berger Nippon Paint Automotive Coatings, continued strong performance driven by booming demand in the four-wheeler segment. Strong double-digit growth, both top-line and profitability witnessed robust growth. However, again, it does not get added to our sales. Only the profit comes below PAT line. Business outlook. Demand revival expected post Diwali, supported by improving weather and release of pent-up demand after an extended monsoon. Gross margin is expected to improve in short term, aided by benign raw material prices and improving product mix. Continued investments in brand and manpower, strengthening retail and dealer network to capture upcoming demand momentum. Forex volatility and tariff changes may pose near-term uncertainties. Thank you and open to questions now. Thanks, Abhijit. We will now start with the Q&A session. I hand over the call to my colleague Mohit Dodeja to moderate the Q&A session. Over to you, Mohit. Those of you who have questions can raise your hand now. We will announce your name and unmute your line. Please highlight your full name and the organization you are representing. The first question is from the line of Mihir Shah. Please highlight your full name and the organization you are representing and go ahead with your questions. Hi sir, this is Mihir Shah from Nomura. Firstly, on the mixed deterioration that we have seen this quarter, should one expect a similar mixed deterioration going forward, or was this a conscious choice for this quarter given that you had some benefits of lower raw material prices and you could have managed your gross margins well? That is my first question. Mihir, no, actually it is not a conscious choice. It is a forced choice. Essentially, the weather conditions, as I have mentioned, is a problem, was a big problem. If it continuously rains, obviously on the exterior side, no one wants to paint because there is no way you can paint there. Hence, there was a negative impact as far as the exterior coating was concerned. As you know, those are high-value, more profitable products, and hence the mixed deterioration which happened. Same thing holds true for the roof coating as well. How do you paint if it is raining all the time? Therefore, the mix was expected to deteriorate under such conditions. For the whole industry, it will be in similar lines. Therefore, that is one. As far as the going forward issue is concerned, I have already mentioned that it should improve for two reasons. One, of course, the rains have stopped now, thankfully. It kept on raining almost to the end of October as well, but now, for the last few days at least, it has abated completely for most parts of the country. Therefore, we expect solid pent-up demand which is there to come up, and that should improve the mix substantially. Typically, in the third and the fourth quarter, these are non-rain affected right up to April end. It tends to be good months for painting and paint, and therefore, we, I would say, are quite confident that the mix will improve substantially going forward. Understood, sir. Secondly, on volumes, now, given October has also seen some impact, and I guess maybe last year some of the festive demand would have also been sitting in October. Given that there is an impact, how should one think about volumes for 3Q and 4Q? 4Q maybe, yes, it can be much better, but 3Q, will one see impact of that in 3Q because of weak October? Typically, whenever the season is slightly preponderant, as it has happened this time, it tends to impact the sale a little bit. October for the whole industry would have been muted. I think, going by our estimate, we would have done slightly better than the industry in October. November, December will be months where we expect very good growths to happen. Should be double-digit growths in November, for sure, and December as well, we should see good growth. Therefore, overall, as we have said earlier as well, we should have a sort of a single-digit, mid-single-digit value growth is what we can look at. Volume growth obviously will be higher. As we have always seen that the volume-value gap exists, and hence, this is our reading of third quarter so far. Of course, November has to pan out well for this to hold true. Got it. Now that is heartening to know. Lastly, on margins now, with the exterior and the normal emulsion paints coming back in the coming quarters and the benefits of raw material, do you think that there can be a case made to further investments in ad spends, or there is a possibility that it translates down in margins and you move up higher versus the earlier guided band in your margins? Our guided band has been the 15%-17%. We would like to remain there. If we see that we are having the luxury of spending a little bit more, we would like to invest in brand building a bit more than what we are doing even today. We have increased it, but we would like to increase it further. We would like to gain share, which is very important in the current situation that exists in the market. Very clear, sir. Thank you very much. Wishing you all the best. Thank you. Yeah. Hi, sir. Am I audible? This is Abhi here from. Yeah, so this is Abhi Mehta here from Acquis. Sir. Hi, sir. Two questions. One, I wanted to kind of just get your sense on what do you think would be the industry growth in the second quarter? And the related question to that is, if you're expecting, say, a high single-digit volume and a mid-single-digit value in 3Q, for the full year, does that. What kind of expectations should we look at? Because the