Ladies and gentlemen, good day, and welcome to the Q3 FY 2021 earnings conference call of Pidilite Industries Limited, hosted by IIFL Capital Services Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Percy Panthaki from IIFL Capital Services Limited. Thank you, and over to you, sir. Hi. Good evening, everyone. Welcome to this Pidilite Q3 conference call. We have with us Mr. Apurva Parekh, Executive Director, and Mr. Pradip Menon, CFO, to take us through this result. Without further ado, I'd like to hand over to Mr. Pradip Menon. Performance for the quarter and nine months period ended 31st December 2020. Consolidated net sales grew by 20%. Excluding the impact of the newly acquired Pidilite Adhesives Private Limited, the growth was 16%. Consumer and Bazaar segment grew by 25%, and business-to-business segment by 3%. On YTD December 2020, net sales declined by 12%. EBITDA before non-operating income at INR 641 crore grew by 38%. Excluding the impact of the acquisition, it was 33% over the same quarter last year. This was on account of lower input costs and A&SP spends. EBITDA for the nine months ended stood at INR 1,223 crore and declined by 4% over the same period last year. Standalone net sales grew by 18%, with growth in Consumer and Bazaar segment by 21% and B2B by 10%. For YTD December 2020, net sales declined by 13%. Robust growth was registered across all Consumer and Bazaar verticals, driven by continued demand momentum in rural areas and strong recovery in urban, including metros. Double-digit growth in B2B segment was led by resurgence in industrial and manufacturing activities. The profitability for the quarter versus prior year was aided by favorable input costs and lower discretionary spends. Significant inflation in input costs during the quarter, margins will be under pressure in the coming quarters. Our key raw material, VAM, procurement rate over the last few months have increased from $750- $930, then to $1,200, and now hovers around $1,300 per metric ton. The consumption cost for VAM in the quarter which went by in quarter three '21 was approximately $875 per ton compared to US$940 in quarter three 2020. When I said quarter three '20, I mean the previous year ended 19/20. Material cost as a% to net sales is lower by 121 basis points over the same quarter last year, and higher by 137 basis points versus previous quarter. EBITDA before non-operating income at INR 572 crores grew by 33% over the same quarter last year on account of lower input costs and A&SP spends. EBITDA for the nine months ended stood at INR 1,142 crores and declined by 5% over the same period last year. Profit before tax and exceptional items at INR 549 crore grew by 27% over the same quarter last year. PAT at INR 409 crore grew by 24% over the same quarter last year. Regarding subsidiaries, overseas subsidiaries performed strongly, reporting double-digit constant currency revenue and earnings growth. Domestic subsidiaries in the Consumer and Bazaar segment have shown healthy growth. Subsidiaries in the B2B segment have shown signs of recovery in the latter part of the quarter. In the case of Huntsman Advanced Materials Solutions Private Limited, which is the entity we took over from Huntsman in the quarter which has gone by, which is now renamed as Pidilite Adhesives Private Limited or PAPL, it has shown sequential monthly improvement in sales during the quarter. There has also been improvement in EBITDA margins due to lower input costs and controls over discretionary expenses. The transition has progressed smoothly and as per plan. Business arrangements with existing manufacturers, tollers, customers, vendors have transitioned, and we are working on the go-to-market approach, distribution opportunities, and brand strategy positioning for implementation in the new financial year. We are encouraged by the quarter three performance. The company is closely tracking the rising raw material and packaging materials with the objective to operate within the targeted EBITDA margins of 21%-24%. Our focus will be on driving volume growth through investment in our brands, sales, distribution, as well as consumer-relevant information. Going forward, we remain cautiously optimistic on continuing robust demand conditions. That ends our opening statement, and I would like to hand over back to Percy and the team for the questions. Thank you very much. We will now begin the question- and- answer session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Anand Shah from Axis Capital. Please go ahead. Hi. Thanks for the opportunity. Just two questions here. Firstly, on the demand, we've obviously seen a very strong resurgence, 20%+ in your Consumer and Bazaar business. How much of this would you attribute a bit to pent up from Q1, Q2, and to maybe delayed festive or to the construction pickup that we are seeing generally? Kind of some color on what could be the sustainable growth as per you. Secondly, on the margins, you have alluded to the rising VAM prices. They've gone up substantially. Next quarter, perhaps on a YOY could be 40%-50% up if this pricing remains. Have you taken any pricing up already or what kind of pricing would you be looking at? Would it be broad-based? Any color on that as well? Thanks. Sure. I'll answer both the questions and Apurva will chip in as appropriate. I think the first point is on the recovery in demand. What we have seen is actually a broad-based recovery across all of our various businesses. In the past, when we came in and we had these conversations, we said, there is construction chemicals, which