Ladies and gentlemen, good day, and welcome to Q1 FY 2024 earnings conference call for Pidilite Industries Limited, hosted by ICICI Securities. 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 your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Arun Vaid from ICICI Securities. Thank you, and over to you, sir. Good evening, ladies and gentlemen. On behalf of ICICI Securities, I welcome you all to the Q1 FY 2024 post-run conference call of Pidilite Industries. From the management side, we have Mr. Bharat Puri, MD; Mr. Sudhanshu Vats, Deputy MD; Mr. Sandeep Batra, Director of Finance and CFO; and Mr. Sunil Poddar, Senior Vice President Accounts. I hand over the call to Mr. Batra for opening remarks, after which the floor will be open for Q&A. Over to you, Mr. Batra. Thank you, and very good afternoon to everybody on the call. I have great pleasure in taking you through the highlights of the first quarter's performance, where the board approved the financial results yesterday. Standalone revenue for the quarter at INR 2,952 crore, grew by 6.2% over the previous year, despite a very higher base. Just to remind that last year in the first quarter, we had reported a revenue growth of 62.5%. The growth in this quarter was led by a very strong underlying volume growth of 8%. Underlying volume growth, just to clarify, refers to volume growth, which includes the impact of changes in product mix. All pricing adjustments are kind of deleted from this calculation. The domestic consumer and bazaar business segment growth was broad-based across categories and geographies, with underlying volume growth of 12%. Both urban and rural markets grew in double digits, with rural market continuing to outpace urban, which signals a gradual recovery in the rural economy. However, exports of our consumer and bazaar products declined due to challenging demand conditions in the overseas markets. Coming to the consolidated results, the consolidated revenue at INR 3,264 crore was 5.6% higher than last year, driven by strong volume growth, particularly, as I mentioned earlier, in the domestic consumer and bazaar segment. The B2B segment registered single-digit revenue decline, largely due to lower exports and lower demand from export-oriented industries. Material costs continued to soften with VAM consumption in the current quarter at around $1,150 a ton, compared to kind of 2x in the same period last year. Last year was $2,250. This resulted in gross margin, which expanded both sequentially as well as year-on-year. 812 basis points year-on-year and 260 basis points sequentially. Part of these gains were reinvested in the form of higher A&SP spends. In the current quarter, A&SP was about 3.6% of sale versus 2.1% in the same period last year, and other growth-related initiatives. Consequently, our EBITDA margin went back in the 20+ zone and at 22.7% for 521 bits above the same period last year, and 430 bits higher than the fourth quarter. Domestic subsidiaries continued to deliver robust sales growth, driven by the Consumer and the Bazaar businesses. EBITDA margins improved in all businesses in the domestic subsidiaries. Sales of our international subsidiaries, excluding the Pidilite West business, was largely in line with the same year, same period last year, largely because of uncertain economic conditions, currency devaluation challenges in some countries, and local inflation pressures. EBITDA in absolute terms was also flat versus last year. The working capital situation remained very healthy and in absolute terms was lower than what we reported on March 23, resulting in very healthy cash position. As a company, we continue to invest behind building capacity for growth and a future-ready supply chain with the aim of upgrading our manufacturing facilities and commensurate market demand. In the current calendar year, we have commissioned seven plants, two for Roff, two for our construction chemicals business, and one each for each of our domestic joint ventures, i.e., Grupo Puma, Tek and Litokol. With growth largely to be volume-led in the near, near term, a good monsoon, increased construction activity and stable input prices enable us to look at the future with increased optimism. ... We remain committed to drive profitable volume growth through investment in our brand, with enhanced customer engagements and continue to build a resilient and agile supply chain. That's all as far as opening remarks from my side are concerned. Leave the floor open for Q&A. 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. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. First question is from the line of Avi Mehta from Macquarie. Please go ahead. Hi, sir. Thanks for the opportunity. Sir, I just wanted to first check on the VAM price update. If you could give us a sense on where VAM prices were for the quarter? That I think I missed that in the opening comments, if you could kind of please share that. Go ahead, Sandeep. VAM prices in the first quarter, what we consumed VAM at, was $1,150, $1,150 a ton, versus $2,250 a ton in the same period last year. So what's the current pricing like right now? Current prices are anywhere between $850-$900. Okay, perfect. Perfect, sir. Sir, just wanted to also understand, you know, building up from the last quarter conference call. You know, we've clearly achieved the margin expectation, you know, from March, which we saw 20%, we are now at 21.5%, roughly or so. How should we look at, you know, do you see there is an upside risk to that guidance on EBITDA margin of 20%-24%? Maybe it should be 22%-24%, or if you could give us some sense on how should we look at margins as we go forward? And B, if you could also give us an update on what happened to the reversal of consumer downgrades that you were kind of discussing in the last time, the product downgrades. Thank you. Avi, on the first question, really, as far as the margin range is concerned, given the volatility that we keep seeing in raw materials, we're more comfortable with the 20%-24% range, and that's where we will keep it. Based on where the situation is, it may go up and down in one quarter versus the other, but we are comfortable with that range. We believe beyond that range, it actually then impedes our volume growth and gives... You know, opens the back door to a lot of regional and other competitors, and therefore, we are comfortable with this range. I didn't understand the, the question on product downgrades. If you can