first two quarters has been more low single-digit. So would love to hear your thoughts on both these aspects. Thank you, sir. So as far as industry is concerned, we have seen Kansai declared their results yesterday. They were at about 0.4%, I think. Yes, sir. We have declared today. I think Akzo will declare on the 6th. And I think ACN is there on the 12th. There are two factors here. One is the base effect, and the other one is overall scenario, rain, which would have impacted everyone. I would expect the leader to do slightly better in terms of growth due to the weaker base. And I would expect Akzo to be similar to us or slightly lower, and therefore, the overall growth rate for the industry won't be greatly different from where we are positioned. So that's how I would look at it. On a YTD basis, we expect that we should have gained market share overall amongst the listed companies. This is where we stand as of end September. And sir, for the second part, which is 3Q, if you're expecting, say, a mid-single-digit kind of momentum for the full year, does that kind of. Just want to get your thoughts? How should we look at that? Because we had some expectations given the changed weather conditions. Is there a revisit to that expectation for the full year? Too early to say, Abhi, but my expectation is that, and we have said this earlier as well, that in the third quarter, we had always said that it will be around the mid-single digit. And in the fourth quarter, we will be closer to the double-digit mark. We stand by that, and therefore, that's what we would expect to happen for the year. Very clear, sir. Thank you. you. That's very clear, sir. Thanks for that. So the second question is on the competition. Would love to know if there's any change in competitive intensity and wanted to kind of just get any updated comments on the new entrant versus what we were kind of seeing last quarter. Competition continues. The intensity has stabilized, I would say, in the marketplace. What is happening is. Possibly from the first quarter, whatever sales that the new entrant might be having in the first quarter. The second quarter, as it happens for most companies, in their case also, it will be slightly lower than the first quarter sales. That is our estimate. Of course, we may be wrong, but this is our estimate that it will be second quarter total net sales will be lower than the first quarter sales. It is stabilizing as such since they have now basis over the third and the fourth quarter. The type of growth and therefore the type of market share that they were taking away from the industry, that will get moderated completely. The impact, therefore, will be lesser on the existing players going forward. Okay, sir. Last, just a bookkeeping. I missed the last part of the question from the earlier participant. The 15%-17% range, given the current environment, we would still be in that range or at the lower end of the range given this quarter's performance? I did not pick. I did not kind of correct. No, I said in the third quarter, we should be in that 15%-17% range. In the fourth quarter, more towards the higher end. Very clear, sir. Thank you very much, sir. That is all from my side. Thank you. The next question is from the line of Aditya Bhartia. Please go ahead. Hi, sir. My first question again is on margins. Wherein, if you look at last seven quarters, our revenue growth has been in low single digits. Every time we had been kind of maintaining our EBITDA margins in, let us say, 14%-17% kind of a range. This time around, to that extent, there was a certain degree of negative operating leverage that was playing out in the last few quarters as well. We were controlling our costs fairly well. What has really changed in this particular quarter that margins at the EBITDA level have taken such a big beating? Yeah. If you look at quarter one, for example, we had, again, a low sale at that point of time as well. The overall sales in the quarter one is always much higher than quarter two. It has been traditionally for us a very good quarter. Typically, we have much higher sales in quarter one, and then in quarter two, it tends to move downwards. The same thing happened this year as well. On top of it, we did not grow. If you look at absolute value, quarter two is much lower than quarter one for us. The growth rate is similar, but absolute value-wise, it is much lower. Hence, absorption of the overheads became much more difficult in this quarter, which is why you see this stronger fall in quarter two, because it was pretty much the same thing in the last year as well, Q2 being lower than Q1. But even on a year-on-year basis, the kind of drop that we saw in margins this quarter was higher than what we usually get to see. Last year, quarter two, if you look at our gross margin, it had expanded. Largely because of two reasons. One, the raw material prices went down at that point of time. This quarter also, it had gone down, but the mix deteriorated much more this quarter. We could not get the full advantage of it. Understood. Understood. That brings me to the second question. What's the kind of raw material cost advantage that we are going to see in the second half of this fiscal with the crude being so benign? Yeah. There is an advantage coming up, which we see about 1.5% possibly in terms of margin expansion, which is likely to happen on account of raw material prices cooling off. Understood. That's at the gross margin level that you're speaking about. That's right. Understood. That's it from my