Hi. Good evening, everyone. This is Rajesh Kumar from Emkay Global. I'd like to welcome all to the Berger Paints India Limited Q4 FY 2026 results conference call. I thank Berger Paints management for allowing us to. We have thus today Mr. Abhijit Roy, Managing Director and CEO; Mr. Kaushik Ghosh, CFO; Mr. Sayantan Sarkar, GM, Finance and Accounts. I shall now hand over the call to the management for the opening remarks, post which we will proceed with the Q&A session. Over to you, sir. Thank you, and a very warm welcome to all of you, to today's earnings call for quarter four of financial year 2026. I'll take you through a short presentation giving the details of this quarter's presentation and the annual presentation and, subsequently, open it up for question- and- answer. The first part is dealing with the standalone results of quarter four financial year 2026. Volume growth of 11.8%, driven by healthy traction across key business segments. Value growth stood at 6.7% during the quarter. Indian operations' market share amongst listed peers remained strong at slightly above 20%. Gross and operating margins expanded to a 12-quarter and 10-quarter high, respectively, supported by favorable mix, operating leverage, and, of course, reduced raw material cost. Operating profit grew nearly 18%, with both sequential and year-on-year margin expansion. PAT before exceptional items increased 23%, while PAT after exceptional items grew 38%, aided by insurance claim recognition during quarter four. If we look at the decorative business line, you know, it delivered strong double-digit volume growth with sequential improvement in value performance, supported by pre-price hike, channel pickup, and premium emulsion traction. Construction chemicals and waterproofing continue to outperform, sustaining robust momentum across key markets. Protective coatings registered healthy high single-digit volume and value growths on a strong base. Automotive coatings delivered strong double-digit volume and high single-digit value growth, driven by healthy demand in two- and three-wheelers, supported by lower financing costs and GST cuts. GI business posted robust double-digit volume and value growth, while powder coatings witnessed sequential and year-on-year recovery. On a CAGR basis, if we look at the two-year, three-year, and five-year for the quarter, if we look at the two-, three-, and five-year volume, it is more or less at that level of 9%-11% in terms of the volume growth. In value growth, again, it hovers between 5%-7%, so it's 5.5% for a two-year CAGR, 4.6%, and 6.9%. An operating profit level, you know, growth 18.8% for two years, three years it is 10.2%, and 8.7% for five years for the quarter. Quarter seems to be, you know, quarter four is much stronger in terms of operating profit growth, whether you look at, you know, the two-year figure, and even in the volume value, it is pretty comfortable. On the annualized basis, however, though the volume growth is similar in two, three, and five years, the value growth reduces. One primary reason was, of course, the price drop, which we had about 2.5 years back, and that has impacted both the three-year and two-year CAGR. The operating profit also shrunk in the last two years a little bit, so the CAGR has been at 0.1% for the two-year CAGR. Now, the trend for gross margin has been very encouraging this quarter. It has been the highest in the last 12 quarters. In fact, in the last 16 quarters, this was the highest at 42.3%. Margin trajectory remained resilient despite elevated competitive intensity and sharp rupee depreciation. We lost some profit element because of the rupee depreciation; in spite of that, our gross margin was at 42.3%. Gross margin improved sequentially and year-over-year, aided by favorable mix enrichment, waning impact of economy segment price cuts, and partial benefit from withdrawal of anti-dumping duty on titanium dioxide. In terms of operating margin also, it was one of the highest in the last 10 quarters. It was the highest, in fact, at 18.3%. The robust operating profit was driven by growth of 17.8%. Gross margin expansion by 110 basis points. Operating leverage and sustained cost optimization measures continue to support margin expansion amid competitive market conditions. If you look at the trend quarter-on-quarter, beginning from Q3 of FY 2024, this is the highest at 18.3%, so the 10-quarter highest operating margin was achieved this quarter. Decorative business. The decorative segment delivered double-digit volume growth, while value growth was supported by improved product mix across premium and economy emulsions. New offerings in premium emulsion categories, such as Kolor Plus and Kolor Plus Glow, performed well. WeatherCoat Anti-Dust in the exterior segment continued to outperform with double-digit growth. Construction chemicals and waterproofing continued to perform well. Wood coatings business continued to witness robust double-digit growth across markets. Retail footprint expanded to 1,900 stores with over 700 additions during the year, while tinting machine installations crossed 10,000 units, with 2,600+ deployments in quarter four alone. Industrial business. Protective coatings delivered strong volume and value performance during the quarter, while operating margins remained at high teens. Automotive coatings registered healthy growth in both volume and value, driven by sustained traction in the two-wheeler segment. If you look at the financial results, this is how it looks. Total income from operations had a growth of 6.7%. Operating profit 17.8%. PBIT is 23.6% growth. Profit before exceptional item and tax: 25% growth. PBT grew at 36.6% and PAT at 38%. There is one exceptional item which is in terms of the insurance cost due to the fire which we had in our Barasat warehouse. We had taken a provision in quarter one of this year, which got reversed when we got the money in quarter four. That's about INR 36 crores, which came in, which took up, therefore, the profit PBIT from 25% to PBT at 36.6%. You know, overall, good sales growth and a very strong operating profit and PBT growth. In terms of the standalone annual performance highlight, it's a high