Good evening, everyone. This is Mohit Dodeja from Emkay Global. I would like to welcome all to the Berger Paints India Q1 FY 2027 earnings 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. Sayantan Sarkar, GM of 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, Mohit, and good evening, all of you. Let me start with the presentation first. This is the first quarter result. Why is this not moving forward now? Okay. The volume growth that was there in the standalone results was in high single digits. Value growth, as you have seen already, is at 12.7%. Decorative business outperformed with nearly 13.5% value growth, and nearly 20% in terms of operating profit growth. The protective GI and powder coatings divisions recorded relatively lower growth, largely due to the fact that the price increases were taken more towards the end of the quarter after a protracted battle in the field. It will come through more in the second quarter. The decorative performance was supported by calibrated price increases implemented through the quarter. Gross margin moderated marginally, primarily due to delayed and partial pass-through of input cost increases in industrial business. In decorative, the full price increases were effective only for part of the quarter. Decorative business delivered nearly 20% growth in operating profit, and the consolidated PBDIT margin expanded by 40 basis points year-on-year. Standalone and consolidated PAT increased by 26% and 29%, respectively. If we look at the figures, volume about 8.4, as I said, income from operations 12.7%, PBDIT growth 12.6%, and PAT growth 25.5%. Home Shield and Wood Coatings delivered strong growth. Exterior emulsions did well, while the newly launched Kolor Plus interior emulsion gained strong traction in the premium segment. Automotive coatings reported healthy double-digit value growth, and protective GI and powder, as I mentioned, the growth rates were relatively lower due to delayed price increases in these categories. Gross margin comparison, more or less in that band of 39% to 42%, and this time it was at 39.3%. It could have been higher, but largely due to the industrial business lines, as we said. The increases were more towards the end of the quarter, and not full increases have been received there. Some of it is happening in July, some will happen furthermore in August. It is always a little bit delayed in the industrial segment, which is why the gross margin is at that level. Operating profit margin, however, was a strong 17.4%. In that range, which we have always indicated of 15% to 17%, typically in a quarter one it goes higher because of the higher value sales. The operating margin tends to be slightly higher in the first quarter. That is true in every year. If you look at quarter one financial year 2025 or 2026, 2027 also at similar levels. That's how it is. It sustained at those levels, even though there was a little slippage, as we saw in the gross margin. Standalone, we grew at 12.7%, PBDIT at 12.6%, and PAT at 25.5%. The decorative business line, highest growth in the last 12 quarters, with Deco delivering 13.5% value growth, nearly 20% operating profit growth with margin expansion. Exterior emulsions outperformed, while Kolor Plus continued to gain strong traction in the premium interior emulsion segment. Construction chemicals and waterproofing delivered robust volume and value growth. Roof, wall, and seal continued to gain momentum. Wood coatings reported strong double-digit volume growth. Store footprint expanded, taking the total count to 1,900+ stores as on date, with the urban stores alone around 900+ and growing. Painting machine installations crossed 2,100+ for the quarter. Because of the price increase, there was a lot more attention there in terms of sales. Otherwise, we could have done even better, but this is a good number in the first quarter. In Luxol Metallics, this was another range which we had introduced recently and is doing very well. These are the stores which we have set up across many markets. The consolidated revenue grew 12%, with slight moderation versus standalone performance, primarily due to the muted revenue growth in wholly owned subsidiaries, Bolix and STP. Bolix, because primarily it is a weak seasonal quarter. Always January, February, March, which gets consolidated in this period, is a weaker quarter there because of snow, et cetera. STP, because of the Jamshedpur plant, which has now come back to normalcy, but in the first quarter remained a little bit disturbed. Overall, these two had flattish growth, and therefore the growth got pulled down a bit. They are back in action in this quarter. In quarter two, this will be fine. Operating profit increased by 15% on the consolidated level, with consolidated PBDIT margin expanding by 40 basis points. PBT and PAT grew by 18.1% and 28.6% respectively. The joint ventures continue to deliver actually very strong growth in both revenue and profitability. This is the consolidated result, 12%, 15%, 16.1%, and then if you go all the way down to PAT, at 28.6%. Berger Nepal registered double-digit value growth. Bolix reported flattish revenue, as I mentioned, during the quarter due to seasonal factors. However, profitability improved, driven by gross margin expansion. U.K. operations remained subdued. STP delivered improved profitability, supported by favorable product mix, calibrated price increases, and gross margin expansion. BNPA joint venture posted robust growth in revenue and profits. Margins moderated slightly, as the full benefit of price increases is yet to offset higher input costs. There was very strong performance as far as this JV was concerned. Of course, the revenue doesn't get added to our sales, because