Ladies and gentlemen, good day, and welcome to Pidilite Industries' Earnings Conference Call hosted by Kotak Securities 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 your touchtone phone. I now hand the conference over to Mr. Jay Doshi from Kotak Securities. Thank you, and over to you, Mr. Doshi. Thanks, Viren. Good afternoon, everyone. On behalf of Kotak Institutional Equities, I welcome you all to Q3 FY24 Earnings C onference Call of Pidilite. We have with us Mr. Bharat Puri, Managing Director, Mr. Sudhanshu Vats, Deputy Managing Director, Mr. Sandeep Batra, Executive Director, Finance and Chief Financial Officer, Mr. Sunil Burde, Senior Vice President, Finance and Accounts. I'll now hand over the call to Mr. Batra for opening remarks. Over to you, sir. Thank you. Thanks, Jay, and very warm welcome to all on the call. I will quickly give you a summary of the performance for the third quarter and the results for which were approved by our board yesterday. Standalone revenue Growth was aided by robust underlying volume Growth of 10.4%. This Growth was broad-based across both the Consumer and Bazaar and the B2B business segments, with both segments reporting double-digit underlying volume Growth. Both urban and rural markets grew, with rural and small town markets outpacing the urban Growth. Export demand remained strong and delivered double-digit UVG. Part of the moderation in input prices was passed on by way of pricing adjustments, and hence, the revenue Growth was 4.6%. Our consolidated revenue for the quarter at INR 3,119 crores was up over the same period last year by 4.4%, led by strong underlying volume Growth across categories and geographies. Standalone gross margins continued to expand both sequentially and YOY, and year-on-year were higher by 1,191 basis points and quarter-on-quarter by sequentially by 174 basis points. VAM consumption in the quarter was around $900 a ton as compared to $2,000 in the same period last year. Investments in brands and consumer-facing initiatives continued during the current quarter. Consequently, EBITDA margins improved by 776 basis points over same period last year and by 188 basis points over the previous quarter. Despite uncertain global economic conditions, inflationary pressures, and uncertain political conditions in some of our operating subsidiaries outside India, the subsidiaries collectively, and excluding the Pidilite USA business, reported modest sales Growth, with EBITDA in absolute terms doubling over same period last year. EBITDA margins improved both sequentially and year-on-year. Domestic subsidiaries reported robust sales Growth, with both the consumer and bazaar and the B2B subsidiaries registering double-digit Growth. We remain focused on building a resilient supply chain and invested behind upgrading and setting up new facilities. In the current quarter, we commissioned one new plant, which takes the total number of plants commissioned in the current year to nine. We also continue to increase our distribution touchpoints across in both urban and rural markets, along with effective use of digitization. Innovation across the consumer bazaar and B2B segments continue to be significant contributors to the overall revenues of the company. As we look ahead, we continue to be optimistic about market demand in the near term, given increased government spending and the overall uptick in construction activities. We remain committed to deliver volume-led, profitable Growth via investments in our brands, supply chain, digital infrastructure, innovation, and customer-facing initiatives. With that, I'm at the end. I conclude my opening remarks and open the floor for 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 their touchtone 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 Abneesh Roy from Nuvama Institutional Equities. Please go ahead. Yeah, congrats on good set of numbers. My first question is on the lending business, which was announced last quarter. You had said that you'll be first doing a pilot project, and from there, the learnings will be there. So my specific questions are in terms of any learnings if you can share, and you had also said that the team will be completely separate versus Pidilite's team. So in terms of team, et cetera, has that been fully set up? And in terms of the INR 100 crore outlay for two years, any change to that number? Good evening, Abneesh. Good to hear from you. On the lending business, the pilot is just being set up over the next, I would say, 15-20 days. It will start in one city in southern India as a pilot. The team has been set up and is completely separate. There are no current Pidilite employees as part of the team. It's an arm's length team. There is obviously no change whatsoever to the commitments of the INR 100 crore over two years. In fact, the INR 100 crore over two years will also happen only after we've seen the pilot and then decide as to where we want to go. Right. So, Bharat, are you going a bit slower to initial expectation? Because in three months, the pilot project has not started. So are you going a bit slow because of, say, the demand scenario is a bit different, or there's a feedback from investors that this is slightly risky? Is there any change? No, there's no change. It's just remember that, you know, when I say the pilot is not started, we haven't started disbursing money. The work has started. For example, remember, you have to do meets across contractors, masons, plumbers, waterproofers, dealers. All