Hi Abhijit sir, can you hear me? Yes, I can. Yeah, how are you sir? All well, all well. I have to share the presentation. Uh, yeah, sir, may I request you to turn off your screen and maybe share this, uh, screen then? Maybe turn off, turn off your camera to increase the network bandwidth. Okay. Is that okay? Yeah. Can you see the screen? Uh, not yet. Yeah, I can see the screen now. Okay, now How do I maximize the size of this one thing? Uh, yeah, there we are. This is it, right? You can see the screen now? Yeah. Next screen. Yeah. Good. We'll just wait for three four minutes before we start the call. Done. Okay sir. And that's how it's going to look like. Hey, Deepak. Yes. Uh, so do you want me to start the call? Yeah, you can start. Great. Hi, good evening everyone. This is Mohit Dudeja from MK Global. I would like to welcome all to the Berger Paints India Limited 2Q FY27 result conference call. I thank Berger Paints management for allowing us to host. We have with us today Mr. Abhijit Roy, Managing Director and CEO, Kaushik Ghosh, CFO, and 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. Good evening to all of you. We will start with the quick, you know, look at Q2 and half-year performance. Uh, Sir, I think you are on mute. Can you hear me now? Yes, sir. Yeah, good. Revenue growth of, uh, 11.9% on a standalone and 13.2% for the consolidated. Half-year growth of 12.3% and 12.5% respectively for standalone and consol. The PB DIT consolidated growth was 5.2%, backed by strong performance by subsidiaries. Decorative business double-digit value growth driven by price growth of about 8%. Industrial business, robust volume and value growth across business lines. Gross margin was lower on year-on-year basis. The gross margins were impacted by double-digit raw material inflation, as has happened with the entire industry, liquidation of high-cost inventory, and delayed price increases in the industrial segment, with pressure further intensifying during the quarter. The operating margin compression remained relatively contained with additional investment of— in spite of additional investment of ₹22 crore in the Rang Bana Re campaign. Impacting quarterly margins. Excluding this, PB DIT growth would have been about 3%. Cash position, uh, company continues to remain cash positive on a consolidated basis. This is as is the condition, you know, for year-on-year growth. Volume growth 3%, and on the half-yearly basis, if you look at it, it is 5.6%. This is standalone. Uh, value growth 11.9% and half-yearly basis 12.3%, and on operating profit -4.4% and +6.1%. Uh, on a half-yearly basis, as we stand today, uh, the EBITDA to sales ratio stands at 14.4% for both standalone and consolidated. On a standalone basis, if you look at the results, you know, uh, 11.9%, largely driven by gross margin compression. Uh, PBDAIT -4.4%. Uh, and PAT is -7.3%. In terms of the half-year result, you know, it stands at 12.3% revenue growth, operating profit growth at 6.1%, and PAT growth at 13.2%. The decorative performance, 10% value growth driven by price increases. Eastern markets impacted due to extended rain. Volume growth moderated as later Diwali shifted festive demand to Q3 alongside a conscious mix improvement with price-sensitive categories such as putty, textures, and enamel which degrew for us. Differentiated products outperformed. The Home Seal segment continued to outperform, with Roof Cool and Seal and Dam Shield emerging as key growth drivers. Wood coatings registered strong double-digit value growth. Strategic investments in advertisement and promotion to support the new Rang Bana Rehe campaign. Strengthening brand visibility and consumer engagement during the quarter. We added a large number of stores as well. Uh, retail store network is at 2,000+ as on half-year financial year 2027. In tinting machines, we added 4,800 machines as of first 6 months, and during the quarter we added 2,700 machines. In industrial performance, we delivered robust high double-digit volume and value growth despite steep price increases. You know, however, margins remained under pressure. As price hikes could not be fully passed on in a timely manner. Value growth across segments further aided by pricing partially offsetting RM price inflation impact. Automotive coatings outperformed, supported by buoyant demand in the 2-wheeler segment, though it's a small segment for us, about 5 to 6%. The growth rate was at about 31%, so I presume all automotive players would have done very well on this particular account. Protective coatings volumes also remained strong. Uh, in fact, you know, all the industrial divisions, as mentioned earlier, had strong double-digit growth. General industrial segment registered double-digit volume within the category. If you look at the gross margin, you know, Q2 financial year '27 and half year '27 for standalone and for consolidated. On a standalone basis, Q2 was 36.6%, but on a half-yearly