is doing well. There are parts of the rural which are doing well. Now what we are seeing is all across, we are seeing demand. Metros have also recovered, so also urban. Overall it is a broad-based recovery. We believe it's a combination of factors. The fact that the pandemic impacts have receded, that is one. There could be some impact of pent-up demand. We do not have much of an impact of festive season. Unlike some of the other industries which have a peaking during the festive season, that is not really a driver or not a significant driver anyway. Finally, industrial activity is also picking up, which is reflected in our B2B segment. That also obviously has got a sort of an impact on our Consumer and Bazaar segment. It's a combination of factors. A factor which is difficult to, of course, also validate or sort of reconfirm, is that in the current environment, many of the established players with supply chains and footprint across the country are able to respond to the situations of demand, the raw material availability, and all that stuff much faster and quicker versus some of the smaller players. There could be some impact also coming from that aspect. I think it's broad-based, what we are seeing, not just in pockets. That is on the first question. I'll also answer the second question then hand over to Apurva any additional points. As far as margins go, we have not taken any pricing yet. Of course, on the B2B segment, what happens is many of the B2B businesses, there is a sort of arrangements wherein the pricing, et cetera, is linked with input prices, and therefore in those cases, we have taken some increases. They are not the largest businesses. 80% of our business is Consumer and Bazaar. There we are waiting and watching. Our intention is, and we never do take on and pass on all of the price increase to the consumer. What we will be doing is a mix of productivity improvement, a mix of pricing if this sustains for some more period of time, and with the focus that it shouldn't be that volume growth gets impacted. It will have to be a sort of a balanced approach, not that we pass on the full pricing at this stage. I will just pause here. Apurva, if you could just add on anything. I think that's fine. Nothing more to add at this time. No, that's quite comprehensive. Thanks. I'll come back in the queue for more questions. Thanks. Thank you. Thank you. The next question is from the line of Nitin Shakdher from Green Capital Single Family Office. Please go ahead. Hi. Good morning to the management and good morning to Apurva and Pradip. My question pertains to, can you give me a color on the distribution and the increase in distributors or the reduction in distribution? Second is in terms of advertising and marketing expenses vis-a-vis sales for the quarter, the percentages of the marketing expenses. I'll answer the second question first and request Apurva to chip in on the first one. See, as far as advertising and promotion is concerned, we had a practical difficulty in implementing some of our plans given various disruptions in the market. The positive point is that as we ended the quarter, the spends are pretty much in line with our annual sort of average. We typically spend A&SP between 3.5%-4%, and that's the kind of range we have achieved at the end of the quarter. Obviously we could not spend what we planned to spend in October and part of November, and therefore the spends have been lower in the quarter. Going forward with the kind of expectations, volumes as well as plans that we have in place, that's the kind of range that we would be spending Advertising and Sales Promotion. Okay. The first part? The first part. The question was what? The increase in number of distributors or what was the question? Just wanted to get a sense of the distribution in terms of has there been a significant increase in distributors or a reduction in distributors? What is the color on that? See, we have a fairly widespread distribution across India. We cover most of the towns with population up to 50,000, and we are now expanding into rural area. There is no reduction in number of distributors, but on an ongoing basis, we do add new distributors in newly emerging area within larger towns and in smaller rural areas. That's an ongoing activity of expanding our distribution and also the number of dealers. Okay. My second question is in terms of is there any expansion which is planned for increasing the lines and then that means increasing the capacity or increasing greenfield expansion on plants? Can you just put sort of a statement on that, at least what we can look forward to in the next one or two quarter in case it's planned? Yeah. I'll answer that. As far as capacity planning is concerned, in terms of CapEx, A, we spend typically between around 4%- 5% of our revenue as CapEx. Some of it is greenfield and some of it is sort of expansion CapEx. We continuously look at the demand projections when we plan this out. We have continued to spend on our capacity. We of course, do have a longer term plan, like a two to three-year kind of horizon also. All of those plans have been crafted in the last few months, we are sort of ready to go. There's nothing specific to call out. We are continuing to invest even during these periods or even when there was a lockdown period, we continued to invest because we believe that the capacities would be required, and we need to be ready when the demand is up. That's the overall approach on capacity planning. Okay. Thank you. That is all from my end. All the best and congratulations