single-digit volume growth. The value growth was relatively muted. The value -volume gap was due to higher contribution from construction chemicals, textures, and tile adhesives, which I had mentioned in my last call as well. The economy segment price cuts and some impact of extended monsoon when this year had been quite bad, and we lost out a significant portion of our exterior emulsion and roof coating sales, which is high-value items, in quarter two and partly in quarter three as well, which is why the annual value growth was slightly depressed. Automotive coatings outperformed on improved demand, post-GST cuts, while protective coatings witnessed recovery towards the end of the year. Gross margins improved year-on-year, driven by a favorable mix, muted RM prices despite competitive intensity and sharp rupee depreciation. Operating margins moderated slightly in FY 2026 due to muted value growth impacting operating leverage and mark-to-market impact from rupee depreciation. YTD margins, however, remain within the guided range of 15%-17%, which we have always maintained. On a 12-month basis, therefore, if we look at it, our income from operations grew at 2.5%, operating profit at 0.7%, and PAT at 1.7%. We introduced a few interesting innovative products. One of them is the Kool range, Roof Kool & Seal, Tank Kool, and WeatherCoat Anti-Dust Kool. In the summer months when in this heat, these are products which will probably be very useful for the Indian consumer, especially in the north where the heat is very strong this time; we expect good sales coming out of this set of products. Another product which we have is the Roof Kool & Seal, which is doing very well. In fact, in April, it had a record sale. This product continues to go from strength to strength. This is a product applied on the roof which protects it from the heat and also seals it from water leakage, which is why the name is Roof Kool & Seal. There is a set of products which we introduced in quarter four, called Kolor Plus Glow, and then we had introduced earlier Kolor Plus, both of these products in the mid-premium segment. Actually, in the premium segment is where it is placed. We had a brand called Rangoli. In that segment itself, this has been introduced. It is doing quite well and very well accepted in the market today. It's getting spread across the country, and we have good expectations from this particular brand this year. We introduced Metallics, and both Silk Metallics, which was introduced in quarter four, and before that, in quarter two, we had introduced Luxol Metallics for metals, and the Silk Metallics is for the walls, both of which have started doing very well. We had, again, a record sale of these two products in the month of April. This is Luxol Metallics, which was introduced in quarter two. We have, of course, you know, many stores across the country in the urban areas specifically, where we have this different model with SIS stores coming up in good numbers in the weak urban markets of ours. In terms of consolidated results, Bolix's top -line and operating -profit growth was strong, partly aided by the P&L appreciation, the local currency of Poland. BJ and Nepal, revenue growth and profitability remained subdued during the quarter due to the elections and the resultant turmoil there. Improvement in political stability along with recent price increases is expected to support recovery in the coming quarters. We have already seen robust double-digit growth in the recent one or two months; therefore, Nepal is back in growth path. STP Limited, top line continued to be impacted. Operating profit muted due to scale. There was a, you know, incident in our Jamshedpur factory in STP. We had to close it down for two or three months to get it repaired and running again. You know, we are slowly gaining back the customers. In this particular, it used to supply to some OEMs; therefore, it had a little bit of an issue last year. We are expecting to come to the growth path in STP again. Our growing at a very fast pace, and we expect the growth rate to be restored. However, gross margins improved on account of the mix change, which happened due to the closure of that factory. SBL Specialty Coatings' revenue growth at mid-single digits improved sequentially and year-on-year. Profitability, however, was affected by scale, high RM prices, and some impact of mix. Berger Becker Coatings: robust sales growth on a low base and strong profitability driven by scale and margin expansion. It did very well, you know, coming back from the fire incident the year before. It had a slightly weak base, but it had strong double-digit value and profit growth. Berger Nippon Paint Automotive Coatings, strong double-digit revenue and profit growth backed by buoyant demand in the passenger car and SUV auto space. Both Becker Coatings and Nippon Coatings, of course, are joint ventures where we have 49%; it doesn't get added to our sales, but the profit is added to the extent of 49%. If we look at the results, you know, total income from operations, 6.1%. Operating profit growth, 12.6%, is largely impacted by the underperformance of STP and Nepal, both of which should do much better this year. PBIT, 13.1%. Profit before tax grew at 25.3%. PAT at 27.5%. Total comprehensive income for the period grew at 38.4%. On the 12-month basis, again, you know, slightly muted, but growing at 2.9%. Operating profit, marginally negative at 1.2%, and PAT at -4.6%. Total comprehensive income for the period growing at 1.7%. The net cash position is positive, you know; it has been growing. As you can see in FY 2024, we were at INR 351 crores. It moved to INR 689 crores last year. Last to last year, and then last year, 2025, 2026, it has improved further to INR 1,198 crores. Group continues to remain net cash positive. Business outlook for FY 2027. Demand conditions continue to be closely monitored, with gradual recovery expected across decorative and industrial businesses. Staggered price hikes from March onwards are expected to support gross margins and rising raw material costs, while sustained cost optimization initiatives are likely to keep operating margins within the guided range, which