just elaborate. Okay. maybe, I mean, if I recollect from the last time, you had indicated that, there was a sense on, you know, when the high inflation period kind of reverses, we can see some impact on the mix as we go forward. That is what I wanted to understand, if that has panned out, in terms of the mix, as in lower priced products or lower margin products have done better, or is there anything of that sort that, we have to look at? Not, not in our business. In fact, in our business, that's not the case. Actually, as far as we are concerned, the product mix is actually pretty much in line, which is why, if you notice, we have switched to reporting underlying volume growth rather than total volume growth. Total volume growth, it has been misstates because, you know, weighty products that cost very little, like for example, the putty and so on and so forth, then actually increase your volume growth, which is not a right indicator of business. Therefore, we are at underlying volume growth, which for the Consumer and Bazaar business is about 12%. Perfect, sir. Perfect. That's, that's clear. I, I probably, what I was trying to kind of understand is that if, you know, when the inflation was high, I thought the mix was impacted and that would have reversed, but I got maybe that impact didn't pan out, and my understanding was inaccurate. No, it, it did pan out. No, that's all from my side. I'll come back in with you for the other question. Thank you very much. Thank you. Ladies and gentlemen, anyone who wishes to ask a question may press star and one. Next question is from the line of Karan Keshwani from Godrej. Please go ahead. Hello? Yes, your line is unmuted, sir. Please go ahead. Yeah. Sir, your material price has been declined by about 7% year-on-year basis. Is this solely due to decrease in material price or any production efficiency? It's always a mix of both. If you look at, you know, and we obviously track this over a longer period of time, it's a mix of both. In, in this quarter, it is largely material costs, because a lot of the material efficiencies, when material costs were going high, we actually squeezed, but it will always be a mix of the two. In this quarter, it would largely be material cost. Okay. Okay, sir. Thank you. Thank you. Ladies and gentlemen, to ask a question, you may press star and one. Next question is from the line of Ashish Kanodia from Citigroup. Please go ahead. Yeah, thank you for the opportunity, sir. Sir, just on the B2B side, as well as on the, you know, the export front, what is, what is the sense you are getting, you know, is the demand environment continues to remain tepid? Especially on the B2B side, you know, it has been like three quarters where we have seen a YoY decline. Just wanted to get some sense in terms of, you know, when you speak to your, your customer on the B2B side, also on the export side, what, what is the sense you are getting on the overall demand environment? Sure. Let me, you know, split this up, Ashish, into two different elements. One is B2B, where there is direct exports to the developed world, which is largely the U.S. and Europe. Could be pigments, or it could be to customers of ours who are exporting to, to the developed world. This could be leather, this could be textiles, this could be wooden furniture, so on, so forth. Here, the indicators we are getting is that the U.S. will probably come out of this quicker. There is a little more optimism around the U.S., whereas Europe may take a little longer. Fortunately, a large part of the exports is to a mix of the two, but the U.S. a little more. I would wait a quarter before we declare and see as to how the situation is, but it does appear to be getting a little better. At least the first indicators are there. As far as the neighboring countries are concerned, which is exports, which is exports of our finished goods, what we are finding is countries like Nepal, for example, are suffering tremendous foreign exchange shortages. Actually, the issue is not that of demand in Nepal, it's an issue of not there being enough foreign exchange. Bangladesh, it was more, a combination of a lack of foreign exchange and the fact that both the Eids this time came in the same quarter, and therefore a large number of holidays. I would say, I would watch this for another three months, but it does appear it will be better in the second and third quarter than it was in the first. Sure, sir. That's helpful. Secondly, on, you know, on your, comment in terms of, you know, reinvesting, some of the RM benefits into driving growth. I mean, apart from the ad spends, you know, if you can just highlight what other initiatives, you know, you are, taking to drive that, profitable, volume growth, that would be very helpful. That's a great question. We're really looking at this across four fronts, Ashish. Front one is obviously expansion in sales and distribution. Just to give you a perspective, in the last 12 months, we have added 17,000 new villages, which we are now accessing directly. We believe from a home improvement point of view, we would have the deepest distribution by a large distance. Just to give you a perspective, we now have over 8,000 Pidilite ki Dunias, Pidilite, you know, the PKD as we call them. All of these are in villages between 5,000 and 10,000. We've obviously expanded, therefore, the whole sales and distribution piece is 1 area of investment, along with the requisite, you know, demand generation activities that take place. The second is the whole area of innovation across each of our divisions, whether it is Fevicol, whether it is Fixit, whether it is the consumer products division. Each of these has now started launching a set of innovations in each of their markets. Therefore, our contribution from innovation, we would hope, will actually go up substantially over the next 12 months, because as I have repeatedly said, going forward, volume growth will be the key. Therefore, we must do everything vis-a-vis that. In the enablers, we've also made tremendous progress with the whole digital piece, not only through digital e-commerce, et cetera, which we've talked about earlier, which has now become a regular part of our business. To just give you an idea, for example, we have an app called Pidilite Genie, and we believe we are only one of two companies who are getting more than 25% of our sales now via an app where there is no salesman or distributor involved. This is obviously, again, reaching, you