that process has started in the city. So now they've worked out their back end. The back end has to be all right. And I think over the next 15 days, we will... So there's no change in our intention, but we are clear. You know, the word NBFC seems to suggest that this is a major venture. This is not a major venture. This is, in a sense, completes, you know, the loop for our whole intermediary ecosystem, and we just want to see whether there's a large enough and profitable opportunity there. That's all that we want to do. Sure. My second question is on the rural and small town demand. Bharat, sir, you are the expert on FMCG, so entire FMCG sector rural demand is a big challenge. For you, last quarter also, rural was ahead of urban, and this quarter also. So I want to understand, is it coming because of higher feet on street, or is it because you were under indexed? For example, Nestlé also is growing faster in rural because they were under indexed to start with. So in your case also, are you under indexed, and that's why the rural slowdown is not impacting you? So it's a mix of three things, Abneesh. The first is absolutely, yes. See, categories like ours, even equalized for income, are under-indexed in rural areas and small towns, largely because of a lack of consumer education, a lack of user education, and at times, a lack of full range availability, right? Whereas, as you know, if I wear my own FMCG hat, FMCG or large part of distribution expansion has already been done. A large part of the Growth therefore comes from increase in consumption or premiumization, and that's where the FMCG sector is currently constrained. As far as we're concerned, we are in the under index. B, having said that, over the last, and this is not something over three, six or nine months, you know, our CAGR for rural over a three-year period is actually one and a half times urban. So it's not that, you know, this is something that is... When we set up this division called Emerging India, where we aggregate all Pidilite divisions and grow as one company, we had seen this opportunity. We have invested substantially in feet on the street, in the increase of range, in the increase of distribution touch points, and obviously, therefore, the amount of below-the-line activity in terms of demand generation. All of that, I mean, you know, the simple example I can give you is, Abneesh, and you know Pidilite better than most. Three years ago, we used to talk about 2-2.5 thousand Pidilite Ki Duniya in rural areas, you know, in the villages between 5,000 and 10,000. We now have 12,000 Pidilite Ki Duniyas. So this is a consistent investment. You know, if I look shop by shop, et cetera, may not be viable for the amount of effort we are putting in, but these are our fixed deposits for the future, and a lot of them are beginning to pay off already. So like this, I mean, I see the expansion of Araldite, for example, into rural and semi-urban. I see the expansion of Roff Vitro tiling adhesive into these areas. All of these are contributing for us to actually make rural and semi-urban a strong driver of Growth, and frankly, that will continue for us for some time. Sure. My last quick question is on the 10% volume Growth, a very good number. So two specific questions there. One is, your Growth margins are at an 11-quarter high, and in FMCG, we have seen that whenever sharp gross margin improvement is happening, there is a local player issue also. So if you could talk about local players, are they taking some momentary market share in some of the market? And second, sir, is in terms of the discretionary demand. So when I see Fevicryl that is used in almost every comparable discretionary item, there's a big slowdown. So if you see apparel, footwear, furniture, everywhere there is a slowdown. You must have seen some of the numbers, initial numbers, and more numbers will come in terms of results. That part of the demand, how is it shaping up in terms of apparel, footwear, and furniture, the white glue demand? See, answering the second part, you know, we are finding, and maybe this is a function of the increased activity around construction and housing, the completion, the consumer's attitude towards decor and their ability to spend a certain amount of premiumization. Frankly, we are not finding consumer discretionary demand to be dull. You know, you could it could always be better in some geographies, so on and so forth. But at an overall level, we are finding demand to be decent. It's not booming, but it is decent, and therefore, we're not finding any of this as an issue. As far as local and regional is concerned, you know, one of the reasons why we keep our margins cap is you can already see that in this quarter itself, we've taken price reductions which are fairly substantial. We are clear what is the price premium that our product can demand. And, you know, for the sake of one, two or three quarters of extra margin, we're not going to imperil our future Growth. So therefore, we will keep monitoring that. Local players are back for the last one year or so post-COVID, but fortunately, we are not seeing a major impact because, A, we are alive to it, and you can see from our numbers that we are on the front foot. We are not like, you know, in a sense, harvesting and then suffering. Sir, understood, sir. Thanks a lot, and that's all from my side. Thank you. Thank you. Thank you. Ladies, ladies and gentlemen, you may press star and one to ask a