on the steady set of results once again. Thanks so much. Thank you. Reminder to the participants, to ask a question, you may press star and one. The next question is from the line of Kartik Rangnekar from Credit Suisse. Please go ahead. Hi, thanks for taking my question. I had two questions actually. The first one is on the Huntsman acquisition. The last time we spoke, I think it was too early for you to provide any color on the kind of synergies or anything that you expect from that acquisition. Since you've already had it for I think two months or so, any color on that that you would like to provide on the kind of synergies you expect? I think we had clarified that we would take about six months to really come back and share a formal feedback. Obviously that is work in progress at the moment. We are looking at distribution gaps, geographical gaps. We are also looking at brand positioning, pricing. All of those elements are right now happening. Of course, costs also we are looking at in terms of overlap and costs between the Pidilite systems and the Huntsman acquired subsidiaries systems. However, the fact of the matter is it is on its standalone basis also quite a profitable entity. I think the priority would be on volume and top line growth there. Synergies and costs could be there but may not be as critical. That's the thinking at the moment. Okay. Fair enough. Just another thing on the consumer business. In your release, you mentioned that it seems like there is a gap between the value and volume growth. It seems volume has grown faster than value this time. Is there anything to highlight as to why that is the case in this quarter? No. See, there are a couple of things. One is that because of the fact that we've had a significant drop, in fact, it's quite of a strange situation. We've had a situation where some of the input prices were at the absolute low when the quarter started, and then it sort of picked up. In some of the categories, the schemes and discounts which have been run have been done to make sure that the landed price in the market is appropriate. That is the reason why you're seeing some divergence between volume and value, but not significantly. It's not a significant one. Of course, as the quarter has come to a close, obviously those additional spends and schemes would be obviously not appropriate since the raw material costs have already gone up. That's the primary reason. Would you have then withdrawn these schemes? Yes. For Q4 things have come back to normal as in. Yes. Now, of course, now we have to wait and watch how the raw material costs go up. I mean, they've already gone up. How to respond to that, whether appropriate, as I said, productivity, pricing, all of those angles we'll have to look. Fantastic. If I could just squeeze in one more. On the real estate side, if you could just throw some color on what sort of a pickup you're noticing. Is it in a particular geography, particular cities, and how much of this is fresh projects being started or, sorry, on rather pent-up demand in terms of projects being caught up, which were stuck for during the lockdown period, and would you expect the run rate that you're seeing now to sustain, or would you expect that to accelerate? Especially from the point of view of your subsidiaries, where you have a direct relation with the real estate on the real estate side? Yeah. On the real estate side, what we are seeing is projects which are held up, there is some indications of restart. These are already existing projects where there could have been some delays and disruptions. The order taking in some of these projects have gone up. Yeah. The translation to sales is going to take longer from order taking to actually translating into an actual invoice booking and a actual sale. That is going to take a little more time, but there is quite a lot of positive indication from the inquiries, orders which are coming in. That's all I would say. Absolutely fresh new projects, there are a few, but they're not as widespread. Apurva, you want to add some color on this? No, I think what you said is correct. Nothing more to add on that. Okay. Thank you, sir. Just one small bookkeeping question. The Huntsman acquisition, that is included in the consumer part or in the industrial part? I would assume consumer, right? Consumer. Yes. Consumer. Okay. Thank you so much. That's all from my side. Thank you. The next question is from the line of Ritesh Shah from Investec. Please go ahead. Yeah. Hi. Thanks for the opportunity. Sir, Fevicol as a brand is quite solid, and we have entrenched arpenter as a segment really well. I just wanted to understand from a competitive intensity point of view, when we look at construction chemicals and waterproofing, I understand Nina Percept and basically the runway on how we actually had that acquisition. How entrenched are we with Dr. Fixit when it comes to construction chemicals and waterproofing as a segment when one looks at increasing competitive intensity in this segment? Wanted to understand that. The line was not very good. I'll try and answer what I've understood. You're basically asking the competition and the kind of environment we are operating in as far as waterproofing is concerned. Is that the question? Yes, that's the question. With Carpenter, our channel is really strong. When it comes to this specific segment, how uniquely are they positioned? That's what I want to understand. Yeah. I'll try and answer that. See, frankly speaking, as far as waterproofing is concerned, if you look at the brand we established, that