we have always maintained. Competitive intensity expected to remain elevated. Growth momentum is expected to be led by strong traction in construction chemicals, waterproofing, and wood coating segments and upcoming product launches. Continued investments in branding, distribution expansion, and store-led urban market initiatives should yield positive results. Protective coatings business outlook remains positive, supported by expected increase in government CapEx spending. West Asian disturbances, volatility in crude-based derivatives, rupee depreciation, supply-side disruptions, and potential inflationary pressures remain key monitorables for the sector. Thank you. We can open up for questions. Thank you, sir. We will now start with the Q&A session. I hand over the call colleague Mohit Dudeja to moderate the question and answer session. Over to you, Mohit. Thank you. Those of you who have questions can raise their hands 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 go ahead. Hello, Mihir. I can't hear anything. Hello? We can't hear anything, Mihir. Just a second, sir. Yeah. Hi, sir. I hope I am audible now. Yes, you are. Yes. Okay, great. Thank you. Thank you for that. Firstly, congrats on a great set of numbers. This step -up in volume growth that we are seeing, what according to you would be the impact of pre-buying before the price increases, and how should one think about the 1Q volumes? Will this pre-buying have any impact on 1Q volumes? That's my first question. You know, there is some impact, but obviously, the volume growth was improving month-on-month. We saw an improvement in January from December and February from January. Then in March, it was slightly better than February as well. It's not fully as if, you know, it is because of the price increase. The second is that, you know, in quarter one as well, there have been actually three price increases, and the fourth one is coming up on the 15th of May for us. There will be healthy growth, you know, in quarter one as well. Understood. Any level of secondary sales for 4Q that you think that, you know, you can share? Secondary sales had improved, you know, from what it was. As I said, you know, Q3 was better than Q2, and Q4 was better than Q3 in terms of secondary sales also. If we saw, you know, say, 11.5% or 12% approximately in terms of volume growth, then I would say that, you know, the secondary would be around 8%-9% and 3%-4% would have been the bunching up of purchasing, which would have happened due to the price increases. Got it. That is clear, sir. Thank you for that. Secondly, sir, given the cost inflation, what is the level of cost increase that you are seeing in RMs currently? What is the cumulative price increase of these 4 price hikes that will sit in 1Q? Should one expect margins, given the timing issue, to compress in 1Q, and to what level? You know, more or less whatever has been the raw material price increase so far, unless the prices again start shooting up; you never know these things. As of now, we are more or less covered. Except for solvents, where there might still be a gap, almost every other product category is more than adequately covered as far as price increases are concerned compared to the raw material price. Of course, the timing, a little bit of, you know, delayed price increases would have happened, but then we were carrying some stock as well from an earlier period, and therefore, more or less it should neutralize each other. I don't see any major impact in the profitability that way. Fantastic, sir. Fantastic. That was true for decorative, but for industrial Yeah There might be a little bit of a delayed price increase because there you need to negotiate and sometimes, you know. That's a smaller portion of our business, you know, primarily in automotive where this is, there, that you need to negotiate. Normally they give from, you know, prior period the price increases. Hence, you know, that might impact it a bit, but otherwise it's fine. Understand, sir. Sir, lastly, I want you to check on the level of volume growth that one should expect in FY 2027, given 2026, you know, has a favorable base. It is an El Niño year, so do you think that there can be more painting days, and can it lead to higher volume growth? Can one expect double-digit volumes for the full FY 2027 with no impact on margins? It's a difficult question to answer, Mihir, at this stage. You know, as it is, it is so volatile that You know, there are negatives and there are positives. As you said, you know, there is this favorable base and, at the same time, more stability in the competitive intensity. These two factors are in our favor. The third is, of course, there is no price decrease happening, which tends to depress the value. On the other hand, in terms of the volume getting impacted a bit, you know, inflation will be on the higher side. That might, you know, soften the demand a little bit. At the same time, the El Niño effect that you mentioned, we don't know how much of the impact it will have in the upcountry areas. The uncertainty, which is there overall, might also impact the demand. It's a mixed equation, very difficult to project at this stage what will happen. We assume that, you know, it will be a fairly decent volume growth in spite of all of these challenges. Got it, sir. Thank you very much. Wishing you all the very best. That is all from my side. Thank you. Thank you. To enable the management to answer most questions, I would like to request that each member kindly keep the number of questions to two. The next question is from the line of Avi Mehta. Please go ahead. Hi, sir. Am I audible? Yes, you are. Go ahead, please. Sir, I wanted to kind of check with you on two things. One, conceptually, you know, these cumulative price hikes, you know, I don't know if you could kind of give us, first, a number for it. Do you see it kind of improving the growth trajectory from the 6%? Basically, is the volume impact likely to be lower than the price hikes? Is what I wanted to kind of understand based on what we've seen historically. Right. You know, the price increase that we have taken is about 11%-12%, depending on the mix of the products