question. The next question is from the line of Sonali Salgaonkar from Jefferies. Thank you for the opportunity and congratulations for a great set of numbers. My first question is regarding an update on the paints business. If you could throw some light as to how we are progressing on that, how many touchpoints, et cetera. And secondly, any comments from your side about the competition, upcoming competition in paints or the competition that we have seen in the waterproofing side of our business? Okay, good to hear from you, Sonali. As far as our paints business is concerned, as we've consistently maintained, this is an initiative only in small town and rural areas. This, we started with the states of Andhra Pradesh and Odisha. We've added, Tamil Nadu and Karnataka to these states. It's going as per our plan, but remember this, we are not in for a big bang approach. We are not looking to enter the ring and fight amongst the gorillas. We believe we have an opportunity at the bottom end of the market simply because of our distribution being extremely deep and the demand from our dealers. Too early for us to declare success or failure for that matter. You know, every pilot in the first three, four months is always successful. So Sonali, I would wait another six months before telling you where we are. It is proceeding as per our plan, but our plan is not a very ambitious plan, please remember. Got it, sir. Very, clear. So secondly, on the VAM prices, Batra sir told us about the VAM prices right now, but, any disruption that you are witnessing or you expect because of the ongoing Red Sea issue, either in terms of supply chains or for your international subsidiaries? That's a great question. See, fortunately for us, the largest part of our... In fact, all of our VAM, none of it comes via the Red Sea currently. However, that doesn't mean the VAM cannot be impacted because if it's impacted for somebody else, then, like, you know, you will have issues. These days, Sonali, you live in this uncertain geopolitical era, where suddenly geopolitics is a strong influence on your business. We will keep a close watch. As of now, we are seeing no impact. Our VAM all comes from, fortunately, from the east, and even the one that comes from Saudi, comes via the Persian Gulf and not via the Red Sea. Got it, sir. Sir, and lastly, any guidance you would like to share in terms of either volumes or margins for FY 25? See, as we've always consistently said, our objective as an organization is double-digit underlying volume Growth. I just want to... You know, all of you tend to compare us with paints. Please remember, we measure underlying volume Growth and not tonnage volume Growth, because our tonnage volume Growth will be obviously much higher. This is underlying volume Growth. Our objective is we are in the range of double-digit underlying volume Growth, and our margin is at the 20-24 level, and hopefully, our proportion of Core to Growth and pioneer continues to change. We will be on a healthy Growth trajectory, and that's our objective. Got it, sir. Thank you, and all the best. Thank you, Sonali. Thank you. The next question is from the line of Jay Doshi from Kotak Securities. Please go ahead. Yeah, hi. Thanks for the opportunity, and congratulations on good set of numbers. My first question is a bookkeeping question. Domestic subsidiary profitability is significantly lower in this quarter versus what we saw in the first half. So could you sort of elaborate on it, and was there a one-off, and how should we expect it to trend going forward? See, what I would do, Jai, is I would sort, you know, actually divide my domestic subsidiaries into running domestic subsidiaries and pioneer domestic subsidiaries. The running domestic subsidiaries, à la ICA Pidilite or Nina Percept, these are having normal business. YTD, they are on a healthy Growth and profitable trajectory. In the pioneer, if you remember, both last time and the time before, we spoke about our new venture on exterior renders. This is a new venture in collaboration with a Spanish company called Grupo Puma. This is just in the process of setting up. The factory has just been set up. It's as per plan, we, you know, there is a, we will, in the first 12-18 months, make a loss before it ramps up. Therefore, if you just look at domestic subsidiaries, through that envelope, you will see a reduced performance. But if you remove Grupo Puma, which is an absolutely new venture, the factory, in fact, was just starting commercial production, then it looks a little warped. But otherwise, as far as we are concerned, it's as per plan. Understood. So I see absolute number, I believe there is a deviation or a drop of about INR 20 crore on a quarterly EBITDA. So is that entirely due to losses that you're incurring in this new venture that you are scaling up? No, this is not a one. The delta is not INR 20 crore. I think the profit in the loss in this Grupo Puma is about INR 4 crore in the quarter. And I think in ICA Pidilite, while we continue to grow profits on an YTD basis, in this quarter, profit was lower than same period last year by about INR 5-6 crore. Because of because of much higher advertising and sales promotion spend that was planned to be spent in third quarter. So that, that, that was the only, I think, drop. It was not INR 20 crore, it was I think about INR 10 crore lower. Okay, my bad. I was actually looking at the quarterly run rate for first half and the quarterly EBITDA of third quarter, and