is possibly the one which has got a strong track record and is sort of synonymous with the category. Recall of the brand is also very strong. As you rightly mentioned, there are different players who've got different sort of strengths. There is a hardware channel, there is a paints channel, there is other channels like building material, cement. Each of the various companies who operate have got strength in those respective channels. That's a fair fact. As far as we are concerned, we are looking at what do we offer. We have strong R&D innovation. We have got strengths to distribute across these various channels. We have a strong connect with specialized waterproofers and civil contractors. Finally, as you mentioned, we've got an arm which actually executes these projects. we are not just providing the product, but also giving the service. in a way, if you look at it from a large customer perspective, we have one neck to catch for both the product and the service. that's the way we think that we have the strength and the capability. Of course, there will be a competition, as is the case in all the various category. Therefore, we believe we are in a position of strength to deliver a strong growth. We have done that, and even during this period, this year, even last year in challenging times, the growth was double-digit plus in construction chemicals. Even this year, we have consistently called out that it has been the fastest performing segment for us during the year. I think, yeah, that's where we see it. There is, of course, competition which is there. Apurva, you want to add something? Yes. I think the important thing is we have a significant first-mover advantage. We were the first company to focus on a construction chemical retail market. We have an excellent end user connect with all the people involved in waterproofing trade as well as waterproofing end users. We have been doing significant ground-level activities for many, many years, much before any other players. As you said, the way we have a strong connect in the woodworking segment with carpenters, we have similar strong connect with various people involved in the waterproofing trade, be it influencers or end user or even consumers. Right. Apurva, just a follow-up question over here. The larger players, what they have resorted to is, one, basically there has to be a right to win, and secondly, bundling as a strategy has been implemented by the competition. Would you say that we have a right to win in waterproofing as a category? I understand Nina Percept is a big lever that we have and we are focusing on larger projects, more on refurbishment. Would we say that we have a right to win? Are there any more complementary products under the Pidilite basket wherein actually we can bundle and push this thing through? No. See, let's keep project and retail aside. In retail segment, we have a comprehensive product portfolio. For a person who does waterproofing, small waterproofing jobs, we have a full portfolio of product, and we have been working with that customer for a long period of time. There is a strong product acceptance. There is a strong end user connect, and that gives us clearly the advantage. When you talk about bundling, we do have a full range of waterproofing product that the person needs. I think the bundling that you refer in respect to dealer is a different thing. Our belief is that our brands have strong pull, our brands have strong product acceptance amongst the relevant end user, and we have a very strong end user connect for last many years. That is what gives us the competitive advantage. Bundling of the products and all have, in our opinion, limited value. People do want to use the right product for the right job and not just because it is bundled with something else. That certainly helps. Sir, if I can just push it a bit further. Sir, you indicated that bundling is something that we can do within waterproofing product categories. Is it possible that there are any other complementary products within the Pidilite basket wherein we can push waterproofing along with that, and actually we can put it in the channel more aggressively? I understand brand is something which is phenomenal, second to none. Everything is right, but I just wanted to understand one specific aspect over here. Look, we have a wide portfolio of product which goes to relevant outlets. If you go to a hardware outlet, Pidilite has large number of products which goes into a hardware outlet. If you go to cement outlet largely buys only waterproofing product. Again, we have the right products for them. If you look at paint type of outlets, yes, we have some more products which a paint outlet can buy. Our greatest strength lies in the other categories of outlet where there is a large consumption of waterproofing products. Sure. Thank you so much for the detailed answers. Appreciate it. Thank you. The next question is from the line of Percy Panthaki from IIFL Capital Limited. Please go ahead. Hi, sir. Good evening. I have two questions. First question is again on waterproofing, more from the competitive angle. You have been the market leader in waterproofing since a long time. Just wanted to understand if basically your gap with the number two player is that coming down, do you see the number two player sort of growing at a faster rate than you or basically the growth is similar and therefore relative market shares are more or less maintained? Yeah. At least it's our view that, and we sort of seeing the growths which are getting reported, it's very difficult