side, sir. Thank you so much. Thank you, Aditya. Thank you. Just a reminder, please highlight your full name and the organization you are representing when you're asking questions. The next question is from the line of Aniruddha Joshi. Please go ahead. Yeah. Thanks. Aniruddha Joshi from ICICI Securities. Sir, two questions. First of all, in terms of expenses, there is a lot of variability in expenses also. For example, if the sales team doesn't achieve the targets, then generally their bonuses get capped or incentives also get capped. Or in a way, in terms of distributors also, if they are not able to meet the targets, some of their incentives are not paid out also. Given that, there is a natural hedge in the business to the sales growth itself. Now, despite that, we have seen a material impact. How should we see this? Do you see it to be an ongoing activity, let's say, if the industry growth remains muted over the next one to two years? Because definitely the industry growth has slowed down materially. If we don't see revival, do you see this impact to continue to play in the next couple of years also? That is question number one. Question number two, in terms of ad spend, if you can share more details in terms of what was the ad spend to sales, let's say, in last year, same quarter versus this time, Q2, or any increase that you can say, let's say, in percentage terms also, it will be better. Third, we have been hearing that October has been a very soft quarter for the entire industry itself. How is it at the Berger end, and how do you see the growth rate spanning out starting in November? Okay. The first question that you asked, how come the expenses are going up? We mentioned that one. If you look at the ad spends, we have increased it from last year levels almost by 22%, 23% possibly, and that's on television and digital put together. Therefore, of course, the sales did not go up. It went up marginally, and hence, the major impact that you see in terms of expenses to sales. The second part is you did mention that, okay, when you do not get sales so much, you might be not spending as much on dealers or on employees' bonuses, etc. We have invested mostly in additional manpower in the urban markets, which I mentioned. If you are not getting results in one quarter, it does not mean that you withdraw that manpower. That continues. We keep, because we believe strongly that it is going to yield results this quarter and going forward. That is why you see this increased expenses. This will wean off in this quarter and even more so in the next quarter. To answer two of your questions, these are the answers. The third, which is there, which you asked, is October sales. As I said, we believe strongly that we have done better than the industry at large. Of most players, I think, of course, the base effect counts, but even though our bases were much better or higher, I would say, compared to some of the other players, we would have still done better in October. Okay. Last question from my side. In terms of auto and industrial, what will be the revenue contribution and which almost customer base would be getting benefited from the GST correction? For example, white goods and durable AC companies or, in a way, auto companies, etc. What percent of our customer base would be getting benefited from the GST cuts? It is a lower percentage for us. It is about 8% odd. Not significantly material for us, as far as we are primarily a decorative company with more than 82% approximately coming out of decorative. Okay. Auto and industrial, any ballpark percentage if you can share? Industrial auto put together is 18%. The balance, protective all put together. Okay. Sure, sir. This is very, very helpful, and many thanks for the call. Thank you. Thank you. The next question is from the line of Karthik Chellappa. Please go ahead. Yeah. Hi. This is Karthik Chellappa here from Indus Capital. Two questions from my side, sir. The first one is, I think our earlier expectation was this volume value gap will narrow by fourth quarter of this year in the sense that volumes will start, I mean, value will start tracking volume growth. Do you believe that expectation to still be reasonable? If not, by when do you expect the volume value gap to narrow to almost nil? It is not going to narrow to nil in the short duration. Largely because there are certain categories of products which we are going to grow much faster than the paint category itself because it is coming on a very low base. However, we see the volume value gap narrowing to about 4%, 4.5%, and likely to remain stable around that point. That should happen going forward from maybe the fourth quarter of next year. Which means for us to see a high single-digit value growth, our volume growth invariably has to grow at about double digit then if the 4%-5% gap is not going to. Absolutely. Absolutely. Okay. Excellent. My second question, sir, is on the A&P expenses. You did highlight that those expenses grew about 22%-23% for the quarter. In the opening remarks, you said that urban markets were seeing some extra investments. Could you give us slightly more details on which are the urban markets that you are targeting at this point for these higher A&P investments and why you chose these urban markets? A&P investments are across the country, so it's not focused only on the urban markets. In the urban markets, we have invested in additional manpower on the ground resources. These are off-road manpower, which we book in the sales promotion expenses, essentially. This particular