basis, it stands at 38.1%. We normally operate in the range of 38% to 41%. Uh, as far as gross margin is concerned, so it is well within that range. In Q2, the EBITDA dropped to 10.8% versus 14.4% for the half-yearly position. Our guided range is 15 to 17. So at the end of half year, we are at 14.4%, which is close to that. The quarter results were, you know, a little lower as we explained. Uh, we had an extraordinary spend on the Rang Banarai campaign which was introduced in this quarter. Uh, therefore it pulled down a little bit in, in terms of the operating margin. Consolidated, you know, if you look at the figures, we are at that range which we normally operate in. Even in this quarter, we were at 39.3%, you know, against 40.1% on a half-yearly basis. As far as EBITDA margin is concerned, we are at 11.6% versus 14.4%, largely scale impact. This quarter is also a soft quarter for us. Normally every year, last year also this was a soft quarter, this year also it is a softer quarter. It normally— quarter 1 is very big and quarter 3 we do well, so, and quarter 4 as well, you know. But, uh, this particular quarter normally tends to be soft. And therefore the operating margin was weak, uh, comparatively, but things are looking better. Hopefully it will be much better in quarter 3. As far as Rang Banarai, our new brand campaign is concerned, diwaro ka bhi, zindagi ka bhi, Rang Banarai. Color for walls and for life. It's a new brand platform built on the joy of color in homes and in everyday life. Story-led creative and backed by stepped-up A&P to build brand visibility and consumer engagement. We think that, you know, this investment is well worth it and will maintain our good presence as far as branding is concerned in the consumer's mind. As a result of this advertisement spend. Color in every moment of life, beyond surfaces into lives. आज का भी, कल का भी रंग बना रहे, दीवारों पे भी, चेहरों पे भी रंग बना रहे, and stay colorful in every situation, रंग बना रहे। Consolidated results, as we look at it, you know, total income from operations, uh, 13.2% was the revenue growth, operating profit growth at 5.2%, and PAT growth also at 5.2%. Half-yearly basis, you know, total income from operations 12.5%, operating profit growth at 11.1%. And PAT growth at 19.3%. As far as consolidated results were concerned, almost every subsidiary and JV did well. Bolex SA had a strong growth in revenue and operating profit, both in constant currency and in rupee terms. BJN Nepal, robust revenue and profitability growth driven by price increases and margin expansion. STP, we had a weak quarter last year. This quarter has been very strong, uh, revenue and operating profit grew well, margins moderated. Due to raw material cost pressures. SBL, which is Sabu Coatings, revenue growth driven by pricing actions, profitability impacted by steep inflation in solvent-based RMAs, as has happened in all industrial accounts. Berger Rock sustained healthy double-digit growth supported by buoyant automotive demand. Berger Becker joint venture— this other 2, Berger Becker and the BNPA joint venture, the sales don't get added to our kitty. Only the 49% profit comes in. So the robust growth in revenue and profitability was observed in Berger Becker Coil Coatings. Uh, very, very strong growth driven by higher volumes in industrial coatings. And BNPA also did very well. The revenue growth was over 40%. Profitability and margins compressed as higher RM costs are yet to be fully offset. by the impact of price increases. Some interesting new products which we introduced in this period, uh, one is the waterproof tile adhesive. It's a unique tile adhesive introduced by us for the first time in India, which is waterproof by nature. The second is, you know, decorative panel, which we sell in good quantities in Poland, France, UK. These are technology imported from Bollix and which we are now selling in India. We just initiated this primarily through the architects and interior decorator community. Uh, very interesting product, you know, looks like wood exactly but is actually made out of cementitious material. It's flexible as well, so it's a different type of a product. Long Life Parapet Coat, you know, this is another interesting product which we have just introduced in the second quarter, and DampShield This is a damp blocking primer for exterior masonry with a 3-year waterproofing warranty. How does the outlook look like? You know, the task is to restore margin and to sustain growth. How will we go about doing margin recovery? Calibrated price increases across business lines. Uh, sustain cost-saving initiatives while driving further efficiencies and cost optimization, and continued discipline on operating costs. We are quite confident that we will be quite close to that 15% to 17% band that we have indicated. Uh, in the third quarter and possibly also in the fourth quarter as well, given the type of initiatives that we are taking and