this is a 49% JV for us, therefore, both Berger and BNPA sales doesn't get added to our Or it's not included in our consolidated sales. Berger Becker JV maintained its strong performance. Again, a very robust growth was registered, registering healthy revenue growth along with higher operating profits. Growing cash surplus from INR 992 crore to INR 1,198 crore to now to INR 1,424 crore as of end June FY 2027. Large part of it will, of course, be used for the two factories which will be coming up, one in Panagarh and the other in Odisha near Bhubaneswar. We had a very interesting campaign which we have just introduced, a corporate one, which is on Berger. "[Foreign language]" is the campaign which we have launched. It has received very positive feedback from the market, and this will be a major focus area and help us in building the brand Berger more strongly in the near future. This is something which we are very upbeat about, and it's a nice, interesting campaign. For those of you who haven't seen it, you can go to youtube.com and see it for yourself. It's a campaign which has received, so far, good feedback from the marketplace. Business outlook for financial year 2027. Double-digit revenue growth expected to sustain, supported by the full quarter impact of price increases in quarter two. We had delayed, as I said, in industrial business line, the price increases were lagging. That full impact will come in this quarter. Festive demand and distribution expansion should help in expanding sales and as well as operating margin from what it was last year, definitely. Operating margins are expected to remain within the guided range, which we have always said, that is between 15% and 17%. This quarter, of course, was beyond 17% in the standalone and just short of 17% in the consolidated. Our expectation is that in quarter two, the results will be good and possibly slightly better than quarter one. Well-progressing monsoon may support rural sentiment. Market competitiveness, however, is expected to stay elevated. Sustained investments in brands, innovation, and retail activation to strengthen consumer base. Macro environment remains dynamic, with crude oil, currency, and geopolitical developments being closely monitored. We end with, "On every wall, in every heart, [foreign language]." Thank you. We can go to the questions. Thank you, Abhijit sir. We will start with the Q&A session now. Those of you who have questions can raise your hand now. We will announce your name and unmute your line. The first question from the line of [Agnishwar]. Please go ahead. Yeah, thank you, and congrats on the decent numbers. First question is on the outlook slide. You have said that the monsoon is progressing well and you expect a benefit out of that. I wanted to understand that because this is an El Niño year, and currently we are having around 13% deficit. Are you saying that because of more dry days as in the less rains will lead to more painting opportunity? Are you saying to that respect or because this time the Diwali is delayed, so we'll get enough time before the rain ends? I could not understand, because this time there is- No, that's a fair question. I think the first part is where I would like. Last year it had rained very heavily from mid-May to right up to October. Hence, the painting season also was very short because the Diwali was preponed. Both of these factors are relevant here. In this case, since it has not rained as heavily and it has been seeing more dry days, so the offtake therefore has been much better than last year in terms of exterior paint, which is one of the major segments, along with some of the other paint categories. Typically, if it rains very heavily, it becomes a problem. That's what we mean. Understood. Second is the 2,100 tinting machines. What will be the annual number? Are you essentially entering the areas where you had an under-indexation, so say South India or Western India, are bulk of these machines going there? Second related question is, the new player who entered around one and a half years back. They claim that their tinting machine is small, talks to the headquarter live, and is more modern-looking, et cetera. How is now your latest tinting machine when I compare with the new player? Right. To answer the first question, our aspiration is to try and touch 10,000 machines for the year. Last year, we were very close to that figure. This year, we expect that we should be able to again touch 10,000 numbers. That's a number which will be equal or more than the new entrant even. Most of these machines are getting installed in our under-indexed markets. We have a list of such under-indexed pin code-wise, where we would like the machines to be installed. The vast majority of that is getting installed in those places. That's how it is. As far as the second answer to your question, of the size of the machine and talking and all that. This has been there for most companies, almost all companies. I don't think those really matter too much. The size, of course, makes some difference, especially in congested city areas. Up country, though, it makes no difference almost. Our size is pretty good. Maybe a few inches here and there, it won't make too much of a difference anyway. Connectivity is established. We do get all the information from the machine into our office as well, so that we know which are the products, what are the shades which are getting tinted. Nothing new there as far as technology is concerned. Total universe of the paint shops is around 110,000. How much is the total universe now? That depends how you look at paint shops, because it depends on the size of the paint shop. It will be much more, actually. Those are very small