that we sell, actually. It should be around that point. Now, in terms of what will happen to the volume -value equation, this time it will reverse, which means that for volume growth, there used to be a differential of about 4%-5% between the volume and the value. It might go the other way around, which means the value growth will be higher than the volume growth. We expect the volume growth to marginally, you know, reduce or be at the levels at which it was earlier. You know, the value growth will definitely be significantly higher than what it was last year. Got it. Very clear, sir. The second bit was just, you know, a follow-up to what you kind of clarified to the earlier participant, Mihir, that we have taken price hikes to offset the input inflation to date. When you say this offset, is this an absolute, you know, inflation number in rupees that has been passed on, or is it a percentage margin? How should we look at this? It neutralizes the percentage margin, sort of, you know. Oh. the absolute. Okay. On a percentage margin basis, we have maintained it. That's right. Okay, got it, sir. Perfect. That's all from my side. Thanks a lot, sir. Thanks for this. Thank you. Thank you. The next question is from the line of Percy Panthaki. Hello. Hello, am I audible? Yes, yes, you are. Yes. Go ahead, Percy. Just wanted to understand, I mean, in terms of volume. In the last crude upcycle, which happened during COVID times, we actually saw even volumes doing very, very well, even better than what it was earlier. This was because I think it was a very special case where people were spending times at home, and they wanted to spend money on home improvement because they could not spend it on many other things, and that's why the volume growth was very strong. This time, the environment is different. If we take significant pricing, don't you think there could be a sort of backlash in terms of volume? How do we sort of figure out whether this will happen or not? I mean, do we have any previous experience in this apart from the COVID period, or, I mean, how do you try and look at this question internally? That is my first question. Right. Okay. You know, you are right that in after COVID, though there was a significant price increase, the volume growth also went up, and that was largely, you know, a part of it was due to the pent-up demand of the COVID period, which came into play after COVID. That will not hold true this year. Though there was, you know, some depressed situation there in quarter two, quarter three of last year, due to the extensive monsoon. This time it will be a lesser monsoon. Hence, you know, we may get a much better situation there in quarter two and quarter three of this year. Difficult to comment on these things, you know, as to how it will pan out. Earlier in previous records we have studied, whenever these price increases have happened, this has happened quite often; in fact, you know, every three or four years this type of situation arises. The prices do go up, and then one and a half years down the line, it tends to slide downwards. That has been the record for every time the oil prices have gone up. It always slides down in a period of one and a half years. You know, sometimes it happens in eight to 10 months, and sometimes it happens in one to one and a half years, but it will always slide. The issue is that, you know, at the time when it goes up, raw material prices do go up for the paint industry, and prices also are taken up typically with a little bit of a lag. This time we have been slightly more proactive and increased the prices because of the price increase of raw materials was much higher. We were forced to increase the prices. There was no choice there. We believe that, you know, of the total paint cost, only 40% is the paint cost, and 60% is labor cost. Hence, the inflation to the customer is only, you know, 4%-5% of the total paint job. I think given the current inflationary situation across product categories, this type of inflation can be absorbed. It may have a little bit of an impact on the demand, but then, as I said, the bases are favorable. The competitive intensity or the strength at which it was, you know, growing has reduced, and therefore, those two are in our favor. More or less, we should be able to hold on to the volume growth that we had last year, and that implies the value growth will be stronger. Understood. The second question I have is on inflation. Crude is up 40%- 50% versus pre-war. I'm assuming crude derivatives, which you use, would be up in a similar fashion. TiO2 too, of course, is up to a lesser extent. On your overall COGS basket, what is the inflation today compared to the pre-war situation? It's about 22%-23%, and that's more or less covered through the price increase. How is it covered, sir? Because if you want to protect your margin, you will have to take a 22% price increase also, which is not taken, right? No, no. It is, you know, it is raw material at 60% of the total cost or 58% of the total cost, the way you look at it. You have covered the rupee impact, not the percentage margin impact, right? No. With a 10%-12% price increase, your gross margin will still fall, right? No, it won't, you know. That's exactly what I'm trying to explain: that if you take a 20% increase in raw material prices, which is in terms of 60%, it will become approximately 12%, because 60% of 20% is 12%. We have taken up price increases of 12%, and there are savings elsewhere which we have to bring on the table, which we work on always. Therefore, you know, we will be able to maintain our gross margin. Okay. Understood, sir. Understood. Wherever and whenever there has been such big cost inflation in the past, at least temporarily for three or four quarters, all the industry players, including yourself, have seen gross margins go down. I'm a little surprised when you are saying that even temporarily we do not see it. Yeah, it used to happen that way. You are right, absolutely. The price increases used to be in a more staggered manner. This time because of the suddenness and the quantum of increase that have happened, we were left with no choice but to increase the prices very