the price increases. Both in decorative and industrial, which are coming up now. Many raw materials are crude-linked. Thankfully, the crude prices have softened a bit, so that might also help in improving the profitability. The growth momentum— we capture festive season demand in quarter 3. Uh, October was the month when we had the highest, you know, sales growth in the last possibly 25-30 months. So therefore, you know, festive season looks good. We should be able to carry on growing in this quarter. We are hopeful that, you know, this quarter the revenue growth will be quite robust, build on automotive and industrial coatings, waterproofing, construction chemical, and wood coatings. On the brand and the reach, we will continue to invest in brand building efforts. We will also do the retail activation and store expansion, and the tinting and point-of-sale capability will continue. As far as capital allocation is concerned, normalized working capital as input costs stabilize, disciplined capacity investment. We just completed the expansion in our Hindupur plant. Uh, today the West Bengal government has announced a new industrial incentive policy. We will take a look at it and then decide to the scale of investment that we want to make in Panagarh. Uh, which is in West Bengal, maintain a net cash balance sheet as well. This is what we want to do. A net cash balance should be maintained by us. That's it, you know, from my side. Over to you for the questions, please. Thank you, Abhijit sir. Uh, we'll 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. Uh, please highlight your full name and the organization you are representing. The first question is from the line of Rishi Modi. Please go ahead. Hi sir, can you hear me? Yes, I can. So, so I have a bunch of questions. Uh, I was just looking at the cash flow statement and we've seen a buildup in receivables and inventory in the half year. Uh, just wanted to understand what's driving the receivables buildup, and secondly, the inventory buildup, uh, would it be at the elevated costs which are there in Q2 and hence our gross margin Recovery will take some time. I think that's best left to Kaushik Ghosh to answer. Can you just come once again? I mean, I mean, you were not very clear actually. So I'm seeing, uh, an inventory buildup and a receivables buildup in your cash flow statements. Correct. So just wanted to understand what led to the receivables buildup, and secondly, the inventory buildup that we've had. Is it at the elevated costs that we've seen in Q2? So it's— I, I get your point. So if you see, October is a very big month because of Pre-Diwali, this sales, right? Right. And this inventory was at its peak at the, the RM prices. So both coupled effect took this inventory buildup. If you see, our inventory buildup was higher by around 400-odd crores. Right, and this is true for all companies because October was a very big month for everybody. We had a very good sale, so, and this inventory buildup was on account of this. This was a planned inventory buildup. Right, so, uh, I mean, how they will fluctuate month on month. Of course, we have a lag between the consumption and it converting into the COGS, cost of goods sold. Understood. But so when you sell this inventory in Q3, uh, and the price hikes that we've taken, uh, Q3 versus Q2, in my Uh, inference is the gross margin should be similar, and Q4 is when probably we'll see an improvement in gross margin. Is that— I mean, it's difficult to say. The prices are so volatile, it's difficult to say that And received— it's still at an elevated level. Received it. And receivables, we would have recovered in this October sale. Like, I'm assuming it's the— it's in the normal course of business. Okay, got it. Uh, second, uh, some more on a longer-term question to Mr. Roy. Yeah. Asian Paints has started their VAMP plant, and now with the VAE plant, they are saying that they will see some 300 crores of savings through this backward integration, which they will decide whether to, you know, use it for pricing or to retain it. But say they use it for pricing, uh, what measures are we taking to, you know, handle this upcoming, maybe, price competitiveness? So, I know, first of all, uh, we have our own plans of, you know, adjusting, uh, or improving the efficiency in, in terms of cost, right? You know, so there are many uh, ways of, you know, playing this, uh, which we will do on our own. Uh, so there will be some savings brought through that exercise. From our side. Uh, in terms of spending, if there is, we will see when it comes, you know, whether there is a 3% saving or a 2% saving or a 4% saving. We don't know what what is the quantum of saving that is actually turning up and where will it be spent, right? So we have to await that, we have to see where it goes, what happens to it. And then we will react accordingly. But we are taking our own measures in becoming far more cost efficient. That's, that's