ones which crop up, seasonal ones. If you call them paint shops also, they are paint shops, but they sell also hardware. As is the case in many of the up-country markets, they sell a lot of other products along with paint. The total universe will be higher, but if you look at those which are meaningful paint shops, maybe 120,000-1 30,000 will be the meaningful ones. This 10,000 tinting machine is going into that 120,000, right? In terms of universe. Yes. Mostly the objective is that, yes. Last quick question. If you could talk about some of the non-paints. Other paint companies are aggressively going into waterproofing, tile adhesives, construction chemicals. Any update on that? We are there. As you know, we have a pretty strong presence in the waterproofing construction chemical, and the growth has been quite robust there. That will continue. I think we have a fairly good presence. The products are well-established now. The quality is good. I think the growth rate that we see is much higher than paint in these categories, and it will continue in that way. Even tile adhesives? Tile adhesives also, yeah. We sell a decent quantity. Not as much, but we would like to probably do more. Sure. Thank you. That's all from my side. Thank you. Right. Thank you. The next question is from the line of [Mahesha]. Please go ahead. Hi, sir. Good evening. Thank you for taking my question, and congrats on a good set of numbers. Firstly, on demand front, wanted to just check the dealers ideally would have stocked up before the price increases that happened over the last couple of months, which eventually should have some impact in July. Can you share how much would be the volume growth for July, or how is it shaping up? Where do you think we will land in terms of the second quarter? That's my first question. Right. You're right. There has been some amount of stocking up, obviously. The secondaries also have been much better than last year. As I said, the rains have been less intense compared to last year. Therefore, the secondary sales has moved quite well. July growth was reasonable. We would expect that the second quarter revenue growth might be slightly ahead of first-quarter revenue growth. The volume growth will be somewhere around similar levels as quarter one, slightly below maybe. We were at 8.5%, maybe it will be 7.5%-8% approximately. A price increase, which is there varying from 7.5%-8.5%, 9%. Okay. This quarter the price increase was 7.5%, would it be fair? No, this quarter was about 5%. Okay. It is going to increase to about 7.5%-8% possible. Okay. I thought the price increases were to the tune of closer to 12%-13%. Was that? That is the DPL increase which was taken in stages. You got only part of the price increase in the first quarter. Yeah. The net impact for us was that it also depends on the mix that we have. On a typical mix, if you look at it, various companies will have different percentage increases, right? If you sell certain kinds of products which have lesser price increase, you will have obviously an impact which is slightly lesser than some of the other products where the raw material prices would have gone up and therefore the price increase has also happened proportionately much higher. Understood. Would you say the pricing growth of 7.5%- 8.5% that you indicated can increase in 3Q, 4Q as the mix changes? It can. 2Q will have a lower mix. It can or it can go down. It depends totally on the mix, as I said. Just to give you an example, suppose in emulsions, the raw material prices had gone up slightly lower, whereas in thinners and solvents it had gone up much more. The price increases in some of these products might be higher. In some of the other products it might be lower, right? Therefore, if your mix changes more towards luxury emulsion, the overall impact in terms of revenue growth due to price increase might be lower. Whereas, if you have a much higher concentration in those type of products where the price increases have been much higher, you might see more impact of the price increase. Understood. That is clear, sir. Secondly, you did indicate on the margins that it will be better, but when one looks at the margins in 2Q of last year, it had some impact. On a normative level, what is the level of margin that one should think about for the second quarter for this year? As I said, there will be some improvement. Of course, the bases are in favor slightly because of, as you said, there were impacts there in the second quarter. In spite of that, there will be some impact there in terms of two advantages. One is the operating leverage, which will be there because the value sales is expected to be at a decent level. At the same time, the mix will probably improve because the rains have not been as intense, we will have possibly more sale of exterior emulsions this quarter than what we had last year. Understood. Sir, lastly, other expenses seems to be lower. Would you say that this is lower because of lower ad spends? Some comment on Saboo Coatings, if you can just share. Why Saboo Coatings? Anyway, first question is, as far as other expenses are concerned, there has been no cut in the ad spends as such. It hasn't gone up substantially, there has been no cut. Certain savings have been there in some areas which we are working hard on, that's something which will continue possibly going forward as well. Some areas of savings in the operational expenses that we have. Understood. Got it, sir. Okay. Thank you and wishing you all the way best. Thank you. Thank you. The next question is from the line of [Percy Panthaki]. Please go ahead. Hi, am I audible? Yes. Yeah. Sir, I just wanted to understand the mix effect, this quarter. Asian Paints said that the