rapidly, you know. That is why I'm saying that it will not impact to that extent. Okay. Okay, sir. That's all from me. Thank you, sir. Thank you. The next question is from the line of Abneesh Roy. Please go ahead. Am I audible? Yes, Abneesh. Thank you. Congrats on excellent numbers. My first question is on your home state where your headquarters are. We have seen a government change. Obviously, double -engine Sarkar generally works. Specific question is, how big is Bengal market for you as a percentage of revenue? Last two, three years, is there a slowdown? Related question is, lot of Bengali workforce come back to Bengal to vote? Absolutely unprecedented levels. Does that impact painter availability in April, or yeah, the month of April, in any way across India? Yeah. You know, let me answer the first question. You know, it is, you know, a good thing that, you know, has happened, you know, in terms of having a government in the state which is of the same party as that in the center. This has happened after 49 years in West Bengal. We expect less karmis and more cooperation, and hence the growth rate is likely to accelerate. That will be, you know, quite evident, especially in the infrastructure segment, and quick completions of projects will happen. Therefore, you know, also the central money for the various schemes which were stalled will come into existence. We expect, therefore, the growth rate to accelerate in the state of West Bengal for sure. We have a significant stake in West Bengal. In fact, you know, we are over-indexed in West Bengal compared to the entire industry. Our headquarters is here. We have two factories here. We have very strong brand equity. Our presence is extremely strong in this particular state. Last two years, especially last year, have been weak year in West Bengal. It was, you know, suffering a bit. As a result, our performance was also getting impacted. We expect that, you know, this time there will be significant growth coming out of West Bengal. Combination of two factors. One, you know, is that, you know, the economy is likely to do well, and we are much better placed in this state, so we'll gain from this. As far as West Bengal is concerned. The second is in terms of the infrastructure also. You know, we are the leader in any case in protective coatings across India. Therefore, you know, that will also help us in growing faster in the state of West Bengal. On the question of the painter, yes, you know, they did come back. A large number of them, you know, in fact, almost reaching a crore number is what I am told. Across, you know, in terms of population, total population, of course, you know, the workers would have been in lakhs. They did come back, the painters, and now I think most of them have gone back. It did impact a little bit in some areas, you know, there was this crisis of painters. Not so much that it impacted sales. One thing you didn't answer: will Bengal be high single digit as a percentage of sales for you? No, it is double -digit, actually. Okay, understood. My second question is on your commentary on slight moderation on the competitive intensity. When I see any metric, for example, a gross margin three-year high, EBITDA margin close to 2.5-year high, and you said volume growth X of the price increase behavior is also reasonably good. If you could explain, then why is the competitive intensity high? It has to reflect in any of these numbers, because in December quarter also, your margins did expand. Second related question is when I see media as a consumer, I see an outsized presence of obviously the market leader, which is always there. The new player is also very aggressive. I don't see Berger, with 20% market share in the legacy paint players, having that kind of a media presence as a customer. If you could tell us what is your media share is when we take the new player also into account and why you are under-investing, if you are? Right. You know, competitive intensity—why I've said that is, you know, because it is still quite strong, you know. The figures, you know, may indicate a different scenario altogether, you know? The leader also might exhibit very strong figures because the bases are muted for them and for us as well. We had a good base, yet we did well, and a part of it would be the price increase impact, which would have helped. The intensity exists, you know, on the ground. There is no doubt on that count. As I said, it is, you know, the growth which was there has completely tapered off. Now it is there in the form of, you know, any other competitor who's relatively doing well. One more competitor has been added, and therefore, you know, some share which had gone to them remains with them, you know. That is how it is. I would place it in that manner. The other question, which you said was, what was the second part? Media. Media share. Media. You know, we have not increased or decreased our spends. Our spends remain at our market share, sort of, you know, which is 20%. Since Asian, the market leader is at, you know, 52% odd; they spend 2.6 x us, they are much more visible. We are also not so present in the sports, which is where some of you might be seeing, and hence, you know, we are less present there. We were much more present in the news channels. We are correcting that media mix a bit this year. We were there also in the GECs more. We have reduced the spends there and increased our spends on the sports this year. You'll get to see much more visibly our brand in the sports channels as well. You know, the new entrant actually spent far, far beyond their, you know, market share. That's something which is their choice. We have always maintained our share of voice at a similar level to our share of market. We don't go overboard; we don't underspend as well, and we maintain our, you know, profitability at the band at which we maintain it. We have no surprises, therefore, on any of these. We are slightly boring but consistent. Sure. Thanks. That's all from my side. Thank you. The next question is from the line of Akshay Thakkar. Please go ahead. Yeah. Thank you for the detailed comments and the presentation. Just wanted to double-click, yeah, on the