to exactly get product-wise information or et cetera. Our sense is that the position in terms of market share we've continued to maintain, if not slightly increased. The market itself has been growing very fast. It is less about gaining shares from each other. Rather, it is more about ensuring that we are able to capture the pie which is expanding. It's a well-known fact that the size of waterproofing market in India is relatively small, and therefore the opportunity is there. Of course, there are many players and there are paint players, et cetera, in the market, but I think there is enough opportunity to grow for all the players. Some of this helps because it helps in expanding and usage of the product faster when there is more competition. We welcome that, and we believe we are in a good space so far, whatever we have seen. Just a sub-question to this. In waterproofing, there are many different types of solutions. There are sheets and there are polymers and there are primers and so many different types of solutions are there. Firstly, out of these four, five options, which is basically the largest size in terms of revenues for the industry as a whole, and where is the growth the highest out of these solutions? Yeah. For the industry again. Both these are pertaining to the industry. Apurva, you want to chip in on this one? Yeah. See, I think I may not have the exact numbers, but overall, there are a set of waterproofing products which are used when a new building is being constructed and there are a set of products, for example, which are added in cement or various other products which are used for waterproofing while a new construction is being done. This is typically done by a building contractor or a waterproofing contractor. Now we are very strong in this space and this is where we believe the largest consumption lies. Also, now some waterproofing products are used by painters when they do painting. They do apply a waterproof primer or they apply a waterproof paint. Here paint companies have a better advantage than us due to the connect with painters and their distribution in paint channel. They have been trying to convert some of the painters' product into waterproof products, which is like creating a new segment or a new market, but it doesn't take away from the market which is to be used while constructing a building, an individual building or a large building. That is where our biggest strength lies. We also have strength in number of other segments like tiling, grouting. We are a full service waterproofing service provider with a full segment of products. I do not have the exact market size of each segment, but the core waterproofing is what we are the strongest in terms of end user connect, distribution, brand awareness, et cetera. We also now have some waterproof related products which painters can use. Got you. My second question is on your margins. This quarter your margins are probably at all-time highs and input cost is going up. Obviously, some amount of price increase will happen, but ultimately, at least in the short term, it is the company which decides the margins that it wants to operate at. From that point of view, just wanted to understand the level of price increase you will take to target a certain amount of margin. Last quarter you had said 21% or something is a good level of margin to remain at. Today we are much higher than that. Is that 21% number very conservative in light of these results? Do you think that given where the raw materials are, that kind of dip in margins versus this exceptionally high level can actually happen? I think we had given a range. We typically operate within a range of 21%-24%. That's the kind of range we had mentioned last time. Correct. 21%- 24%, yes. That's the kind of range we expect going forward. As you rightly mentioned, some bit of pricing may need to be taken if the costs continue or the inflation continues unabated, but not fully. At the same time we need to also invest behind the brand and sales distribution. There will be additional costs coming there as well. That's the kind of range we expect to operate. Is it possible that for a few quarters, four to six quarters, you might continue to remain higher than the upper level of that band? Or you think that the reversion might happen a little more quickly than that? Even last time we had mentioned that the quarter we are now reporting, which is Q3, we may not see the full impact of inflation because you're carrying stocks of lower priced materials, raw material and finished goods. Now that all the new arrivals are all coming in at a higher cost, the costs are going to come in anyway and some bit of pricing, as you mentioned, if it happens, that will negate part of it, but not fully, and plus the investment behind A&SP which will happen. We do expect to operate in this range of 21-24 only. These are difficult to predict, the way costs have dropped and then gone back. It's anybody's guess, but at this point of time, our view is the next maybe four to six months, the costs are going to be higher, and therefore this is the kind of range we would expect. Thank you. That's all from me. Thank you. The next question is from the line of Heet Vora from Prabhudas Lilladher. Please go ahead. Yeah, hello. Thank you for the opportunity. The first question I want to ask was actually on the raw materials. We saw that the raw material prices have gone up or they've shot up a lot. Is there any particular reason for that or it's just because of increase in basically the usage for the raw material? Is