I thought I saw the difference of INR 20 crore. Maybe I'll recheck. No, because of the Diwali quarter and seasonality in ICA Pidilite being a wood finish paints business, there is obviously a much higher ATL and BTL spend in this quarter, which, in a sense, tends to warp this quarter's results. But on a YTD basis, it's perfectly healthy. Understood. Thank you. My next question is, you know, you talked about your, you know, aspiration of, you know, delivering double-digit UVG. Now, you know, this quarter, you know, you delivered that number, and it was broad-based across C&B as well as B2B businesses. And even your commentary on, you know, rural demand and in general, seems to be a lot more comforting than what we hear from most other companies. So given that backdrop, should we expect this as a more sustainable, you know, volume Growth for the next few quarters based on the visibility you have at this point of time? Can anything go wrong, is my question. See, Jay, having been in this business long enough, I can tell you, let's just, you know, these days it's best to fly the plane visually and look quarter to quarter. Does quarter four look all right? Again, if there are no black swan events, it looks all right. Now, we then have a massive general election coming up. Unfortunately, the general election, not from a sentiment or so, just from a logistics point of view, tends to always warp sales in the quarter there is elections, because there is massive government mobilization of transport, people, so on, so forth. You know, generally, elections tend to be a time when sales gets muted, but hopefully it makes up over time. If you ask me, are we confident on the trajectory of the organization, the home improvement sector, the India consumption story? The answer to all three is yes. You know, barring any bumps along the way, which frankly, for an emerging economy, are par for the course, there will be bumps. I think, you know, on a secular basis, we're quite confident of the direction we are taking. Today, our proportion of core to Growth in Pioneer has slowly pretty much become 55-45. You know, therefore, we have a better Growth engine. We're moving ahead, a lot of our newer categories are successful, and therefore, like, you know, which is why this proportion is changing. We have our clear direction. Fortunately, as of now, input prices are stable. This will enable us to keep investing back in the market. You will appreciate that this year, in the first 9 months, we've pretty much almost doubled our investment in advertising and sales promotion. Because, again, for us, profitable underlying volume Growth, we are getting that, then you're on the right course. Thank you so much. I'll come back with more questions later. Thanks a lot. Thank you, my dear. Thank you. The next question is from the line of Latika Chopra from JP Morgan. Please go ahead. Hi, thanks for the opportunity. Mr. Puri, it was interesting, you know, to hear a comment that the core to, you know, Pioneer and Growth share is now 55/45. If I remember correctly, in the prior call, you were hoping to close FY 2024 at 60/40. Would love to get some more flavor on, you know, what are the categories and Growth and, you know, pioneers, say, Araldite, you know, your tile adhesives, floor coatings, wood finishes, you know. If you can get some flavor on what is the Growth trajectory that, you know, they are clocking. You know, are they growing 15%-20%? Are they growing 20%+? And, what is the confidence you have, you know, for sustaining these kind of Growth rates? My second question was, you know, between distribution, reach expansion, and new product contribution, you know, which of these has been a bigger, volume Growth contributor for you, you know, in the recent quarters? How do you think, you know, this is gonna play out, in coming years? Thank you. Great, great questions, Latika. Good to hear from you. See, on your first question on the proportion of Growth and Pioneer to core, this, you know, moves ±5% every quarter. Our objective for the year was 60/40. The way it's tracking, we will be anywhere between 55 and 60 to, you know, 40 to 45, which is a pretty happy state to be in. What is driving that? Obviously, it is the newer categories. When I look at, for example, Araldite, when I look at our whole tile adhesives business, I mean, 4 years ago, I had, you know, 2 anemic tile adhesive plants. We now have 10. So clearly that has been a good driver of Growth. We look at our wood finishes business, that's a good driver of Growth. The joinery business is a good driver. So there are a whole set of initiatives that we have. Each of these, again, Latika, is growing at differential rates, and we've always maintained when we plan for these, we want 2-4 times GDP Growth, depending on, you know, the amount of infrastructure we've created, depending on the demand, the situation, and how much penetration there is, et cetera. So there's no one answer to the, you know, at what rate they are growing, but obviously, they are all growing at the rates of 2-3 times GDP, at least. Yeah. That's the first listing. And just remind me on your second question? I was just checking on your between distribution reach expansion and new product front. Got it, got it. Yes. See, I would say as of now, remember, because innovation impacts both urban as well as rural and small town markets, in an absolute sense, innovation is always a bigger driver of Growth than distribution touch points. A