mix for them is positive 3%, which was after many quarters they have seen a positive mix effect. How much is our mix effect this quarter? Yeah, fortunately, one part of it is, of course, of the price increases which has been taken, which has resulted in some amount of stocking up of good products which are more profitable, I would say. The second is that, overall, if you look at it, the mix has improved for the first quarter and is likely to improve even in the second quarter as well. Okay. Would it be in similar region of 2% to 3% positive? Similar. I haven't measured exactly what percentage it is, but it should be close to that. Fair enough. If I split up your overall 13.5% deco growth- You said 8.5% is volume, right? Right. Let's say another 2.5% would be price, that would bring it to 11%. No, price is almost- Sorry, mix would be 2.5%. That would bring it to 11%. That means that the pure pricing impact is only 2.5%. No, it is 8.4% is the volume growth. Additional 5% is the price increase impact. Yeah. The mix change is included in that overall volume growth, if you look at it, possibly normal circumstances, if you had gone, seen last year, it would've been much higher in terms of volume growth. Value growth was coming out lower, right? That 8.5% includes mix effect, is it? That 8.5%, I thought, is just the pure tonnage growth that we are reporting. Pure tonnage growth, that's right. In the price increase, that includes the mix change also of about 5%, which has happened so far. Correct. Therefore, if that 5% is, let's say, 2%-3% mix, then the pure pricing change is only 2%-3%, right? Mix doesn't improve by 2%-3%. I don't know what Asian Paints has told you. Normally, the mix changes is about 0.4%-0.5%. Okay. The improvement in mix. Okay. Got it. Yeah. Now, this 5% which has happened this quarter is because it is time weighted, right? That is right. Mostly. If I look at Q2. More of it is because of the industrial business lines, where it is a time weighted, because we got it more towards the end of the quarter. What do we expect this number to be, the pricing effect to be in Q2, because it will be there for 100% of the quarter. Will it be like a double-digit number? No. That's what I was saying, around 7.5%-8.5%, probably 7.5%-8.5%, depending on the mix that we have. Sir, why is this so different? Because when we talk to dealers in three tranches, the actual price increase has been to the extent of 12%-13%. That, if you take a straight product by product without any weightages to any product, that may be true, right? For different companies, different products have got different price increases. For example, in a luxury product category, we have had an increase of 6%. In the case of enamel, it might be 12%. In the case of some other product, it might be only 3%. In some other product, it might be 14%. It depends on the mix that you are selling. It is very difficult to tell exactly, pinpoint that this is the mix percent and therefore this will be the percentage, because every quarter, depending on the seasonality, product mix changes, and therefore, the impact of this revenue increase will be different. Understood. Very clear. Sir, just one last question. Just wanted to understand, if any insight as to why our decorative growth this quarter is a little lower than what the industry leader has posted? Yeah. Despite the tinting machine additions, et cetera. That's true. The explanation is simple, because the base effect kicks in. The industry leader had de-grown in last year. We had grown, and therefore, there was a 3.6% differential in terms of the value growth, in the base itself. At the same time, in the profit, there was a 8.6% differential between the industry leader and us, because they had de-grown last year and therefore the base impact was there. That's the reason primarily. Very clear. Lastly, sir, on margins, you mentioned Q2 margins can be better than Q1. Assuming that crude sort of fluctuates in the mid $80s, would you say that Q3 and Q4 margins would also be similar to what we see in Q2? It all depends. It's very difficult to say what margins will be. It depends on Mr. Trump than anyone else, because the raw material prices keeps shifting up and down. As far as we can say, I can say with a degree of certainty as far as Q2 is concerned, that the Q2 operating profit will be decent, the growth will be good, and we can expect a good top line and operating profit growth in Q2. Okay, sir. Okay, that's all from me. Thanks and all the best. Thank you. The next question is from the line of Avi Mehta. Please go ahead. Yeah. Hi, sir, this is Avi here from Macquarie. Sir, I just wanted to conceptually understand. See, for fourth quarter also, on a secondary basis, we saw high single digit volume. Now we also seen high single digit volume and what you're suggesting, and correct me if I'm wrong, you said 7.5% to 8% is what you could possibly do, even in 2Q. What I'm trying to appreciate is, for the year as we see, and as we go into the second half, would it be fair that despite this high single digit pricing that is kind of flowing through, we are able to maintain for the year also a high single digit volume growth? Or will pricing have some Do you see a risk on that volume growth? Just wanted to get your thoughts on how should we look at volume impact because of pricing. Understood. I think we should be able to maintain that. As we said, we are taking many initiatives from our side as well to grow the volumes. One is, of course, the expansion in network itself. The second is the branding campaign, which we hope that it will have also some energetic effect on the ground as well, for the team as well as the consumers as well. Overall, some new product