something which I can tell you that you will get to see. Uh, in terms of our improving gross margin and as well as the EBITDA margin. more of a period of elevated marketing spends followed by more maintenance marketing going forward? So normally, you know, marketing is not like you switch it on, switch it off type. You know, you have to have sustained advertisement. over a period of time to build up brands. Brand building doesn't happen overnight. And, you know, initially when you launch, you know, for the first time— in fact, we are introducing after a long number of years, you know, a corporate campaign You have to sustain it, you know, you have to initiate it with some spends. Okay, so I'm sure that you are taking steps and you might not want to reveal them at this point. I'll leave it to you on that piece. Uh, finally, just on the marketing piece, right? I understand we're building a consumer brand, we are investing in it, and this quarter we've invested excess amounts to start off a new campaign, but if I recollect correctly, uh, in the past also we had done some marketing campaigns which, uh, didn't fire for us, uh, in that one quarter, like and you said that these were pre-planned. So I'm just trying to understand, is that— can we have less variability, or are we seeing instant results on any of our marketing spends, or it's Unfortunately for all of us, you know, the raw material prices went up in this quarter only. Uh, which, you know, was not known to anyone, you know. So therefore, our planning, we stuck to it. Uh, we, we decided to go ahead with the advertisement spend in this quarter. And it will obviously, you know, when you introduce something, you spend a little bit more in that and then slowly taper it down. And again, maybe, you know, we give a burst after 7-8 months, again one more burst will come in, you know, which where we will spend again in that manner. So that's how typically everyone does it. And that's something which we will also continue to do. Okay, got it. So not taking up more time, this one last bit I wanted to ask is that I was looking at our FY26 numbers versus FY25, our sales return as a percentage of gross sales. Uh, has gone up by about 200 bps in FY26 over FY25, which I assume is more of dealer support that we would have given in the last year of more preparation for the new entrant. Uh, is there a scope of, you know, us recovering some of that 200 bps that we would have spent extra in the channel? Last year, in this year, and hence we can offset some of our expenses against that. I don't know what you're talking about because I can't understand what you are saying. So I'm saying last year we had ₹2,500 crores of sales returns. FY25, we are ₹2,100 crores of sales return in my numbers. It's return, uh, sales returns. Uh, okay, maybe I'll take it up with the IR later on. I can't understand what you're talking about. Yes. All right, that's it from my end. Thank you. Right. Thank you. Thank you. The next question is from the line of Aniruddha Joshi. Please go ahead. Yeah, uh, thanks for the opportunity. Uh, so 2 questions from my side. One, uh, Berger was earlier focusing on driving the urban, uh, penetration, uh, and was focusing a lot on the adding, uh, people, dealers, uh, and in the urban markets. So if you can share, uh, where are we in that, uh, stage and how is the update, uh, any further market shares, the gains that we would have done in especially in the urban markets? And, uh, how do you see the project going in, uh, rest of FY27 or, uh, FY28 too? So that is, uh, uh, question number 1. And question number 2 is, uh, any thought on the way the market leader is going in terms of the moving from share of walls to share of space? So what will be strategy of Berger on, uh, that aspect? Uh, because obviously the free cash flow generation is very strong, and if there is no plan to get into any backward integration of VAM or VAE Is there any plan to get into any additional segments or any inorganic plans, etc., or the company, uh, will be looking at, uh, in a way dividends, uh, as the, as the only option to returning it to the shareholders. So, so how do you see, uh, on these lines? Yeah, thanks. Thank you. So the first answer, your first question, the urban thing So we, we have this strategy which we call MEGA, which is Maintenance, Experiment, and Grow and Accelerate. So whatever experiments work, we tend to, you know, double down on that and then take it for further growth and acceleration of that particular activity. So this is an urban, which is an experiment which we are conducting. You know, as of now, what we can say is that it is yielding good results, positive results. We've got, you know, we are fine-tuning it still as an experiment. Uh, we now know what is to be done exactly in these markets. It has started yielding tangible positive benefits for us. Now we need to fine-tune it further in terms of the execution modalities, uh, so