lot of times, you know, what happens is like, say, for example, some of our Growth in rural is coming because of the extension of, say, Araldite, the extension of our sealants business, the extension of, Roff. Now, for the rural markets, this is innovation because they are new to the rural markets, though we've had these products for long, so we don't count them in our innovation machine, so as to say. But at an overall level, I would say both are strong drivers of Growth. Innovation, because it cuts across both, tends to be a little stronger, because in urban areas, really, our task is not so much increasing distribution touch points. We still keep increasing distribution touch points because cities are all expanding at the peripheries. But it is more also about getting more out of our existing outlets, both from a range as well as a volume perspective. All right. And if I may squeeze in one more check, you know, this is on, you know, margins. Do you see any possibility of any further price reductions in any of your segments? And also, we talked a lot about emerging India. Could you share what's the revenue sales for this broadly, you know, for your standalone business now? See, first, just as far as price decreases are concerned, again, as you know, we've always maintained that we believe that our price premium that we command over competition varies from product to product, but we have clear formulas within. The moment we find that that price premium is going above those, we tend to reduce price because it suggests that the, you know, the raw material prices have come down because the local guys have become more competitive. So if, you know, raw material prices get a little softer, they remain soft, we might see some price decreases. But the way raw materials are now looking, I think I should suspect they are somewhere near the, you know, bottom. These could still be famous last words, because you never know what happens with the China. These days, there are too many geopolitics things involved. So I, I would say, as long as, you know, our price premium doesn't go beyond the level, levels that we have set for it, we will not decrease prices. If it does, we will. That's the basic listing going forward. The second thing, as you said, the proportion of urban to rural plus semi-urban is 70/30. Thank you so much, Mr. Puri, on all. Welcome. Thank you. The next question is from the line of Arnab Mitra from Goldman Sachs. Please go ahead. Yeah, Bharat, hi. My first question was on, you know, if I look at the Growth category, and if I take waterproofing out of that, because that's quite a large category, the other ones which have ramped up quite a lot in the last recent two years and are growing fast, is there any impact on margins as these become bigger? I mean, are they dilutive, accretive to your business at a gross level and an EBITDA level? Good to hear from you, Arnab. That's a great question. See, what we do normally is, at a gross margin level, we tend to keep our margins at very similar levels because we are clear that, that's, that's what impacts our intrinsic profitability. So plus or minus 3%-4%. Gross margins across our categories will be healthy. In a lot of obviously the Growth categories, we would invest a lot more, invest a lot more in, for example, investment behind the brand, in go-to-market initiatives, in below-the-line initiatives, as well as people. So at, you know, therefore, on an EBITDA basis, you know, we are clear that the Growth categories will have a lesser EBITDA, but similar gross margins, and over a period of time, tends to taper off and then come to our averages. Got it. Thanks. That's very helpful. And my last question was on waterproofing. So you've of course clubbed it all as part of Growth. I mean, the perception is that it's slightly bigger as a category now. It's obviously quite competitive. Are you seeing something like that towards plus GDP Growth in waterproofing continue? Or this segment, I mean, while your overall Growth may grow at 2-4x, waterproofing may be a little lower than that. What are the trends that you're seeing in that market in terms of end demand, given that paint demand seems to be slightly soft in the recent few quarters? See, retail demand, you know, which the paint industry has also reported, has been soft. But having said that, institutional demand for waterproofing has jumped because of the infrastructure investments, et cetera. Waterproofing is still... The penetration-led Growth is still fairly high because even now, our belief is real waterproofing penetration is less than one in two, which is less than 50%. And therefore, you know, the task for a lot of us is to first expand that market and make sure that, you know, that market is expanding rather than only look for share within the fifty. Having said that, it is, in our view, it is still growing. It may, you know, from four times GDP has become two times GDP because of the stress in consumer discretionary segments, but it's still a fast-growing segment. The only thing is, you know, the issue that is coming is, Arnab, these days, the definition of waterproofing. Everybody is using a very fast and loose definition of waterproofing. The paint companies tend to now put all exterior paints into waterproofing and call that waterproofing. A lot of their primers, they now, you know, if they say it's a waterproof primer, what was being sold earlier as a primer is now sold as a waterproof product. So, do you, you