introductions, a combination of all of these factors Should help us to maintain the volumes that we are talking about, and that's the objective. Along with there is this price increase which should get absorbed therefore, and we don't see a downside risk there in terms of volume growth. Got it, sir. Very clear. Sir, secondly, on this margin front. Now, my understanding is that we saw flattish margin YoY in 1Q. We are arguing for it should kind of expand. We obviously don't know where crude is. Crude is volatile, but assuming this current scenario continues, would it be fair to argue that operating margin profile expansion is what we should be able to drive for the full year? Is that what it implies, and is that reading accurate? Yes. If it holds true at these prices, the raw material, and if the prices don't get dropped subsequently. In terms of selling price drops, then of course, yes, the operating margin possibly will expand. That is why I'm saying there are too many ifs and buts, but in the second quarter, I expect that the operating margin will grow at a decent pace. Okay. What you're saying is contrary to what has been pricing, inflationary scenarios actually helped because the impact on volumes has been limited. Is that a correct reading, sir? Is that how I should see? So far it looks like that it has been absorbed, that the volume growth has been more or less intact. Yet, the entire price increase has been absorbed and therefore the value growth is coming at a decent level in double digits. Got it, sir. Last, sir, just a bit of understanding on Bolix, which is a reasonable kind of share from a international business. Yeah. Sir, just wanted to understand what there has been, for the last some quarters, growth has been a little volatile because of factors. What is the concern, or is there a concern there? Is it just macro or something has to be changed? Any thoughts about this, sir, if you could share that. No, there's no concern as such. As you know, those parts of the world are not growing really fantastically well or something. They have very moderate, very muted growth rates there overall in the economy itself. We are doing reasonably well. We have a product line which is slightly different, which we see as a possible profit enhancer for us, certain lines, certain kinds of products. Specifically the Bolix panels, there are certain panels, one of them which we are going to introduce in India as well. Those are doing well and is quite profitable. What you see currently is one is- Yes, sir The economy itself, which is why slightly is on the slower side. The U.K. operations which have been there, where we are taking some corrective measures which we took, where less profitable businesses we have reduced. The top line is not growing, but the bottom line is fairly growing. Got it, sir. Geography expansion now is no longer the principle, at least from a Europe perspective, because at some point of time, you were considering that as well. The focus now is essentially getting profitability on track. Is that a right- Correct reading? Okay, sir. That's right. Thank you very much, sir. That's all from my side. Thank you, sir. Just a reminder. For management to be able to answer most questions, I request participants to limit the number of questions to two. The next question is on the line of Pratik Gothi. Please go ahead. Hello. Yes, please. Hi. Yeah. Thank you for taking my questions. This is Pratik Gothi from HSBC. I have one question, please. Excuse me. Yeah, go ahead. On dealer inventories, you mentioned that there could be some dealer destocking in Q2, and Q2 is typically a seasonally weak quarter. I understand year-on-year the backdrop is better because of longer monsoons. Can you please elaborate on why quarter-on-quarter as well you will see better mix and better margins? You are right that there was some amount of stock-up which has happened, typically that should have put a little bit pressure in July, August, September. As I said, much of it is also that the sell-outs will be far better this year, which we saw in July also, the sell-out was much better than last year. We expect that the August also should be on similar lines. Keeping these factors in mind that last year was quite a prolonged rainfall had depressed the sales. This time that will be more than made up. Whatever little upstocking has happened will be overcome by the extra sell-out which happens in the marketplace. It's far healthier this year compared to last year. Understood. Thank you. Thank you. The next question is from the line of [Aniruddha Joshi]. Please go ahead. Yeah. Thanks for the opportunity. Sir, two questions. Generally, you speak about market shares, if you can indicate how the market shares would have been in Q1, especially in eastern part of India. Yeah. That is question one. If you can elaborate a bit more on the market shares at top end of the market, as well as bottom end of the market, waterproofing. Whatever details you can share, because I guess the mix is changing Most of the companies. That will be better. Yeah. Sorry, sir. Please go on. Anirudh, detailing in whether in East or in the premium or luxury what we have done, the figures are not available, so it's difficult to tell about the market share, and whatever I say will be conjecture. Based on figures which are available today, and which is what when we talk about market share, we talk with figures. There we would have gained market share in quarter one once again. It will sound strange that the leader has actually grown faster and we haven't grown as much. We will gain market share actually a little bit, because our proportion of base of the first quarter is always much higher. If you do mathematics, you will