know, reaching our people who therefore do not even have access to our sales force, can order and get material over a 24-hour period. Like this, we've got other digital initiatives on. We're also looking at some initiatives in the areas of AI. The fourth is the supply chain, Sandeep referred to it. If I look at the bigger picture, really what we are doing is we are making a resilient, flexible, on-demand supply chain. We now have 70 manufacturing facilities in and across India. We will probably add three to four more every year as we go forward, which is what we've got plans for. That we're not only equipped for future growth, we're also incredibly flexible and, you know, can therefore service needs at a very quick, at a very short notice, very quickly. These are all the other areas of investment besides obviously investing in your brands. Yeah, sir, that's very helpful. Just, last bit from my side is, any pricing intervention which, you know, you might have, taken, given, you know, how the VAM prices have, you know, panned out? Secondly, what is the, you know, price difference between, you know, your product versus, the peer product? See, our price premium tends to be depending on the product in the whole wood adhesives area of between 10%-15%. That's the premium that remains. If it goes above that, we tend... You know, for example, even in this quarter, we would have actually reduced prices, the effective price to the customer, given the VAM price decreases. So on a consistent basis, our premium remains between 10%-15%. We've tested over a large period of time. We believe that is what is justifiable and what the customer is happy to pay. Anything above that, we actually give back to the consumer, because otherwise we believe it impedes our volume growth. Yes, sir. Just, you know, just a related question on this, maybe on a portfolio level, because I understand, you know, across categories, across product points, maybe the, you know, effective price reduction will vary. Maybe at a overall portfolio level, what kind of a reduction we might have seen this quarter? Very difficult to say, my friend, because our portfolio is so wide across such a large... It's best to take it at a vertical level, and then because, you know, otherwise it's very difficult to translate this at the company level. ... sure, sir. No, no worries. Thank you so much. Thank you. Thank you. Next question is from the line of Latika Chopra from JP Morgan. Please go ahead. I thank you for the opportunity. Apologies, I, I joined in a little late, but I was curious to hear your thoughts, Mr. Puri, on overall B2C demand environment. I just heard your comments on B2B, but just trying to gauge, you know, are you getting the more positive, excited about the underlying growth trends that you are noticing in your business? Thanks, Latika. Always good to hear from you. Yes, I would say, you know, from a demand perspective, what we are seeing is really, A, the whole construction sector does seem to be seeing an upturn. You know, if you look at organized real estate, you look at individual housing, there is a certain amount of buoyancy which we are seeing in the market. We've earlier also spoken about the fact that consumers have reappraised their relationship with the home and are willing to invest more in their home. This is something which is an ongoing trend that we are seeing. The good thing we've seen now over the last six months is that for us, at least in our sector, we are seeing rural demand slowly coming back. It's still not the buoyant, you know, twice urban demand that we used to see. Slowly and steadily, you know, for example, in this quarter, our rural growth rates were 1.5 x urban, and that's really encouraging. I would say, while the monsoon has been good, though it hasn't been well distributed, now barring, you know, these disruptions we are having because of flooding in certain areas and disruptions, we are actually quite optimistic about the next six months, simply because we don't see demand conditions domestically changing dramatically. There's a long festive season, and most importantly, from our point of view, we also see input prices as fairly stable. Yeah. Well, that, that's good to know. I, I heard your comments on pricing. Are you done with your pricing interventions? Because, you know, it seems your current price of VAM is still lower than, you know, what your price was there in Q1. Do you anticipate you will still take some tactical calls on pricing, or you think you are largely done? Oh, absolutely, yes. We will still take some tactical calls depending on the VAM price. We are always sensitive to that. We believe now, you know, given the last two weeks, the way crude, et cetera, is going, we think this is pretty much the bottom of crude and therefore, VAM, and it will slowly go back to its traditional around the $1,000 bar, ton over the next six months. Yeah. Okay. And, you know, I, I also, you know, was trying to just understand, you know, there's a lot of push on rural expansion. I was just wondering if you could, you know, give us some more color on what kind of products, you know, are getting better reach in these areas. You know, what kind of price packs, price points, you know, what is allowing you to penetrate, you know, rural markets more? Another question I had was on your margin mix. You know, as you go deeper into these, you know, smaller towns or rural areas, does it affect or influence your margins in any, any significant manner? A good question. As the good thing for us actually is that our rural mix, you know, outside the fact that obviously there are smaller packs and there are more basic products, you will not sell the premium products except maybe in, you know, Kerala or Punjab or Gujarat. In the rest of the places, it tends to be the what I would call this, the starting products in the range. It is still the same Fevicol, the same Fixit. The basic range of, you know, waterproofing, starting from the construction. Fevikwik anyway, has very deep penetration and is pretty much there across, like, you know, all villages above 5,000. It's our full basic range, and we keep adding to this range. For example, we've expanded substantially with Araldite. We are now expanding with tile adhesives. On a consistent basis, based on the kind of town, we obviously have lots of rural marketing and penetration models. We classify markets into various substates, and we believe there's an ideal product