point that you made on margins. You know, just roughly 100 is your sales and 60 is your raw material. Just for the sake of argument, you said that the '60s got 20% inflation, so your raw material cost will go up by 12%, which is the price increase that you've taken. Now, I get that an absolute gross margin in this scenario doesn't change, but in an accounting sense, the percentage gross margins would be lower, no? I'm just sort of wanting to be on the same page here. Yes. You know, you are right. You know, it will have an impact, you know, slightly on the gross margin. We have, however, initiated certain measures which we believe will give us some savings on the gross margin on account of, you know, the formulation efficiency and, at the same time in terms of sourcing efficiency that we bring to the table. That, you know, we have done last year as well, and this year also, we believe that some of those advantages that we got last year will continue this year, plus we will add a few more. That's one impact. It will still possibly have a slow 1.5% impact on the gross margin, but that will get neutralized in the EBITDA margin because of the scale efficiency which will come into play. Fair, fair. Percentage gross margin is lower, and then whatever efficiencies we get on costs and operating leverage will drive the EBITDA, this thing. We've not seen a period where we've had 10% or 15% price hikes, only a few times in the past. Correct. You mentioned that elasticity is lower. I mean, what's giving you that confidence? Because, see, you know, discretionary spends could be under pressure given where inflation is now. Yeah. Do you see downtrading as a risk? Do you see volume as a risk? I know it's a little bit of an unknown, but I just wanted to pick your brains over there. No, no. You would've seen more cycles than us. No, true. You know, so I have gone through this type of cycle many times, you know, and we have not seen this type of increase of 12%-1 3%, but we have definitely seen 7% or 8% price increases at least 4x or 5x earlier. You know, which is a very similar type of, you know, okay, 3%- 4% more maybe in terms of inflation, in terms of prices, but that's very fairly similar. Whenever that had happened, the expectation was that, you know, it would impact volumes somewhat. It did impact, you know, but very marginally on the margins, you know. Sort of, you know, really it, you know, those who will paint will paint. 3% and 4% inflation on overall painting cost. If a person is willing to spend INR 1 lakh, I'm sure he's willing to spend INR 1 lakh 5,000, you know. Instead of saying that, No, INR 1 lakh could be INR 1 lakh 5,000, and therefore I will not spend anything. That rarely happens. That is why I'm saying, you know, more or less, you know, it doesn't impact so much the volume. Okay. One very last question, sir, is on your comments on competitive intensity. You know, we've discussed what the strategy for the new entrant has been and how in the past you've seen it is unsustainable. We've also seen one more player become a little more serious towards the paint segment. Just generally, your comments. Yeah What's giving you the confidence that it's not increasing any further? No. Comments seem to be on stability. Right. I'll just explain why I said two things. One, you know, as far as the new entrant is concerned, it has, you know, increased the dealer price list much more than, you know, what we have done or what the leader has done, you know. In fact, it used to operate at a 5% discount. Now, except for, you know, the low-end economy emulsions, where it has a 2% advantage in price, everywhere else the prices are the same. In fact, in one or two cases they are higher. Therefore, you know, that price advantage which they were giving in the marketplace does not exist anymore. The second is in terms of, you know, the painter amount that they were, you know, giving to the painters in terms of various types of schemes. There also has been a substantial reduction announced this year. Overall they are, you know, trying to shore up their profit. As I said, it was not sustainable, so it's evident from the current actions that, you know, they are trying to correct the situation and make, you know, the operation profitable. From that perspective, you know, it will have an impact on their volumes and the growth that they were registering. That's one, which is why. Then we have seen for the last almost five, six months, our report from the market says that it's more or less stable sales for them. It's not growing at the pace at which it had initially started. It's month on month, quarter on quarter; if you track their figures, more or less it is at similar levels as it was, you know, the previous month or the previous quarter. This is how it has been. You know, in March they did well because I think their quarter and year-end schemes ended; certainly, you know, there was some amount of sales which would have happened at that period because most of the dealers that we spoke to said that they had stocked up a little bit. From that perspective, it would have gone up a bit. Otherwise, it has been, you know, relatively stable sales. Now with these price increases in the DPL of dealer price list and reduction in expenses on painters, I don't think, you know, the growth rates will be the way it was in the first year. This is why I said competency intensity remains, but it's stable. It's not growing at a faster pace. As far as the new other new player is concerned, yes, you know, they have plans. We have, you know, both these players existed in the market. We know what they have done or what they can do. It's not something that they are coming from zero base or something. Even if they grow, it won't impact so much, you know, the overall market. Okay. Thank you, sir. I'll fall back in the queue. Thank you. Question is from the line of Aditya Bhartia. Please go ahead. So again, harping on the same point as margins and raw material price increases that have been taken. So fair to assume that there may be a slight percentage reduction in gross margins, but at least gross profit that we'll be having on a per -liter basis should be remaining the