find that in quarter one, we would have gained a little bit of market share. There will be other players who will declare. Akzo is coming in next, and Kansai has already declared. There is a little bit of a gain in market share for us in the first quarter. Okay, sure. That's great to hear. Second question, we keep hearing that there is a possibility of price cuts post-Diwali, and a lot of dealers, et cetera, seem prepared for that. Is that a possibility considering the revival or increase in crude prices again? Do we see a big, in a way, reduction in trade inventory if the price cuts happen at that time? It all depends on the raw material prices, as you rightly said just now. The prices have climbed back again a little bit. Every time it goes down, there is some statement from Mr. Trump saying that he won't bomb, and the price is correct, right? Then the raw material prices also move downwards a little bit. Again, he starts bombing, and again, the whole thing gets confused, and then the prices go up again. It's very volatile and very difficult to comment at this stage. Depending on where the raw material prices, if they do go down substantially and there is peace finally there, then of course, one can look at that price cut going into the second half. Then the margins would have gone up substantially and it won't make sense to. There will be again discounting and price wars, which is not desirable. Therefore, there might be some sort of a drop in prices at that point of time. As of now, very difficult to say. I don't think anyone should comment at this stage what will happen in the second half. It's too far off. Okay. Sure, sir. Last question from my side. Backward integration, most of the players seem to be doing. Asian Paints has already announced. Even Kansai Paint is doing some backward integration as far as resins are concerned. Will that be the next, in a way, important factor to look at profitability, as most of the players get into backward integration? What will be Berger's strategy and investments towards backward integration? Yeah, that's it from my side. Many thanks. Thanks, [Anirudh]. Yes, backward integration wherever possible and feasible and which makes economical sense for us. We definitely look at those, like for example, in emulsions. The entire emulsions are made by us in our factories. Similarly, most of the resins are made by us. There were some which were imported. Those are also now being made mostly by us. Like that, there are other products like thickeners, et cetera, which we have started producing in our own factory. Recently, we had a tie-up with Dow, for one of the emulsions, which we were buying from them, and now we are going to manufacture the same in our unit in Sandila in Lucknow. Like that, there is always a lookout for improving the profitability and efficiency and reducing the cost wherever it is feasible and possible, and that's what we keep doing every time. Yeah. Sure, sir. Many thanks. Thank you. Thank you. The next question is from the line of [Anurag Dayat]. Please go ahead. Yeah. Hi, sir. Thank you for the opportunity. One quick clarification first. That EBITDA margin we are talking about likely to be better in second quarter. It is sequential we're expecting this to improve or YoY basis, sir? No, not sequentially, obviously. Because second quarter, the value sales will be on the lesser side, so the operating margins are typically on the lower side. Yes relatively. Got it. Yeah. It is year-on-year that I am talking about. Yeah, sure. That makes sense. Second, I just wanted to understand the regional demand trends, if you could share something, because rainfall has also been uneven at different places. Is there any geographical variance we have observed in demand? Particularly relating to East India where there's a competition plus now there's an opportunity with the new government in. Have you started seeing some growth there? Another link to the regional demand trend is the markets where we are under indexed, especially in the South market, where we are now growing aggressively. How substantial that business has become for us, and is it mostly the project business or we are getting retail demand as well? That's three parts of regional demand. Right. To answer the third question first, it mostly retail and project is similar. Project is slightly higher, not substantially higher, 1%- 2% higher than the retail growth rate. It's essentially much more of retail and also some project growth which is coming through. Second question. The answer is that overall the growth rate has been higher, possibly in the south and the north, to some extent west. East has actually been a little bit muted. Northeast has been, as you know, floods and a lot of issues there in Assam is in very bad shape. It has been impacted to a large extent there. We are a very strong player in Northeast. We are a clear leader in that market in Northeast, and therefore, it has impacted to some extent our sales there. As far as West Bengal is concerned, there is a change in government. Things should become positive, but as of now, in transition period, it is always a little bit of confusion. The decision-making has to happen, the government contracts has to restart, sort of. It takes some time, three, four months of settling in time typically, before things start looking up. As of now, nothing substantial has happened, but we expect the market to grow faster there. Okay. Very clear, sir. Just one quick thing. See, earlier you used to share that volume growth breakup between pure decorative paints in terms of emulsions, enamels, et cetera, versus the construction chemicals and the waterproofing segment. Is there any breakup at this 8.4% or 8.5% growth