markets which we have chosen are weak urban markets, which we have defined. These are markets mostly in the west and the south of India. Many of the metros or mini metros which are existing there, these are markets where we are weak, and we would like to strengthen our presence in those markets. Okay. My last question, sir, is on the margin range of about 15%-17% for the medium term. Given that in the first half, we are at 15%, and you had highlighted in one of your previous responses that by fourth quarter, you expected to go towards maybe 17%-ish or so, would it be fair to say that at least this year, it looks like the margin range will probably be closer to 15%, 16%-ish than it is to 17%? Any tailwind to margins will probably happen only in FY 2027? As I said, we are currently at around that 15% mark, right? Yes. If you look at where we are headed, we will improve slightly in the third quarter and will be more closer to that 17% mark in the fourth quarter, right? On an average, probably will be around that 16%, 15.7%, 16% for the full year. That's where we will be, most probably, by the end of the year. I think that's a fair thing given the current situation that exists, given the weather conditions that existed. I think overall, for all of us, it has been a bit challenging, but I think things are improving, and we look forward to coming five months, we should be much better. Excellent. Just one clarification, sir. Although you highlighted monsoons and rains as one of the reasons for demand, there was really no GST-related disruption, at least for the paint categories or for your distributors, right? We can negate that as any impact or so. No, it had no impact. Okay. Excellent. That's all from my side, sir. Thank you very much, and wish you and the team all the very best. Thank you. Thank you. The next question is from the line of Pratik Gothi. Please go ahead. Hello. Yes. Thank you for the opportunity. This is Pratik Gothi from HSBC. A couple of questions, please. The first one regarding your comment that premium luxury segment saw some downtrading to the economy segment. Can you please elaborate on that comment? Was it across exterior, interior? Any color there, please? Yeah. Basically, excessive rains were basically a major factor here. The impact happened across emulsions, but some amount of downtrading we saw moving more towards the economy emulsions. The economy emulsion growth was there, at least. The luxury emulsion, the premium emulsion, there was a little bit of a slowdown there, more so on the exterior category, but it still impacted interior as well. All right. Good to know. Apart from that, any color on incentives, dealer incentives, rebates? Has that plateaued? Has that been increasing Q2 as well? No, no. Not really. It's been stable for the last few quarters. I do not see any major changes happening there. Nothing material, I think. As is the norm in the industry, if the growths are a little bit muted, rebating may go up a little bit to push up sales, but that's about it. It's not significant. Okay. Good to know. Thank you. Thank you. The next question is from the line of Amit Purohit. Please go ahead. Hello. Yes, Amit. Yeah. Hi, Abhijit. We can't hear you. Am I audible now, sir? Yes. Yeah. Thank you for the opportunity. Sir, just on the cost side, I wanted to understand. Typically, when I look at quarterly numbers, Q2 is a typical quarter where employee costs go up. I'm looking at standalone numbers, and then probably it averages out in the subsequent quarter. I wanted to know when you said that this quarter, there has been some focus on the urban and some recruitments done. Is this the new base one should look at it, or there is some seasonality when it comes to employee cost as well? Yeah. It has two parts. As you are rightly saying, there is a part which is seasonal in nature that the Q2 tends to go up because incentive payouts happen in this quarter for the previous year, and therefore, it tends to have a jerk upwards. Along with it, we did invest some amount of money in the urban markets, and that investment will continue, and so that will remain as a part of the higher cost that is there. That will get neutralized by higher sales as well, which we expect from the urban markets going forward. This initiative, you have been talking about since last year, right? Focus. Is that something which has happened now, or has it been there in previous quarters also on urban spend on employees? It has been there earlier as well. We have increased a little bit in the type of investment that we have made. We see decent results. Unfortunately, the rains interrupted a little bit in terms of the sales, but that should happen this quarter and then going forward. My second question is on other expenditure as well. Similar, this could be also because typically when we look at it, Q3 is when you spend because that is the festive season. This time, there was an early Diwali, so maybe Q2 is when the ad spend. Do you think that the spend requirement would continue given the competitive intensity? You highlighted that you will focus to gain shares, and hence, the other expenditure number would tend to be on a YoY basis higher. Yeah. It is true that the season was earlier this year, so we did spend in the second quarter slightly more in terms of television spends because we started a little bit early. As I have indicated, we would continue to spend in the third quarter as well. Specifically in areas where we feel that we need to shore up our volume sales as well, there the