there any specific reason why we've seen such a sharp increase? Yeah. See, frankly speaking, every raw material, there are different drivers of the increase. If you want a very broad-based kind of response, I would say a few things have happened. One is, of course, basically crude prices themselves have gone up in the last six months. That is one sort of very basic driver. The other thing which has happened is in some of these products, the Chinese and Asian consumption is high, and therefore when the consumption and demand went up, that had a immediate impact. The third element which has also happened is many of the refineries have been operating at a lower capacity. Because of the lower capacity, the production is also lower. As a consequence, the response time to the uptick in demand has been less. Basically, sort of two or three broad reasons. In one or two cases, we have also had some unplanned shutdowns in the various manufacturing units in some of these large raw materials, and these are the combination of factors. All of them, we don't see it recovering in the next month or two, which is why we are saying that it could take five, six months for prices to come back to some normalcy. Okay. Thank you. Sir, just one more question, mainly on the cost advantage. We had reduced some of our costs. Going into the next year, how much of the cost advantage do we sustain? Frankly speaking, I don't think we can look at it that way. What we have to look at it is, what is the kind of operating margins or EBITDA margins we will be working with. As I said, that's the kind of range. 21-24 is the broad range we will be working with for next year as well. That will give you an indication, comparator with this year or the previous year, or whatever. Okay. Thank you. Thank you. Thank you. The next question is from the line of Kaustubh Pawaskar from Sharekhan. Please go ahead. Yeah. Thanks for giving me the opportunity. My question is on the Huntsman. This acquisition has higher margins than what our business has. In your initial comment, you mentioned that still a lot of work has to be done in terms of distribution expansion and on the cost front as well. Considering that, should we expect the margins of this particular business to further improve from the current level? Yeah. I'll just give a couple of qualitative comments and then maybe Apurva will chip in also. See, I think the first thing is that we have only operated two months. It's very early days. What we have seen in the two months versus the past data is that we've got some benefits of the better mix of the kind of products we have sold. Second is, like many of the other products, there have been lower input costs during the quarter. Not necessarily going forward, lower input costs during the quarter, because what we were carrying or whatever we had contracted. Now, because of that, the costs are lower, the mix is better, we are seeing a much better margin. I think we'll have to just wait and watch on the sustainability of the margin. What will be the sort of longer- term number. At the same time to expand distribution and volume, we will also have to invest in the market, right? We have to invest on distribution, people, et cetera. We will have to just watch this. Right now, as I said, yes, it has improved versus the past because of these two reasons. Apurva, you want to say some additional points? I would like to say, the current margins are high, as Pradip said, the raw material prices were lower. As they increase, it will have some impact. Also, as we spend more money on the building capability in this business, as well as on brand building, the cost will go up. The current level of margins is quite high, and it may not maintain at this level. However, it is likely that it will be still a very profitable business. Okay, sir. Thank you. Thank you. The next question is from the line of Shanti Patel from Shanti Patel Investments. Please go ahead. Sir, can you tell the capacity utilization various products that we would have had. I'm sorry to interrupt you, Mr. Patel, but your voice is breaking. Can you please check? Don't worry. Now it will come. Hello, I think now it is okay. Hello. Yes. Better, sir. Yeah. First, what is our capacity utilization today? Number two, where we stand as far as in the market ranking is concerned. Number three, what is the return on capital employed today, and what you expect in next one year? I think I'll just broadly cover the points. I think one is that in terms of capacity utilization, we continue to invest as far as the future is concerned, but as far as the current capacity utilizations are concerned, they would all be in the range of about 85%-90%. That's the kind of range we are operating in. Which obviously means that we need to continue to invest on our capacities going forward as well. As far as ranking, et cetera, is concerned, I guess this is not something we track. You should be better placed to give us a feedback. As far as return on capital employed is concerned, the metrics are all sort of public. That's, again, something which will be available in public domain. Suffice to say that as far as return on capital employed is concerned, we very closely look at the kind of investments we make. We very closely look at the kind of working capital we maintain, and therefore, our endeavor is always to ensure a better return as far as the shareholders are concerned. Thank you. The next question is from the line of Jasdeep Walia from Infina Finance. Please go ahead. Good afternoon, sir. Thanks for taking my