which has come? The more contribution is still coming from the pure decorative or it's more from the construction chemicals? No, no. How large it has become as a share of decoratives? As far as paint is concerned, for almost every company now, the construction chemical, because on a lower base, it will possibly register higher growth rate. Right? As far as the percentage is concerned, it is in now around 10%-12% level. Varies from month- to- month, quarter- to- quarter, but somewhere around that level of 12 odd percentage, and growing at a slightly higher pace, or I would say significantly higher rate than the paint growth rate. That's how it is. Very clear, sir. Thank you so much. Just a reminder. For the management to be able to answer most questions, I request participants to limit the number of questions to two. The next question from the line of [Akshin Thakkar]. Please go ahead. Sorry. Most of my questions have been answered. Wanted to get your perspective on the competitive intensity. How has challenger brands reacted to how the volatility in raw material is? Have you seen discounts or dealer margins go down? When there are periods where crude comes off, have you seen some of that go up? Wanted to get your perspective over that. Thanks. The competition remains intense as far as the challenger brand is concerned. Though they have raised their prices, and dealer price list has been now equated to the industry at large. The rebating to some of the bigger dealers have gone up. At the same time, the 10% free material continues in most of the packs other than the economy category or the lower end of the spectrum. It remains intense and it remains challenging in terms of the intensity of competition. Except for that fact that, as I said, there was a 5% gap between the dealer price list itself, between them and us, and that has been neutralized. That prices have gone up to that extent. Even in case of painters also, the extraordinary spend levels which was there has now been normalized to a level where it is quite comfortable for everyone. Overall, therefore, the intensity has reduced, but it still remains at an elevated level. Okay, thanks. One last question. If we think about industry growth in the last two years, we've had volume growths which were middling, and then obviously last two to three quarters, you've seen a sharp pickup. Even if you discount for the fact that some of it could be dealer inventory buildup. Outside of that also, underlying demand seems to have done well. What's your level of confidence on this demand recovery continuing? Because prices have gone up, and just more generally, one would assume that discretionary spends would come under pressure. I'm just trying to understand where this sort of recovery in demand in paint is coming through from. Thanks. Yeah. Overall, actually, earlier also, the volume growth was there, in those days, there was a price decrease which had happened, therefore the value growth used to be much lower. Now the situation has reversed. You see a volume growth, there is a much more stronger value increase happening because of the price increase happening. I don't see a major change has happened. Of course, there has been some improvement over last year in the volume growth as well. That volume growth improvement is on the back of two factors. One, this quarter and last quarter, June possibly, last year was a absolute disaster because of excessive rains. Now that situation is not there. That impacts painting definitely. Hence, large part of the painting cycle was impacted. Last year, the other problem was that the Diwali was much earlier. Typically, people tend to paint before Diwali, they got no opportunity because it kept raining right through, almost up to Diwali. It was a very short Diwali. We expect this year that the sell-outs will be much better, hence, in all possibility, even though the prices have gone up, it should have impacted the volume growth, that impact will be more or less neutralized by these favorable weather conditions. Okay. Thank you, sir. Thank you. The next question is from the line of [Aditya Bhartia]. Please go ahead. Hi, sir. Sir, Asian Paints had indicated that in Q1, they also partly got the advantage of low-cost inventory, and some of that advantage will not be coming in in second quarter. Your commentary around margins appears to be a lot more optimistic, wherein we are speaking about a year-on-year expansion in second quarter as well. Just wanted to understand where is the difference. Isn't it the case that higher cost inventory will also start contributing, and in that context, the price increase that we have taken will largely be offset by that higher cost inventory? No. The essential difference is that we have a higher percentage of industrial business than them. It's almost 20% for us, and in their case, it might be much lower. It's primarily a decorative play for them. What happens therefore is that, there was a significant delay in the price increases that we got on the industrial business lines. That will come into effect in the second quarter. That's an advantage which we should have in quarter two, compared to what the leader has told you in the commentary. That's very clear, sir. Thank you so much. Thank you. The next question is from the line of [Amit Purohit]. Please go ahead. Yeah. Hi, sir. Thank you for the opportunity, and congrats for a good- I can't hear you, [Amit]. Hello? [Amit], can you come close to the headset and speak? Yeah. Am I audible now, sir? Yes. Yeah. Sir, thanks for the opportunity and congrats. Most of the questions are answered. Just on the subsidiary part, while the growth has been muted, the margin expansion has been decent across most of