advertisement will be jacked up a bit. You may probably use the gross margin expansion that you highlighted to invest behind that. That is all right. Okay. Correct. Thanks. Thank you. Thanks a lot. Thank you. The next question is from the line of Tejas Shah. Please go ahead. Hi, sir. Am I audible? Yes, Tejash, you are. Go ahead. Thank you, sir. Sir, my first question pertains to the whole demand scenario. In the past, it has been taught by you and other leaders of the industry that if we miss out on Diwali, then it is very difficult to recover that season later because then there is a tendency of customers to push repainting to next cycle. Looking at that, how do you see the demand scenario recovering now? Second point, I am assuming that when we would have started this year in this quarter also, we would not have budgeted for this unseasonal rain. How is the health of inventory? Should we assume that primary will be kind of muted even if secondary picks up, at least in the near future? Good questions there. In fact, whatever we could gather from the market, I had also been in the market in the last 10-15 days. There is significant pent-up demand, so that is a good sign for us. The second part is that our collections have been very robust because we got a short window. But But a very strong window in the first few days of October before Diwali kicked in. In that 15-16 days, there was very brisk sale, and liquidation happened. The inventory is at a very healthy level, as is evident from the collection record which we have. We have collected the money, the outstandings are not there. Hence, we expect that with demand now picking up, with the pent-up demand being there, sales should improve in this month and also in December and going forward. Makes sense. Second question pertains to your observation that competitive intensity has stabilized, which could be true. As an observer, it still remains intense because perhaps it has shifted from dealer level to consumer level. Just an observation, right from IPL to Asia Cup to Women's World Cup, it is very much visible that paint companies are advertising very aggressively, especially the challenger. Even in terms of other benefits, be it warranty or now there is a talk of EMI also coming from them. How do you read? Perhaps numeric expansion of distribution is not happening anymore, but at least from our lens, it still remains intense, at least from consumer acquisition perspective. It is going to be there, Tejas. I do not see. By stabilization, I mean if you look at the sales figure, it is not jumping upwards as was happening in the past few quarters, right? The sales would have stabilized to a large extent. The numeric reach, as you rightly said, is not expanding at a very fast clip. It is improving, but at a normal pace, as would happen for any industry player. What we see now is a sort of stability there. Yes, there will be attempts to do various things to acquire customers and improve the productivity possibly going forward, but that is expected. I do not think anyone is not expecting that. Its intensity, as I mentioned, is there but not increasing. It is stable. Got it, sir. That is all from my side, and all the best for coming quarters. Right. Thank you. Thank you. The next question is from the line of Percy Panthaki. Please go ahead. Hello. Hello. Am I audible? Yes, you are, Percy. Yeah. Percy Panthaki here from IFL Capital. Sir, just wanted to understand. Someone did ask about competitive scenario, but I specifically wanted to ask about competitive scenario in East India, given that Birla Opus is now sort of opening up their plant there, and they will sort of have better availability, better servicing of dealers, etc., etc. Is there in East India either any change or any expected change in competitive intensity? Should we sort of read that along with your financials in terms of the sales growth being only 2%, but the other expenses line inflating by 15% YoY? Is this either a response or a preempting of the expected increase in competitive intensity in the East? No, not really. I do not think we are stretching it a bit too. I have explained this earlier as well, that in the paint industry, I do not see if you put up a factory at a location, you start gaining market. Very rarely does it happen. We have a factory in Puducherry We have a very weak presence there. We have a factory in Jammu. We have a very weak presence in Jammu or in that surrounding area. It does not really make any sense at all just because some factory comes up in some location. That might help a little bit, but it really does not create any great impact. We have not prepared ourselves in any significant way. We have a strong position in the East, and we maintain that. I do not see that being unnecessarily disturbed in the short run, right? We are not spending an extraordinary amount of money envisaging any great hit and trying to protect ourselves there. In that case, what is the thought process behind spending disproportionately in this quarter when it was apparent that demand is going to be sort of subdued because of monsoons, etc.? Why not have those spends at a time when they can actually sort of give a better bang for the buck? I do not think that is how things operate because branding is not like whenever you have a good time, you advertise, and then when you are in, seeing because the season, who can predict what will happen? End End of September, no one thought that it will keep raining, right? Once we started advertising, we booked slots for the period, right? From