question. Sir, my question is on the brand Araldite. Is there a very large unorganized market in epoxy adhesives in India? By unorganized, I mean local players who service markets like, let's say, imitation jewelry through resin and hardener import from China. If that's the case, what's your estimate on the size of this market, and can you tap this market through, let's say, improving distribution reach or coming out with a lower value-added product at a lower price point, which would be more amenable to this kind of market? Yes, there is a certain handicraft jewelry type of market which operates at the lower end of the market with a low selling price. Yes, there could be opportunity in that kind of a segment. The bigger opportunity is in the core usages of the brand, where the margins are better and where Araldite is a strong player, and we plan to focus there. Got it. Sir, any idea of the size of this market at lower price points? It's difficult to estimate. That is not a significant focus area. While the market size may be larger, but the margin pool is much smaller. We will examine it. If we find there is good opportunity there, we will certainly address it. In terms of margin pool, our opinion is it's not very significant, this imitation jewelry type market. Got it, sir. Thank you, sir. That's all from my side. Thank you. Ladies and gentlemen, anyone who wishes to ask a question may press star and one now. The next question is from the line of Ritesh Shah from Investec. Please go ahead. Mr. Shah, may we request you to please unmute yourself if muted from your handset. Yeah. Hi. Am I audible? Yes, you are audible now. Yeah. Sir, just one bookkeeping question. What are the spot VAM prices against $875, what you indicated for Q3? Yeah. The spot prices are around $1,300. That is what I had. Okay. Thank you so much. Thank you. Anyone who wishes to ask a question may press star and one now. Participants to ask a question press star and one. The next question is from the line of Surbhi Jain from Macquarie. Please go ahead. Hi, sir. I had one question. You've said that we've seen demand recovery in the metros and the urban areas as well. Just wanted to get your sense as to what can be a reason for a lower recovery compared to a leading player, paint player, say Asian Paints, where they've had a 30% volume growth this quarter. Just wanted to get your sense as to are there any geographies which are yet to see recovery, or what could be a reason for that? See, there are two, three points around comparison with paint players. First of all, whatever our growth is, we have a set of businesses and categories which are not all of them overlap exactly with the paint players. We have a mix. First of all, there is a Consumer and Bazaar element, and then there is, of course, the B2B segment. Both are there sitting in our numbers. That is one. Second is, if you look at the areas or businesses where we overlap with Asian or with any other paint players, where results have come out, it will be in the space of largely waterproofing construction chemicals. Whatever is the growth rates which have been declared by the paint companies, our growth would be there and thereabouts, if not slightly higher. There is no problem on that side, from a comparator with the paint companies. However, from a geographical point of view, urban areas were much more impacted by COVID, and therefore have taken longer to recover. Also, just a point as far as quarter three results are concerned, we don't have a festive season-led demand, and therefore, that is another element. It's not a significant play as far as our returns are concerned or our sales are concerned. Finally, volumes in some of the paint businesses are also led by some of the lower price products like putty, et cetera, where volume is high, but value is lower. We don't have that kind of large portfolio in that area. Anyway, we're not in that segment at all. That's possibly three or four reasons to explain. Apurva, you have anything to add on this? No, I think what you have said is correct. Thank you, sir. That answers my question. Thank you. The next question is from the line of Anand Shah from Axis Capital. Please go ahead. Yeah. Just two follow-ups. Firstly, if you can throw some color on the international business. That seems to be doing quite well, both in Q2 and Q3, and especially Americas which is seeing very strong growth. What's the outlook there, and what's driving this growth in Americas? Just a bookkeeping on the Huntsman acquisition. That was a complete cash payout by internal accruals, or did you resort to any minor debt, any interim, just to fund that. Just those two. Yes, I'll answer the second question and request Apurva to answer the first one. As far as acquisition is concerned, we did that out of our own internal accruals. We have a substantial treasury, so that was the source of the funding. As you know, when we did the deal, the deal was 90% of the payout, and the balance 10% is paid on achievement of certain sort of metrics. That's the way the deal was struck. Okay, got it. As far as international business goes, Americas, in Brazil, the overall business was good. One of the factor was also the corona voucher that the government had given there, which resulted in a significant growth in the construction market. Our company and our team was well-poised to benefit from it, so that was one of the factors. As far as U.S. goes, also in U.S., during lockdown, the art, hobby, and craft category has seen significant growth. Again, our company did well to capitalize on