know, if you add all of that, it's three to four times, but real waterproofing, I would suspect, is growing twice GDP. Okay, thanks. Thanks a lot, sir. All the best. Thank you so much. Thank you. The next question is from the line of Keyur Pandya from ICICI Prudential Life Insurance. Please go ahead. Thank you. Congratulations to the team for a great set of results. First question is on the overall Growth rate in terms of volume. You mentioned that the Growth rate is more broad-based, but, I mean, if you look at, say, two quarters back versus right now, so where have you seen the highest rate of change, I mean in terms of Growth rate? Basically, incrementally, what has improved versus say two years back or two quarters back or three quarters back? Just want to understand that. See, good question, Keyur. Basically, what has improved is two things. One is clearly the Growth categories continue momentum, and therefore, the momentum on those is leading to greater Growth. The second thing is rural and semi-urban markets, you know, as they have been cycled, we're finding momentum there also, and they are growing faster than they were growing two quarters back, you know, two quarters back, we were talking of 11% and 12% Growth. We are now talking of 1.5 times. So therefore, you can see that both these sets of markets are tending to contribute to higher Growth. Geographies rather than, I mean, category-specific improvement, you are saying? Both geographies and in categories, the Growth categories. You know, for example, each of the Growth categories, some of them have good momentum, be it, for example, an Araldite, be it tile adhesives, obviously waterproofing. So a lot of these have momentum anyway. Sealants is a new business which has got a lot of momentum. Understood. Extension of this question is, I mean, adhesives, assuming that it's a late-cycle product to the real estate construction, has that seen pick up from what it used to be, say, a year back or whatever benchmark you want to take versus the normalized Growth rate? And, generally, on what kind of Growth rate we are witnessing or we are yet to see that improvement? See, if I look at my CAGR scale, they are even for the adhesives business. They are close to double digits. So, I mean, the business has been robust throughout. You know, post-COVID, what has happened is consumers have reinvested a lot in their homes, and that has obviously benefited all our businesses, especially adhesives. Hmm. In fact, you know, if this current real estate and housing boom continues, then we obviously see adhesives will step up, because adhesives, as you are rightly saying, comes at the last stage of home completion. So basically, you are saying that current Growth rate itself is a decent Growth rate, but probably this pickup is yet to be seen. I mean, the pickup will be over and above the current Growth rate. Yes, hopefully so. Understood. And just last question on the CapEx or capacity addition. We have seen a lot of capacity addition for various products. So, this is more from, I mean, just to cater to the demand or, or, I mean, is there a change in strategy that too many small plants at various locations, and is this for all the new products or existing products are... I mean, any color on where and how we have done the CapEx? I mean, after a lot of time, after a long time, a discussion is happening on CapEx from the Pidilite, and we have seen that also that actual CapEx has also gone up. See, as far as CapEx is concerned, again, it is actually for both, even our existing products. So for example, you know, your point, we are now building much larger factories for existing products. We've just built two massive factories in Vizag. Now, our biggest adhesives factory is therefore the one in Vizag, which is the most recent factory. The biggest coatings factory will also be in Vizag, which has just got commissioned, which is, you know, again, a new factory. In addition to that, the new categories, obviously, whether it is tile adhesives, we are obviously seeing expansion because these require distributed manufacturing. So it's a mix of both. Our policy remains, you know, we as an organization are, A, very strong believers in the India Growth story. We also believe we are in the right sector at the right time. The home improvement is a sector that correlates very well to GDP Growth, and therefore, as GDP Growth steps up, we will see, demand step up. So the moment we touch 70%-75% capacity utilization, we start planning new capacity. The new capacity obviously now is much larger plants than earlier, in locations, hopefully, which also give us a competitive advantage. Noted. Understood. Thanks a lot, and all the very best. Thank you. Thank you. The next question is from the line of Ritesh Shah from Investec. Please go ahead. Yeah, hi, sir. Thanks for the opportunity. A couple of questions. Sir, first, would it be possible for you to quantify the volume Growth on a four-year CAGR basis? The four-year CAGR, as far as volume Growth is concerned, will be close to, again, like, you know, about, if I see it, exactly 12%-12.5%. ...Okay, that's perfect. So second, again, the question is on demand, volume Growth is really good. But when we look at ceramics, wood panel categories, cement, all these categories, we haven't seen volume Growth. It is like single digits. So again, just trying to understand how to better understand the Growth. I appreciate you have answered this in different ways