that, you know, by end of March we will be through with whatever experiment that we are conducting and how to execute it. From April of next year onwards, we will accelerate this particular initiative because now we are quite confident that it is working and will work. As far as the second question is concerned, uh, which is, you know, share of wall to share of space which, you know, the leader is doing I have always maintained that we will be only in paints and coatings and construction chemical and waterproofing area. We have no desire to diversify into other areas. So then, first corollary to that you said is that we have cash flow. What are we going to do with this? We have, you know, we are going to invest into factories which are going to come up. Uh, one is in West Bengal in Panagarh, uh, the other one will be coming up in Odisha. We need these 2 factories, you know, to meet the demand that is, you know, building up already and will build up in the future as well. So that entire money initially that we have as surplus cash now will get, you know, used up in this way so that we don't have to borrow. We will use our own funds to set up these 2 factories. Short-term borrowing might be there, but otherwise we will use this fund to set up these 2 factories. So essentially, we will be consuming in those 2 factory buildups which will happen at a later date. Okay, uh, sure, sir. That's, uh, very helpful. Uh, just last question on the competitive intensity. So we see the new entrant has raised prices higher than most of the peers. So do you see— is there any further milling down of competitive intensity even in this quarter, which is September quarter also. And, uh, in a way, uh, Berger was earlier gaining market share. So how do you see the trends? emerging for H1 and any, any further market share target for, let's say, '27 or '28 also? That's last question from my side. Many thanks. Right, so as far as the new entrant is concerned, you are right that they have increased the prices. You know, they, they were operating at 5% lower prices. Now they are matched to the industry overall as far as DPL is concerned. But, you know, they are rebating a little bit more, uh, having raised this 5%, they are putting it back, you know, a large part of it, you know, to the dealers through increased rebating. So that intensity of competition remains to that extent. Uh, as far as, you know, the market share is concerned, we are in at the end of half 1. We are more or less at the same level at which we were earlier. At that, we were earlier at 20.3, we're still at about 20.2 at the end of half year. You know, of all the listed companies who have already declared results. So far, uh, all of them have declared, and, and so based on that, uh, top 6 companies, I think, which we take, uh, this is where we stand, you know, as far as the market share is concerned. So relatively stable as far as market share is concerned, no loss, no gain. So far in the half year. Uh, what will happen going forward? Uh, I, I cannot, you know, say that, you know, we will gain heavily Uh, it is a tough fight, you know, it is intense competition. We are hoping that we should be able to maintain, you know, comfortably where we are. At the current moment. Okay, sure, sir. Uh, many thanks. Thank you. The next question is from the line of Pratik Gothi. Please go ahead. Hello. Yes, am I audible? Yes, Pratik, you are audible. Yes, thank you for the opportunity. This is Pratik Gothi from HSBC. Um, so my first question is on the Deco business, or rather on the, on the gross margins. Can you please throw some more light on the interplay between the pricing you guys had, the, uh, the existing raw material inventories, and, uh, the— you also mentioned that mix. sort of improved for you in Q2. So can you please throw some light on how these, uh, these interplayed with each other for the gross margin number that we have reported? So, you know, if you look at how the gross margin has dropped a little bit in Deco, actually the drop was lesser in industrial you know, it was even higher. On the average between the two, you know, if you look at it, we have dropped by about 2.5-3%, I think, you know, somewhere around that number, right? Uh, now of this, you know, the raw material price increase is the major component which created the issue. Uh, we did take up prices to some extent to neutralize the raw material price increase. Uh, we also pulled back on a little bit of rebates on certain product categories. Uh, where we suffered a bit on sales. The top line therefore did not grow as much as we would have loved to grow, uh, and, and as a result of that we were able to maintain the gross margin at a certain level in spite of the headwinds being there, you know. So the raw material prices really went up substantially more than what we could get by the price increases. And that came in because the first quarter prices were much higher. There was a small drop in the second quarter in the raw material prices. Marginal drop, uh, which will carry forward in Q3. But the highest level was in Q1, which carried into Q2, which impacted us the Q2 area. Understood, very good. And on the industrial business, um, what kind of price hikes have you, have you pushed through so far? Um, Any light on how the gross margin trajectory there looks like into Q3 and Q4? So there was a gross margin drop of about 5% in the industrial business. 