September 1st till October 15th, just before Diwali, that is the peak time when we have always advertised. That happens irrespective of weather conditions. Now, whether it will change, I cannot pull out my ad suddenly saying that, "Oh, whether it is still raining, I will not advertise." It does not happen like that. Brand building has to continue irrespective of whether it is raining or not raining. Similarly, in terms of the investment which we made in the urban markets, just because it started raining, I cannot dismiss my people there who are working and say, "Come back once the rain stops." It does not happen like that either. We have to invest. We have to bear that cost. It does not matter so much. In one quarter, it might have happened, but we will get our results sooner or later. Understood. Ad spend, which is part of the other expenses line, grew by about 22%. The other expenses overall, including the ad spend, grew at 15%. That means that even excluding the ad spend, the other line items within the other expenses would have grown close to about a double-digit kind of a number when the sales growth was only 2%. So what really has driven this part of the growth as well? Is it some extra rebates or dealer schemes or something like that? Or what has driven? Because the investments in other urban markets would, I think, come under the employee cost line and not the other expenses. It does not come under the employee cost line. It comes under the other expenses only. Because that is off-roll manpower, which we put under the other expenses. Understood. Understood. So shall we assume that these kinds of investments will continue in the future and therefore margin expansion, I mean, margin improvement, if any, is just going to be a function of the top-line growth improving? This will continue when the top-line has to grow. That is the objective, right? Because at the end of the day, if we have invested a certain amount of money there, we are expecting that results will come. Results will come, as we strongly believe that. It is just that the rains stalled it for the time being, but we will expect that it will come back. And you will see that happening in the third and the fourth quarter itself, not very far off. Okay, sir. Okay. That is all from me. Thanks and all the best. Thank you. Thank you. The next question is from the line of Shirish Pardeshi. Please go ahead. Hi, sir. Good evening. Thanks for the opportunity. Two questions. This is an extension of what Tejas was asking. In our stronger markets, example for North and East, you mentioned that system hygiene is clear and there is no excess inventory which is there. I mean, paint companies always have a benefit delivering this stock within 24 hours. But still, I am pushing you. Is there any regional variation in terms of higher inventory, more than the permissible level? The reason why I am saying this is because North has seen the excess of rains. And by virtue, the trade inventory would have been higher. So that is the question. If you can explain or help us to understand, is there any regional variation in terms of inventory into the system, which is higher or lower? No, not anything. Shirish, we have not seen anything tangibly different from different regions. More or less, it is at similar levels across the regions. Okay. And my second question, if quarter four exit has to have double-digit growth, so is this growth primarily from the offtake and secondary, or will it be getting into the newer products, newer areas, and tier three, tier four market expansion? Or maybe if you can give a little more color, that if that positivism has to come in double-digit growth in terms of volume, how it will happen and which market will drive? You are right, Shirish. It is a combination of all of these factors. The investments that we have made in terms of network expansion. We were not able to leverage it fully as of now because of the market conditions which existed. We believe that going forward, we will add, in fact, more dealers on the ground in the third quarter as well. Therefore, that will give us results in the fourth quarter substantially more. The other part is, so therefore, it is a combination of network expansion, the brand building, which I have mentioned, which will continue and which will strengthen further. Third, of course, the product range that we have introduced, some of them new, some of them which have just been introduced, three more which will get introduced this quarter. All of this combined, it should help us to grow at a faster clip. Okay. Just last question. On the cost front, if I index last year as 100, how much deflation have we seen in overall raw material index? And is there any particular item or any particular raw material which is seeing inflationary in your view right now or maybe next two to three quarters? There has been, I would say, a very reasonable deflation in prices which we have seen in the raw material prices. The net impact, I cannot remember, but it will still be in the range of about 2%-2.5%, possibly, overall. Some of it gets eaten away by the mixed change which is happening. Overall, we will gain, as I had mentioned earlier, by 1.5% in the next quarter and the quarter going forward, inclusive of all the mixed changes that are happening slightly, and at the same time, the raw material price drops which have happened. This is something which can be expected. Is there any cost push you are seeing for any particular raw material? Not as yet. We have not seen anything significant. There