same or possibly expanding a little because of formulation benefits. At the EBITDA margin side, at the EBITDA margin line, even percentage margins should be remaining broadly similar. Is that so? Right. Absolutely. Your understanding is correct. Perfect. Perfect, sir. Sir, historically, what we have seen is when raw material prices start cooling off, paint companies have been able to retain a part of the advantage. Of course, every time that this had happened, it was before the Birla Opus era. Given the kind of pricing discipline that the industry has shown in this hyperinflationary environment, is it fair to assume that a similar kind of a theme may play out once crude prices start correcting? Is that what your approach is likely to be? Well, it might happen, you know. It all depends on what happens, you know, to the prices of the raw materials. Typically, you are right, you know, that partly, you know, it is kept to some extent, depending on the brand strength and some of the products where we might have an advantage. We don't tend to pass on the full price decrease benefit at that point in time, as and when the situation arises, you know. We will have to wait and see what happens. There are two new competitors now, you know, so it may not hold true, you know, completely. At the same time, you know, wherever the brands are strong for any individual player, this may hold true. Some of the commodities may not; it may get passed on fully. Some of the branded items, where there is, you know, a possibility of retention, might be retained. Sure, sir. Sir, historically, you have guided for roughly a 15%-17% kind of an EBITDA range. Is that the range that you'll stick with even in this inflationary environment and as raw material costs cool off? Do you think maybe we should be at the upper end of that range? No, we stick to that 15%-17%. You know, like this quarter, we did exceed that. You know, we went up to 18.3%. You know, more or less, you know, our track record has shown that we typically remain in that 15%-17%. Sometimes when it goes up consistently, if it is remaining at those higher levels, we will spend more on advertisement and brand building, you know, rather than, you know, go up to 18%, 19%, or something. Sure, sir. That's very helpful. Thank you so much. Thank you. For the benefit of everyone, I'd like to request that each member kindly keep the number of questions at two. The next question is from the line of Jaykumar Doshi. Please go ahead. Hi, Abhijit, sir. Thanks for the opportunity. Thank you. Just a clarification on your previous question and previous response. 15%-17% that you guide, is it always on standalone or is it at a consol level? Because consol this quarter is 16.8%, if I'm not mistaken. Correct. That's true. You know, it was on the slightly lower side, compared to the standalone. Your guidance is at a standalone level or a consol level? You know- When you generally talk about 15%- 17%. When we, you know, primarily, I talk about standalone, but, you know, in the consolidated, it also remains at. Understood More or less, the console follows the standalone, you know. It should be somewhere around the same level. Perfect. Second is, you know, you did mention that the dealer price list of Birla Opus, you know, has gone up, you know, by a higher percentage than, you know, let's say, Berger or Asian Paints. Right They've narrowed the gap. Right. After rebates and trade schemes, do you think that net of all those schemes and rebates, also the gap has narrowed? Yes. That is right. Similar. By how many percentage points, ballpark, do you think the gap would have narrowed? 3%-4%. Understood. That's very clear. Thank you. Last one is you did mention that, you know, material cost is only 40% of the total project cost. INR 1 lakh budget goes to INR 1 lakh 5,000. Right. You know, what we have seen in the past is that in an inflationary environment, painters also actually increase their labor charges and basically, you know, per square feet painting, you know, costs at a similar, you know, similar kind of inflation. Do you think, you know, this time around also, you know, it would be same or you think this time it will be different? Or if you can share your experience from the last inflationary cycle, where the industry had taken almost 24%-25% price increase over a four-six quarter period? Yeah. You know, how did labor costs move then? You know, it does move up a little bit. You know, it's not as if, you know, it remains completely static. Not to the extent of, you know, the material cost. It typically, you know, because there is competition there in that segment. You know, lot of the players, lot of the painters may not raise their prices. Some of them may. Therefore, you know, the competitive intensity is much stronger there, so you cannot charge, you know, a much higher amount, therefore, and get business. The tendency is that, you know, there is a little bit of an increase, you know, because the overall cost for them also goes up. But it doesn't increase to the level of the material cost. The material cost, as I said, you know, if it has gone up by 11% or 12%, the labor cost may go up by 3% or 4%. Therefore, the impact will be much less as far as the labor is concerned. Okay. One final one, please. Historically, you know, in all inflationary cycles, all the players took gradual price increases. At the end of, you know, in a deflationary cycle, it resulted in improvement and profitability for the industry, and it was quite a rational competitive environment. We saw similar trends in, you know, 2020 to 2023 pricing, you know, inflationary cycle as well. Subsequently, after the entry of Birla Opus, you know, because of higher rebates, discounts, competitive pressures, you know, that discipline, you know, went away, right? This time around, you know, do you expect that, you know, what we had seen in the previous cycles will continue? Are you very comfortable and confident that, you know? It is self-evident from this price increase itself that Birla has actually increased more than what the industry has done. In fact, they were increasing from the month of January itself to narrow the gap between the