mix for every substate, and we keep working towards reaching that ideal product mix and therefore, you know, in a sense, realizing the potential of that substate. That's what we are doing on a consistent basis. As far as margins discounts are concerned, frankly, they are pretty much the same as urban. Actually, discounts here tend to be lower, but freight and logistics costs tend to be higher. All right. Can I check with you, you know, you have very, very wide portfolio and, you know, you have always, split your portfolio and there is a growth in Pioneer categories, which were about 1/3 revenue salient, just trying to understand, you know, what parts of these categories, or which segments of these are actually doing, you know, tracking your expectations, something that's surprised you positively, something that you think probably there's more work to do, some flavor on that, you know, tile adhesives, stone solutions, you know, premium wood finishes, some of the things, niche segments that you are tapping into? See, actually, I'll tell you from a... I mean, I would say we've largely, you know, our model has worked 8x out of 10 x on a consistent basis. It takes a little bit of time. Whether it is, for example, premium wood finishes, you know that we report ICA Pidilite results separately. You would see that ICA Pidilite itself. Mm. is now a very strong unit in its own self with... You know, their, mind you, their minimum price point starts at INR 750 a liter. It's really premium, and we would submit the best quality wood finishes, not just in India, but in the world... Is that, whether it is tile adhesives, whether it's the joinery segment, we've largely, I mean, our model has been holding well. Core has tended to grow 1.5 x GDP. Growth has tended to be, you know, for example, waterproofing for us continues to be a strong growth driver, irrespective-- I'm sure somebody will ask the question about competition. Well, competition from paint companies has been there now for 10 years, but we are kind of growth-- we are continuing to grow healthily in waterproofing, and therefore, it remains a growth driver for us. We keep adding newer stuff. For example, we've added tile grouts, we've added stone solutions, we've now added exterior renders. On a consistent basis, Latika, every year we will add one or two new categories and slowly and steadily establish them. Sure. This last one, sorry, you know, I, I remember the last earnings call was full of this, but, I just thought I'll just check if there is any meaningful update or on this, you know, interior decor paints expansion. I, I, I know your comments from the last time, but anything, you know, to call out or update on this time? Thank you. No, it's just, it's very early days. As I said, you know, we are not, we are not in. You, all of you know Pidilite is a company. We are not the big bang. We will put up X plants and make a lot of song and dance. We will do things slowly and systematically. When we have something to report, we will come back to you. All right. Thank you and all the best, sir. Thank you, Latika. Thank you. Next question is from the line of Arnab Mitra from Goldman Sachs. Please go ahead. Yeah, hi. Thanks for taking my question. My question was again on the demand environment. I think you mentioned about the strong trend in the construction industry. On your adhesives segment, which has, you know, direct consumer products like Fevikwik also and woodworking products, are you also seeing a buoyant demand environment there, and also kind of in the rural markets, which indicates that even that segment, even though it's not very directly construction linked, are you positive on that in terms of how you're seeing the demand? A, yes, we are seeing demand, definitely also showing a little bit of an uptick as far as, for example, wood adhesives is concerned. My invitation to you, Arnab, would be it also does follow, though not fully construction, because two-thirds of the demand tends to be renovation. When there is new construction, you are going to then furnish it, and when you're going to furnish it, you're going to put furniture, and when you're going to put furniture, you're going to use Fevicol. We are seeing that as a lag, and at an overall level, yes, we are, you know, while there may be certain categories that are growing faster simply because, you know, we are still, we are at the growth stage of the category, be it tile adhesives or waterproofing. Even the core categories of, like, say, for example, a Fevicol, we are continuing to see healthy demand. Understood. My related question was, when you're doing this rural expansion, what we've seen in FMCG typically is that your fastest moving packs anywhere reach through indirect means where the demand is. In your case, does that hold true, and therefore, are you getting the incremental sales on more of the non-Fevicol kind of products? Do you think there's a big gap even in the Fevicol, like, reach, in terms of, you know, either unorganized share or actually the product not being available? See, the difference, Arnab, between traditional FMCG and us is that in our case, you know, like, say, in my old world, when I was in the chocolate and toffees world, or in Sudhanshu's old world, when he was doing detergent, you don't have to teach a person how to eat a chocolate or a toffee or to use a detergent. In our business, most of our products actually require a certain amount of user training, and in this case, at times, the user may be the end user himself. What we've done actually, which is giving us good dividends, is we operate with two sales forces in what we call emerging India, which is a mix of rural and semi-urban India, where we have one sales force that keeps training users and consumers in the use of the product, and that, in my-- our view, is a greater multiplier of sale rather than just pure availability. What benefits from pure availability is actually things like Fevikwik, which are simple to use. The rest of them, we find that, you know, we-- there is a certain amount of education which we will have to do to create the category. Understood. My last question was on any change in the, or acceleration in the CapEx, that you foresee the FY 2024, 2025, given the faster growth and your initiatives? No, we are already, you, you know, we've been repeatedly saying this. In fact, during, even during COVID, we were busy investing in CapEx on a consistent basis. We will remain at, between, you