was this titanium dioxide which was because of the duties imposed or the anti-dumping duty which was imposed by the government. Then there was a legal case which the IPA had filed, and IPA won that case. Still, the government has not notified so far the lowered duty structure. I think IPA is fighting that out in the court. If that happens, then titanium dioxide will also come back to normal levels. That might improve the profitability a little bit further. Okay. Thank you and all the best, sir. Thank you. Thank you. The next question is from the line of Rahul Agarwal. Please go ahead. Yeah. Am I audible? Yeah. Yes, Rahul. Hi, good evening, sir. This is Rahul Agarwal from Ikigai Asset Management. Sir, two questions. One is related to the expansion into the urban cities, which you mentioned, off-road manpower investments. Assuming that you are trying to push growth in these markets, I am assuming also that these are premium product, higher ASP market. The revenue salience from these markets will be faster and faster growth we should see here because of the lower base in the overall top line in decorative or Berger. Does that mean that. From a margin perspective, these should be diluted incrementally on overall company level EBITDA, or they should be similar to company level margins? That's the first question. No, so if the mix is better and it is growing faster, obviously it will be margin accretive from current levels, right? That should help going forward. As I said, urban markets tend to be more project-oriented markets, and they were more affected by these rains. We will see that in the third and the fourth quarter, that should become much better. It should become sales and margin accretive both. Despite them being more projects and despite them being more competitive, or you think that these are retail project type? We are not going into those very big projects. Smaller projects which are not that competitive in terms of pricing, and the margins are pretty okay. Got it, sir. Got it. Just one question. I mean, I understand the build-up to how you will exit fiscal 2026 in terms of growth on volumes. I also wanted to check with you if I have to hazard a guess on fiscal 2027 and maybe next three-year kind of volume CAGRs. What would be the probability of Berger growing at double digits for next three years? That's the question, sir. I don't think I would like to comment on that at this stage. Predicting the next six months itself is an issue. Projecting it for three years is, I think, difficult at this stage. We have stayed away normally from projecting. It's all pie in the sky type of thing. We will only project for the next few months. That's about it. I can see it up to March or April, maybe beyond that I don't have visibility. We do all our good things that need to be done. We believe that this should add. The basic fundamentals are that the network should be in place, the brand should be built up, and product quality should be good, supply should be good. These are all in place. We can expect that if the industry grows at X%, we should be able to grow at X at least. We should be actually growing at a faster clip. That's all that I can say. Perfect, sir. Sir, appreciate your simple replies. Learn a lot on this call. Thank you so much and all the best for the rest of the year. Thank you. Thank you. The next question is from the line of Harsha. Please go ahead. Yeah, hi, sir. Good evening. Basically, if we were to look at, let's say, the decorative segment, what would be our share of voice, let's say, if we calculate it by our ad spend versus deco industry ad spend relative to our deco market share? It is slightly below the deco market share as of now because of the new entrant. Their share of voice is much higher compared to their market share. In our case now, we used to be similar to our market share, but now it is slightly below that. Indicatively, sir, I mean, if you could, I mean, 100 to 100 basis points or even? Yeah, somewhere around that. Okay. I mean, even this quarter, our ad spend is higher by 20% +. We tend to kind of, I mean, let's say if we were to think of again going back to that historic levels of share of market, right? Would that be a factor of us spending more or basically it would happen only if, let's say, the new entrant kind of starts moderating their spends? Combination of both, I think. Because the new entrant, as of now, because it has come in fresh, it will spend more, right? It is expected that it will keep doing that until it builds some salience. That is something which was expected and is going to continue. Even though we might increase the spend, we will still not be restoring it back to earlier levels. That is how it is. Okay. Thank you. Thank you so much. We will continue to invest in our own way because we do not have to, because we have invested all these years and have built up a significant brand presence. Even with a lesser spend, we can get a far good result. Hello? Hello? In the interest of, yeah, sir, we are done with the questions. In the interest of time, we consider that as the last question for the day. I now hand over the call to the management for closing remarks. Thank you very much for taking time out and coming and hearing out. That is all that we had to say. Hopefully, it was a tough quarter, but we did answer all the questions that were raised. We look forward to better quarters going forward. Thank you. Thank you. On behalf of Emkay Global Financial Services, that concludes this conference. Thank you for joining us.