industry and themselves. Obviously, they are behaving very responsible as responsible players within the industry and maintaining parity with the industry. No reason for us to believe that suddenly they will change behavior and create a gap for themselves when they have narrowed it down completely. I think it will behave in a similar fashion as it has happened. The industry, whatever has been seen earlier, should repeat itself. Thank you very much, and all the best. Thank you. Thank you. The next question is from the line of Amit Purohit. Please go ahead. Hi, sir. Good evening. Amit here from Elara. Sir, just on your comment on industry growth, I just wanted to know, one, on the trends with respect to luxury, premium, and economy. Any changes, like, I mean, for some quarters we've been hearing that consumers are downgrading and economy segment or the lower end segments have been doing well. Any trend change that you have seen, with the growth gradually improving? That was the first one. No. As far as the trend is concerned, typically what happens is in the second and the third quarter due to the rains, and this time it was excessive; you know, the premium emulsion for exteriors and luxury emulsions for exteriors and the roof paint, you know, the Roof Cool & Seal type of product, do not sell much, you know? Typically, the second quarter has a poorer mix for all paint companies. It improves in the third quarter, and fourth quarter it improves further. That was the trend which was seen, and that is why you see our operating margin has moved up. A part of the reason is because of better sales of premium and luxury emulsions comparatively this quarter. And- It is not a trend shift sort of; you know, seasonality is a factor there. Every time, you know, typically the third and the fourth quarters seem to do much better, and it continues in the first quarter as well. Have you seen similar signs in the month of April? I just wanted to know. Yes. That's right. You know, similar signs in April as well. Yeah. Okay. Okay. Okay. Like you indicated that, at this, I mean, the trend in April would have been very strong in terms of primary, right? Much of the price increases are happening now. Is the secondary also decent enough during the month of April? Yeah, this question was asked, and I did answer that, yes, you know, not to the tune of the primary that we did, but the secondary was strong enough. Okay. Last, sir, question on the paint painter that you indicated on the price increases. Typically just want to understand, in markets like, I mean, metros and all, we understand it's all per square feet. Yeah. Is it the same phenomena across the country, or it is material cost is bought and then labor is appointed? How do you- No. It changes from city to city. Broadly everywhere it is per square feet. It is, you know, location to location. Some places, you know, they leave it to the contractors. Some places, you know, it is that the consumer goes and buys himself, and the labor is provided by the contractor. It changes, you know. There is no hard and fixed rule like that. Typically in the urban centers it used to be mostly, it still is, that the contractors play a larger role. In the upcountry areas, you know, they have little bit more time on hand, and, you know, they go and pick up the material along with the contractor. That's how it happens. Okay. Thanks a lot, sir, and all the best. Thank you. Thank you. We take the last question from the line of Aniruddha Joshi. Hello. Yes, Aniruddha. Yeah. Sir, most of my questions are answered, but now I guess you have already crossed the age of 60, and you have been in the role for 15 years and you have spectacularly led Berger to very strong market share gains with strong profitability. How should we think about next five year, 10 years as such? Whether there will be continuity from your side itself? How the leadership roles will change, emerge? If you can provide any clarity on that, it will be very helpful. I'm there, you know, and I In fact, you know, probably you'll get to hear soon that I'm there till 31, you know. Right. Five more years to go. You'll have to bear with me. That's how it is. No, no, sir. You have been doing probably the best work. Sure, sir. Sure. Five years, that answers the question. Sir, in terms of last question, is the channel inventory really at a high level right now? At least whatever the checks we would have done, it seems to have gone up materially. Is that a fair understanding? Because if the entire industry has 10% price hike is taken, means, for example, let's say a dealer is keeping inventory worth INR 5 lakh in his shop. Now he cannot suddenly change his budget, he will reduce the volume actually because the paint prices have gone up by 10%. We still don't see the reduction in volumes. In fact, volumes are also higher. Is there a material increase in the trade channel inventory, or is there reduction in the trade inventory for multiple smaller stroke, unorganized players? Both are happening, you know. There is a little bit of stocking up happening, you know. They're putting in more money from their kitty because this type of large price increase gives them, you know, an enhanced margin for themselves because they can sell and make good margin. They tend to stock up a bit more. That's one thing which is definitely happening. The second part is, you know, some of the marginal players will get squeezed out in the process because they know that, you know, the branded items will be easier for them to sell. Since the price increase is happening, they tend to concentrate on the branded items, stock them up more. The leaders in respective categories, you know, wherever they are, will tend to gain more. Okay. Sure, sir. This is very helpful. Many thanks. Thank you. Thank you. That was the last question for the day. I now hand over the call to the management. The closing remarks. Right. Thank you everyone for coming and joining for this, you know, quarter four results analysis, you know. Have a great day and, you know, carry on, you know. Thank you. Thank you. On behalf of Emkay Global Financial Services, that concludes this conference. Thank you all for joining us.