know, 4% and 3.5% to 4.5% of sales, on a consistent basis as far as CapEx is concerned. Okay. Thanks. Thanks, that's it from my side. All the best. Thank you, Arnab. Thank you. Next question is from the line of Ritesh Shah from Investec. Please go ahead. Hi, sir. Thanks for the opportunity. Sir, just wanted some incremental flavor when we say we have underlying volume growth of, say, 8%, so can you, can you break it up, basically, when we look at it from a category standpoint, say, growth and your emerging? That's, that's one. Secondly, again, taking a leaf out of, I think, Latika's question, how do we look to benchmark ourselves? Like, what will make you happy? What will make you sad? I, I understand you do give a number of GDP multiplier, but again, if you could put some numbers over there, I think, that would be great. Do you do- should one look at our volume growth versus paints or any other subsector in the building material space that you look at? Just a couple of questions. Remember, paints is on a consistent basis, Ritesh, actually reporting total volume growth. If on a comparative basis, we report total volume growth, our actual total volume growth will be 19%. In our view, that's not the right way to look at it, because that's just actually inflating what, you know, are cheaper products, which are, in a sense, a little more commoditized, you know, be it putty or powders and so on. We believe underlying volume growth actually captures mix and also captures, therefore, the pricing element. If you look at, for example, the C&B business in the first quarter, we've grown volumes by about 12%. Our, you know, as per the RBI yesterday, our overall economic growth is anywhere between 6%-6.5%. As long as we are between 1.5x-2 x GDP at a gross level, we are all right. When I look at my categories, frankly, the good thing is it's broad-based. My core categories are growing at 1x-1.5 x GDP. My growth categories are growing at, you know, 2x-3 x GDP, and a lot of the pioneer categories are getting initial traction. So at an overall level, that's the indicator we use. Over a period of time, what we've also seen is that our core to growth and pioneer is consistently going up. It is now pretty much, you know, by the end of this year, it appears it'll be 60/40. That's really for us, therefore, you know, gives us a greater flywheel for growth. That's how we look at it. Those are the benchmarks we follow. We obviously study all of the other companies, but please remember that vis-à-vis them, we have a consumer products business, which is different. We have, obviously, a B2B business that is different. We will look at it all composite, but at an overall level, I would be very happy as long as we are, you know, between one to 2x GDP on a volume basis. Sir, I'll just continue with the question. I'll just flip the argument a little bit around. In the current context, wherein the raw material prices have gone down, you did indicate that we have taken some price reductions. When you have to take a call on market share versus profitability, you have already given a margin guidance. Is that something which is more sacrosanct than market share? How should one understand that? If could split it between C&B and B2B, it would be great. We are clear that market share/volume growth is our prime indicator. I mean, you would notice that in the time when we were suffering from really high raw material prices, when VAM went up to $2,500 a ton, we felt it is a temporary phenomenon, and fortunately, we were proven right. We actually took down our margins down to 17% from our traditional 20%-24%. Similarly, you know, therefore, we are clear that volume, market share is primary. We, however, don't like to play in the commodity end of the market. We are a branded business, and therefore, we make sure we command the premium. We are also clear that you can get a premium, higher than normal premium for one or two quarters, but then you will open your back doors for lots more people to be sitting in your garden. Sure, this is helpful. Last question is on paints. Sir, in the last quarter, you had indicated that we had ventured into AP and Telangana states. Sir, any incremental update over here, the sort of impact that we have? You had also indicated that we will optimize on our distribution reach. If you could provide some color over here, would be great. Thank you. Ritesh, right now, too early to say. Remember, all sales systems in the first 3 months will declare success very early. To our minds, I think it's best that we come back to you 3 months later, and when we decide to expand into other states, that will be a great indicator that we've met our action standards in these states. Sure. Just last question, you have elaborated a lot on the rural reach, but you also indicated that the freight and logistic costs are over, higher over here. How should one look at the incremental margins and incremental ROCs, for the incremental sales, in rural India, what we are aspiring for? See, whenever I study, actually, at an overall level, there is no difference in profitability and therefore, you know, ROC between our rural and urban businesses. Urban businesses tend to be higher on schemes, discounts because of the competitive nature of the market. In rural and semi-urban, competitive intensity is far lesser. It's about demand creation and reaching the product there and consistently, therefore, servicing the market. At an overall level, actually, it doesn't make a great difference to us in terms of the mix of sale. Sure. This is quite helpful, sir. Thank you so much. Wish you all the very best. Thank you. Thank you. Next question is from the line of Samir Gupta from IIFL Limited. Please go ahead. Hi, sir, this is Percy Panthaki here. Sir, my first question is on the B2B business, and apologies if this has been answered earlier, I joined late. What is the volume growth on the B2B business, the UVG? See, the UVG is minus 3%. Percy, good to hear from you. Always good to hear from you. We answered that earlier. Simply remember, where we are suffering is exports to developed markets and exports by some of our customers of, you know, products which are export-oriented, be they leather, be they resins, be they textiles or wooden artifacts and furniture. These are the ones that are tending to suffer. The other place that is suffering is the neighboring markets, like a Nepal and a Bangladesh, where the issue is actually one more of foreign