this. I would say, while both companies did well, they were also aided by the external conditions, and such high growth may not sustain going forward. Both companies are now reasonably well-placed in terms of the management team, product portfolio, and other things, to be able to perform consistently. That is what we hope and expect. In second quarter, we saw good improvement in our SAARC region. Our Bangladesh and Sri Lanka business are good and strong. As from corona, these countries are recovering, both the businesses saw good growth in those two markets as well. Got it. Thanks a lot, sir. Thank you. The next question is from the line of Utkarsh Solapurwala from DAM Capital. Please go ahead. Can you provide an update on the other acquisition that you made in 2019 and 2020, like Pidilite, CIPY Polyurethanes, Tenax India Stone Products, and Grupo Puma? Yeah. Many of these actually, in the case of Tenax, this is essentially in terms of operations, et cetera, we have taken it over. In fact, the actual transfer of business happened in May 2020, so it is hardly six months. We have transferred operations controls into Mumbai, and work has started. As far as the other two entities are concerned, we are in the stage of actually setting up factories, manufacturing facilities, and these would be live sometime in 2021, 2022, during the financial year 2022. That is couple of quarters, three quarters away. I think these are the broad updates on these two. Thank you. Thank you. The next question is from the line of Mithun Soni from GeeCee Investments. Please go ahead. Yeah, hi. Just one query, question. Basically, I just wanted your view on how are you seeing this trend of consumers buying ready-made furnitures and things like that. Like IKEA coming up, and Urban Ladder, and Pepperfry, all of them springing up big time. It's a big market, and all these big organizations are getting into it. How do you see that affecting our demand for Fevicol? I'll take that, Pradip. Yeah. See, ready-made furniture is not a new trend or phenomena. Ready-made furniture has been coming in India for more than 30, 40 years. We are also today the strongest player in the joinery adhesive segment. We have a wide product portfolio and the right go-to market to service this segment. We have the right products, right technology, and right distribution to address that market. In addition, what we are finding is that both ready-made furniture and on-site furniture are growing at a good pace. In India, there is still a lot of room for interior decor and on-site furniture to happen, and we are currently finding that both segments are growing at reasonable pace. We are sort of well-equipped to serve both the segments. Just one query. In cases like these organized guys, then do we get a pricing power for selling our products through, whether it is Pepperfry or these organized guys, or we don't really get that pricing power? See, Pepperfry is a marketplace for furniture, so they end up buying from a lot of smaller joinery. As you know, we have a strategic investment in Pepperfry, so we know that company fairly well. It's a marketplace for furniture sellers, and they buy from large number of joineries. Yes, we do get reasonable pricing power because of our product, our technology, and our service. Okay. How big would that contribution be, like the furniture market for the overall market of Fevicol? Would you be able to give some figure? I do not like to break that up for confidentiality reasons. However, still the on-site furniture is a much larger part of the overall business. You don't see that consumer habit of getting their things, making it house is changing over? No. There you see market overall is growing, so there are people who were never doing on-site furniture, do a little bit of on-site furniture, and also they buy furniture from outside. In India, there is a very good growth runway available for both. It is possible that ready-made furniture growth rate may be a little bit more, but there is still healthy growth available in both on-site furniture and off-site furniture. Because a lot of furniture and construction is yet to happen. We are present on both the sides, whether it is made in-house or from outside? Yes. In joineries or on-site, in both of the segments, we are very strong, and we are present in both of them. Yes. Technically, we are indifferent whether what grows for us. We are present and we are strong in both the segments. Perfect. Thank you very much. Yeah. Thank you. The next question is from the line of Kaustubh Pawaskar from Sharekhan. Please go ahead. Yes. Just a bookkeeping question. Sir, you just mentioned that your capacity utilization is around 85%-90%, and you are looking beyond investment in CapEx. What are your CapEx plans for next two years? I think I had covered it earlier. Typically, we spend between 4%-5% of our revenue as CapEx. Those are the kind of range in which we continue to invest. There's nothing significantly different. It's a very consistent plan year-on-year that we end up spending, and that's planned out for several years. Yeah, absolutely. Okay. Thank you, sir. Thank you. Ladies and gentlemen, as this was the last question for today, I would now like to hand the conference over to the management for closing comments. Yeah. First of all, thank you all for coming in and raising the valid questions to us. Appreciate the questions. Please stay safe and till we meet again, good evening to all of you. Thank you. Thank you. On behalf of IIFL Capital Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.