the businesses. Do you expect over the medium term and even this year, the margin improvement story should continue in spite of the- Yeah, we join here. Hello? Yeah, we can hear you. Carry on, please. Yeah. Despite the volatility or the increase in RM cost, you don't think so that the subsidiary business margins could come under pressure, for this year or next one or two years? No, I think the margins will be pretty okay, as far as the subsidiaries are concerned. I think the businesses are now looking good. In fact, we have taken some corrective measures, as I mentioned, to correct the profitability angle of both Bolix and STP. I think it should yield very good results in this quarter and going forward in Q3. I can see only up to that. After that, it'll all depend on how the raw material prices behave and what happens. Sure. Thank you, sir. Thanks. Thank you. The next question is from the line of [Kayu]. Please go ahead. [Kayu], please unmute your mic and go ahead. Since the current participant is not responding, we can go ahead with [Mihir Shah]. Please unmute your mic and take off. Hi, sir. Thank you for my follow-up. Just one question on the mix that is changing this year versus if you see the historical years, the difference between the volume and value gap used to be minus five average, which is now reducing in this quarter. We also saw that for the market leader as well. Should one think that this year, given the raw material prices are high, the mix probably will remain at a much lower level, the impact of mix will remain at a lower level like a -2% zone, like minus one, two zone, or you think it can go back to -5%, -6% zone, in the coming quarters? No, I didn't get it. If you look at the earlier figures, the volume growth used to be 8%-9%. Correct value growth used to be 3%-4%, right? Correct, sir. That's what you are indicating. Correct. The difference was - 3%, -4%, -5%. That was primarily not because of the mix, but because of the price decreases that had happened. If you look at it has reversed, because we are getting an 8%, 9% volume growth, but a 13%-16%, 14%, 15% value growth, largely because of the price increase, which is there, right? The essential difference is in terms of the price increase or price decrease. More and less so to do with the mix percentage change which has happened. Understood. Okay. There is a degree of mix which is changing, [Mihir]. You are right that there are some amount of construction chemical products we sell, and the growth of those categories are much higher than, say, normal products, say, admixture or tile adhesive. These are low-value products, but high volume products. They are growing at a faster pace, and hence, sometimes the volume growth is running ahead of the value growth. To that extent, there might be a differential of 2%, 3%, but the balance is in terms of almost 3%, 4.5% of price drop, which was happening regularly earlier. That situation has reversed with the price increase going up by 7%-10%. A 10% price increase is eaten away by the differential should have been therefore 10% in terms of, or 8%, say, in terms of the price increase, which should have reflected. It doesn't reflect fully because it depends on two factors. One is this, that the mix is changing and these are the type of products we sell, in which case, instead of eight, it will show only five or six percent. That's the reason why you don't see the full extent of the volume value gap, which otherwise should have reflected with the type of price increase that has happened. Understood. Got it. Last question on the other income side, just wanted to check what has led to the sharp bump up in other income, both on consolidated and standalone, actually. Yeah, you can mention. Yeah. Hi. Hi, [Mihir]. Kaushik here. Hi, Kaushik, sir. Yeah. This is largely on account of, if you see our cash balances have gone up. Right. Only that, right? It's out of our treasury incomes. Okay. CapEx for the year, how should we think about that? I mean, the CapEx roughly is at, as we had predicted earlier, it's phased somewhere around, because our Panagarh project will start at the end of this fiscal. Right. Roughly it will be INR 600-INR 800 for the year. For the year. Understood. Got it, sir. Okay. Thank you very much. Thank you. Thank you. Wishing you all the best. Thank you. The next question is from the line of [Jay Doshi]. Please go ahead. Hi, Abhijit. I don't have any question, I just have a request. Yeah. Would it be possible for you to move to UVG instead of volumes? Pidilite, all other FMCG companies, they disclose UVG, which is value weighted. What is UVG? If you can just explain the concept. It's underlying volume growth. It's value weighted. Right now, the issue of mix that you explained earlier, that will be eliminated. UVG is basically price, volume plus mix. I'll probably take it offline. Yeah, okay. Just explain to me. We can do it, that's not a problem. Everyone has to do the same thing, then only you can compare one with the other. Sir, I'm hopeful that if you start, others may also sort of follow. Sure. No, we have no problems in explaining in that way. Let me know what this is all about, the concept, and we can do it. That's not a problem. Sure, sir. I'll write to you separately. Thank you so much. Thank you. In the interest of time, we consider that as the last question for the day. I hand over the call to the management for the closing remarks. Thank you for coming and attending this session. Hopefully, we can have a slightly better quarter two from the current levels as well, and all the best. Thank you. Thank you. Thank you. On behalf of Emkay Global Financial Services, that concludes this conference call. Thank you all for joining us.