exchange rather than that of demand. Got it, sir. In India, the B2B growth would be how much? The India B2B growth is healthy. The India B2B growth is not an issue, in fact, because of the government spending in infrastructure and the, you know, overall organized construction going high. Actually, B2B in India is doing pretty well. Understood. Secondly, just wanted to get your sense on margins, and obviously, in the medium term, you have given a floor and a ceiling for margin. In the near term, would you say that the current quarter margin, Q1, is sort of the peak? Because while VAM has fallen further, you will take price cuts, and on the other hand, crude has gone up. Would it be fair to say that the Q1 margin, EBITDA margin in Q1, is the peak margin for you for the next few quarters? I would not say that. I'd just say stay with 20-24, crude will still have a two-quarter impact. As Sandeep told you, our consumption of VAM this quarter was at $1,100, at, you know, $1,100 + a ton. The current buying is at $900, so you know, in one or two quarters, we may even go higher than here. As I said, stay to 20-24 and keep focusing on the profitable volume growth. Right. Last, just a accounting question. Just wanted to understand your other expenses line has grown more than 20% YoY, which is much higher than the overall sales growth. Any reason for that? I think the main cause that sits in other expense is Advertising and Sales Promotion, which, if you look at it in terms of percentage terms, last year was 2.1%, now it's 3.6%. That itself has grown more than 50%. That, that is the biggest cost that sits in other expenses. Okay, that is the main reason why the overall other expenses percentage to sales are. Largely, yes. Largely, largely. Is this just a phasing issue, or is the ad spend likely to remain at the higher side because you have sort of a benefit in the gross margin? In our belief, as we said, we will keep playing this obviously over a longer period of time, but we will see you know, greater focus on brand building, so it will remain at a higher level. Now, what's the exact level? You will see in the next three quarters. It will not be going back to the same levels as it was last year, because last year was a challenged year from a margin perspective. Okay, okay. That's all from me. Thanks, and all the best. Thank you. Thank you. Before we move to the next question, a reminder to the participant, anyone who wishes to ask a question, may press star and one. Next question is from the line of Abneesh Roy from Edelweiss. Please go ahead. Hi, sir, a couple of questions from my side. The first question is regarding the, you can say, new or the innovative products. Like, we have got two, three buckets of products, and the newer products which have been, say, growing at much faster rates. Now what is the salience of such products? Where are we in terms of the total contribution, and what is the outlook on that? See, that's a difficult question, Abneesh, because each of the new products is in a different life cycle stage, depending on the... I presume your question is more towards categories rather than products, because each product is different. Yes. For example, in some of the, you know, like some products have been from pioneer move to growth. If you take something like tile adhesives, now, four years ago, we were a very small player in tile adhesives. Today, we believe we are one of the top two players in India in tile adhesives. Now, that's obviously moved from pioneer to growth. Things like marble and stone, things like grouts, is something that we are now, you know, slowly, in the next one year, will move from growth to pioneer. The joinery business, where we are now the leader, moved to a growth business about two years back and can, you know, is therefore one of our growth businesses. It's different for different businesses, but on a consistent basis, as I said, we keep looking at our own internal indicators and seeing that, you know, on a consistent basis, are we creating categories? I mean, five, six years ago, our ICA Pidilite business was a small, sub-INR 100 crore business. It's now close to INR 400 crore. Clearly, you will see that a lot of these businesses are, you know, achieving or overachieving the benchmarks we have set for them. Okay, sir, how much would be, say, contribution of these businesses, to our sales now? As I said, by the end of this year, we expect core to growth in pioneer to be 60/40. Okay, okay, that's good. The second question is that we have seen a lot of, you can say, disruptions from the floods and, you can say, unseasonal rains, particularly in the month of July. Any impact it will have, particularly on the two key numbers in terms of demand, stocks, any disruption we faced in terms of any plants or warehouses, et cetera? No, we definitely faced disruptions, Abneesh, in the month of July, simply because we have about seven plants in Himachal, close to Chandigarh. Now, with that massive rain that took place there, there was a certain amount of closure. We have one of the consolidating warehouse for these seven plants is in Ambala, which is close to Chandigarh again. Now, we've had some disruptions for between 10 and 15 days, so on and so forth, but, you know, our way of looking at it is this happens every year in different locations. It's part of the, you know, part of the play in operating in India. You'll have this somewhere or the other. Hopefully, you know, now in August, September, we don't have further disruptions. It may impact... It definitely impacted our July sales, but it will hopefully even out over a period of time. Remember, the good thing in high rainfall areas is it also gives you great demand for waterproofing. Yeah, yeah, yeah, absolutely. Absolutely. Sir, looking at the VAM scenario and the fact that you're open to, you can say, taking tactical price cuts going forward also, should we then presume that the realization, say, in the standalone, which today maybe say roughly around 2 percentage points negative, that number can go higher? Negative realization? It could, yes, definitely, if like, you know, VAM remains low and we find the need. As I said, we will prioritize in the short term, the volume growth over the value. Sorry to interrupt, the management line is not audible, sir. Is it audible now? Yes, sir, it is audible now. Until where did you hear us? I think, you were saying about the, your VAM prices? As far as VAM prices is concerned, if