5.5% almost, uh, in, in— but, you know, the value sales growth was robust, you know, so therefore operating margin was Uh, to some extent, you know, uh, it was not as bad as the gross margin reduction that was there. Uh, the other part is that, you know, we have been able to pass on partially the price increase, you know, and some more price increases we have got in the month of October. Some we are planning to get in November as well. Uh, hoping that, you know, we will be recovering almost 90% of the increase that we want at the end of November. We will have to push through till December to get, you know, the balance 10% that will be left over. And, uh, this 90%, so I mean crude oil prices are all over the place, so I understand. Yeah, so if it's— if it stays at these lower levels, then we would have recovered almost everything. Understood. But if it again starts climbing to back to, you know, where it was, then obviously 90% would have been recovered, sort of. Understood. Uh, I'll get back in the queue. Thank you. Right. Just a reminder, if anyone would like to ask a question, please raise your hand. The next question is from the line of Sushil Chavan. Please go ahead. Hello, am I audible? Yeah. Yes, you are. Uh, as per my own research that I am seeing, there is a drastic shift that has been observed in Tier 1 where families are focusing more on wall decorations which consists not only paint but also wall decorative panels. So as management tried to push in Tier 1 by its mega initiative that it mentioned earlier, and raised expenses from last 2 years, will it be able to generate that much amount of results or future growth which has management estimated? So, you know, uh, Sushil, uh, for us, you know, the market— we are a very small player in the urban markets in most of these weak urban market or low market share areas in the urban markets. For example, in Bangalore we may have only 7-8% market, right? You know, in Pune or Mumbai, we may have even lower market share. So it is, uh, for us it is a huge opportunity that is there to improve our market share because overall on an all-India basis we may be around 20%, but in these markets we are less than half of of that, right? So there is an opportunity for us in this market. Number 2 is that what you talked about in panels, etc., is primarily relevant for interiors of houses. Right, we are, you know, focused on the exteriors, which is a much larger segment anyway because exteriors get painted. Even today they are getting painted, whether they apply texture and then they apply finished coats of emulsion, uh, and then primer as well. Then the roof coating happens. Then there is waterproofing, you know, which is happening all the time in these major urban centers. So there are enough and more opportunities as far as the market size is concerned. In some of the interiors, you know, the high-end, you know, houses, the interiors are having different types of finishes. It can be wood, it can be panels, it can be, you know, some other types. But that is not a segment which we are targeting anyway in these urban markets. So for us, it is a safe domain. There is enough and more opportunities, and we will, you know, get a part of that share. Okay, thank you for my question. Uh, have a great quarter ahead. Thank you. Just a reminder, those who want to ask questions can raise your hand now. The next question is from the line of Shivakumar Marlingappar. Please go ahead. Hello, can you hear me? Yeah, yes, yeah, sir. I, I just want to say in the share price, uh, the share price of Berger and even other paint companies companies are in the low for a long time. What is the future words for the, you know, price market capitalization? Okay, this is a strange question, you know, I must say. Uh, what the future will hold will, you know, be visible to you when whatever happens will happen, you know. So our job is to just ensure that we perform perform well, we grow our sales and we grow our bottom line. You know, the rest is left for people like you in the market to decide. Thank you. Thank you. As there are no further questions, we consider that as the last question for the day. I hand over the call to the management for their closing remarks. So thank you all, you know, for being here and attending to this meeting, and have a good weekend. Thank you. Thank you. Thank you. On behalf of Emkay Global Financial Services, that concludes this conference. Thank you all for joining us.