they continue to be at a low level and we feel the need to take some tactical price cuts, we will definitely do that. Okay. Okay. Best of luck, and, thanks a lot, sir. Thank you so much. Thank you. Next question is from the line of Avi Mehta from Macquarie. Please go ahead. Hi, sir. I just had two follow-ups. One was on the competitive intensity. Has there been any increase from regional competition, because of the price, of VAM? Welcome back, Avi. I would say not significantly, but yes, I see our categories anyway, there is always one or two new competitors and the old traditional competitors. That continues. We've seen a greater, obviously, intensity of discounting, as we said, because, you know, people now have greater leeway, which is why we as I said, we've taken the price cuts, but we haven't seen many new players or, you know, or lot earlier players getting revived strongly. They've always been there, and they're still playing in the marketplace. Okay. Sir, just to kind of understand from a thought process perspective, the way you see this is, if demand needs it, we will take price cut. Otherwise, it is going to be, it's the need from competition so that we ensure that we are not significant premium from peers. Is that the way I should look at your price cut, or you know, how you look at price? Our belief is that our product commands a certain premium. Mm-hmm. Therefore, if others reduce prices, we will make sure that our premium doesn't go over so that it, like, you know, in a sense, shuts us out. We will make sure that, that premium remains at the same levels. Okay, perfect. It is going to be more... In case you face that competition, that's when we should kind of look at price cuts as of now, not otherwise. That's true. Yeah. Got it, sir. Sir, second is just a, you know, understanding question. I'm not clear yet on how is the current reporting different from the volume plus mix that you used to give earlier? The numbers have changed, so I'm not sure what has changed or what has driven that change. One second. See, let Sudhanshu explain that. One sec. Okay. Hi, Avi. I think, see, our, our philosophy on underlying volume growth, which we, which you now see is, and I think Sandeep spoke about it a little bit. I think what we are now reporting is how our mix and volume have grown over a period of time. I think, you know, over... What happens is, you take your price, it's, it is in some ways growth in volume and mix at constant price. I think that's what we are reporting. I think therefore, that, that is the difference, and we'll stay consistent with this. What it helps us to do is to, as Bharat has always been saying, that, you know, we are about profitable volume growth. Therefore, it's about making sure that the mix of the volume which is growing also- Mm-hmm. is consistent. Point number one. Point number two, I think Underlying Volume Growth also allows you to to look at different volumes in, in the same bucket. In some ways, you can aggregate apples plus oranges. Therefore, whether it is tons, it's kiloliters, it is units and all that, it all gets sort of subsumed because you are looking at growth with net of price in your volume and mix. I think that's what it does. Therefore... In some ways, Underlying Volume Growth is actually growth in turnover, but at constant price. It is why you call it underlying volume. That's, that's. I mean, what I was trying to get to is I thought volume plus mix, the earlier way we used to give, was also kind of capturing the mix impact and essentially doing the comparison. As, you know, Bharat, as I was saying earlier, that, you know, we kind of take Putty, take a lower share and kind of take that mix impact in that sense. I thought that was coming in the last time, but maybe I'll take it offline. I'm still not very clear on what exactly changed. We'll pick it up offline, so I think in order to explain to you what has changed. Sure, sure, sir. Thank you. Thank you. Thank you. Next question is from the line of Sheela Rathi from Morgan Stanley. Please go ahead. Yeah, thanks for taking my question. I have three questions, and all three on waterproofing, as Mr. Puri had, you know, preempted earlier. First is a very basic question, sir, is, you know, we call out that Consumer Bazaar is 80% and B2B is about 20% of our business. If I have to just look at what is waterproofing as a percentage of our business, that was my first question. Second question is, you know, recently Asian Paints called out that, you know, they are the largest player in the retail segment with respect to waterproofing. What is our positioning there? Third question was, you know, Mr. Puri, you have always said that the biggest competition in waterproofing is non-consumption. You have alluded that it's, you know, six out of 10 households do not use waterproofing products. How is that number changed, and how is it different in urban India and rural India? Okay, great question. Let me start with the first. See, as far as overall waterproofing is concerned, there is a B2B element and there is a B2C. I would say, and don't hold me to the number, if I combine the two, it would be anywhere between 15%-18% of our sales. Okay, that's the overall waterproofing portfolio. Now, as far as the overall growth in waterproofing and Asian Paints calling out leadership in waterproofing, frankly, what is happening is most of the paint companies have now reclassified a lot of their what were traditional paint products as waterproofing products. You know, for example, an exterior emulsion, which is used for exterior, the exterior beautification earlier, now is claimed to be exterior beautification and waterproofing. Some of the primers have been converted to internal primers for waterproofing. It's very difficult to-- e-every paint company has a different definition of waterproofing. Traditional waterproofing, as we have seen it, was normally, A, used in new construction, B, used in renovation. Largely, what paint companies are even now selling is everything is about renovation, very little about new construction. Having said that, Sheila, as far as we're concerned, when we look at our growth rates, we look at where we are going, we are clear that on a consistent basis, we are like, you know, making substantial progress. As far as the consumer is concerned, and we've just done this study, for example, of the saliency of brands, nine out of 10 consumers name Dr. Fixit as the first brand of waterproofing when they're asked to name a brand which they would like to use in waterproofing. We believe we have the brand, we have the range now. You know, this confusion, this overlap between paints and waterproofing will always continue, and it depends on what people are counting. As far as the difference in penetration is concerned in waterproofing, I'll tackle this in three ways. In organized construction, which is organized real estate, organized commercial real estate, office buildings, et cetera, we're now finding that waterproofing is getting between 65-70-- you know, seven out of 10 buildings are using some form of waterproofing in the organized real estate sense. In individual housing in urban India, it is between four and five out of 10. Individual housing in rural India is one and two out of 10. A large part of rural India tends to just do simple concrete mixing on the roof and, you know, presume that is waterproofing. We've got a very long way to go. I mean, the best indicator I can give you is, world over, if you look at the ratio of waterproofing to paint, it is one is to three or one is to four at best. In India, it is one is to ei ght or one is to 10. You can see the kind of runway that waterproofing has for a growth perspective. Does that answer your question? Yes, it does. Just to be clear, you said it's about... You know, I know it's not exact numbers, but it is 15%-20% of our overall portfolio. Yes, that's true. Okay, understood. Thank you very much, sir. Welcome. Thank you. Next question is from the line of Rahul from Impetux. Please go ahead. Yeah, hi. Thank you for the opportunity. Sir, you mentioned, you've used AI in your business. Can you just elaborate a little bit about, how you've done that? See, we're still at the early stages. You know, we are still working through use cases, some of which are incidentally confidential. Once we are ready to talk about, give us a little more time that we are ready to talk about it, because otherwise, you know, it will be music to my competitors to know how we are using it. Sure. Thank you. Thank you. Thank you. Next question is from the line of Jay Doshi from Kotak. Please go ahead. Hi, thanks for the opportunity. First question is just a quick follow-up on the earlier question asked by Avi. you know, so if you were to, you know, use the same reporting for volume and mix that you used earlier, what would be your volume growth for C&B business standalone Consumer and Bazaar this quarter, versus the 12% that you've reported? One second, let me just... Just give me a second because there are- Can I ask my second question? See, they're just. That's a rough calculation. There would be a marginal 0.5%-1% difference, but we will work the exact number and come to you. They're also doing that for the last year. If you were to look at total volume growth, which is what most other companies are reporting, including the paint companies, we would, instead of 12, we would be at 19% growth. That I'm aware. That I know that, you know, paint companies, you know, include putty and tile adhesive... Yeah. roofing products.... I was just curious to understand whether your change in reporting optically changes something versus what we- No, it, it doesn't change substantially. You know, the question that Avi was asking was the right one. We, as a company, have always consistently said volume plus mix. We are now doing volume plus mix at a, at a given price, and that's the difference. That doesn't, you know, that doesn't therefore move the needle the way total volume versus underlying volume does. Perfect. That's helpful....Second question is, Mr. Puri, you mentioned about you are, you know, one of the only two companies where Ciggy, not Ciggy, I meant, your [Jimmy], that's portal or app, has 25% of- Yeah. Could you elaborate? I was not sure whether it was referring to a particular category or. No, no, exact. For, for Pidilite today, 25% of Pidilite sales every month, we are now getting out of an app where a dealer, it doesn't matter where he is, presuming he is in Ludhiana or he's in Trichy, or he's in a small village in Maharashtra, he can actually on the app, key in his order, and 24 hours, material will reach him via our distribution system. He doesn't have to call up a salesman. He doesn't have to call up a distributor. Slowly, over a period of time, we are only one of two companies. We believe the other is HUL, which is in, you know. Right. doing the same thing in a substantial fashion. We're today now getting 1/4 of our sales like this, and this really therefore sets us up for much deeper and easier distribution in the future. Correct. Understood. This is dealers ordering through the app, not carpenters? Dealers, dealers ordering through the app, yes. Okay. See, carpenters don't order through the app. Carpenters have a separate app where they can ask questions, so on, so forth, et cetera, but they will be linked to a dealer. Understood. Final question is, you know, from whatever little bit I've gathered about Haisha, I believe currently the price range that it operates, at, is primarily targeting the economy segment, right? The e-economy or ultra economy segment in the decorative paints. Is that understanding correct? No, that understanding is not correct at all. It is actually, in our view, matching the range of each of the paint companies with a significantly superior product. Actually, therefore, one of the first feedback we are getting is that what we are calling an economy product, the market is looking at it as the next category, as a premium product, but it's early days. No, that's not true. We're not in just the economy or the bottom end of the market. We have a full range. Understood. Thank you so much. Thank you. Ladies and gentlemen, this was the last question for the day. I would now like to hand the conference over to the management for the closing comments. At least from my side, thank you to, to everybody for their continued interest in Pidilite. Bharat, if you have any other closing comments? No, it's always a pleasure. Thank you. You know, the, the wonderful thing about the Pidilite analysts at least, is you always set us thinking and you always ask the, you know, questions that set us thinking. Thank you all for your participation. Thank you for your support, and have a lovely long weekend, and look forward to meeting you post the weekend. Thank you very much. On behalf of ICICI Securities, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.