before. But is there any better way to look at it, probably from a perspective of end user, be it carpenter, painter, plumber, or from CMD standpoint or from a B2B, be it joineries or paints or textiles? Is there a better way to appreciate the delivery on numbers what the company is doing? Let me try, Ritesh. See, you know, take for example, we just spoke of tiles. You know, as of now, pretty much 1 out of any 4 tiles in a household uses any form of tile adhesives. The balance simply use cement, right? Therefore, whether the tile industry grows frankly by single digits or double digits, our task is to, you know, if I can just take this and increase this by 10%-15%, I've got a Growth engine for the next 5 years. What we've done, and this is what, you know, that Pidilite does well, again, for tile adhesives, we've created two sales forces. We are working with the tile layer, who's called a kadiya, where we're educating them in the use of the product and then educating them in the use of a more premium product. So, you know, therefore, what I would submit is, while some of these categories may be growing slower, our penetration is growing faster. Whether it is tile adhesives, now, whether it is, for example, the use of sophisticated adhesives as far as joineries are concerned. Earlier, hot melts were used only by the top-end joineries. Now it's become something that all of them are using. So there's a fair amount of, I would say, user and consumer education, along with, you know, specifications work with architects and interior decorators, who are now therefore pushing superior products and pushing superior specifications because they want things to last. So I think that things like this are also helping our Growth a lot more. I mean, you know, the fact that we have a sales force that works only with users in educating and creating demand in tough times, that really comes into good use. Right. Sir, if I just had to play a devil's advocate, right, the underlying variables, what you indicated, it's a continuous affair that the company engages in. Then if that's the case, then we should not be witnessing the kind of deviation on volume Growth that we look at it on a year-on-year basis. See, there are so many factors that are, you know, in play with, I mean, I can't simplistically say that, you know, therefore, everything is equal. But when I look, you know, the very fact, Ritesh, is over the four-year period, if we are growing our volumes double-digit, then there is obviously something right we are doing, because none of these categories are showing four, four years of double-digit CAGR Growth. Sure. Fair thing. Okay. So my second question is basically on product launches. If you could highlight what product launches we had, say, in last six months, nine months. And are there any white spaces that we look to fill, say, over next year or two? See, at Pidilite, innovation is always a strong driver of Growth. So all of our divisions, we would have launched at least 1-2 major products and 1-2, what we would call, not major, but minor products. So like, for example, in the Fevicol division, we have launched a new variant, a very premium variant of Fevicol called Fevicol Hi-Per, which is doing extremely well, which is, you know, a high grab, very high quality adhesive, which saves a lot of time for the contractor and for the consumer. We've launched a whole range of sealants. This was two years back, this was a wide space largely for us. We've now launched a whole range of sealants. This is completely new. In the waterproofing business, we have a whole range of roof sealing products and a whole range of exterior products at different price points, which are again contributing very well to Growth. In our higher waterproofing business, we have polyurethane-based and polyurea-based products for sealing roofs, et cetera, which are, again, a whole new range. In our art material business, for example, we've, you know, you would have seen the relaunch of Drops, you would have seen work around Fevicreate. WD-40 has some work going on with some packaging innovations. So, you will see at Pidilite, you know, our objective is one-third of my Growth must come out of innovations launched in the last 24 months. And that's what we keep pushing towards, and that's one of our, again, strong drivers of Growth. Sure. This is helpful. Sir, just lastly, you did indicate on the paint side, basically, would it be possible for you to give some numbers, anything on the aspiration side that we would like to have on the revenue and specific- You know, I will leave paint. There are enough gorillas trying to fight it out. Let them worry about how many plants, how much... We are quietly, you know, just completed our range. It is not something substantial that impacts our numbers in any substantial way. So I mean, it's not this is not a big initiative from Pidilite, where we put up 3 plants or 4, 5 plants, as others have put up. We are going slowly, steadily, in small town India, where we believe we have a competitive advantage. We are testing that out. If that works, we will come back to you. But sir, would it be fair to assume that this business, on a separate basis, it will be positive at the EBITDA level? Over a period of time, it has to be positive. In the initial stages, we may choose to invest, but yes, I mean, at Pidilite, launch anything which doesn't have the right gross margins. Sure. And sir, lastly, on waterproofing, would it be possible for you to quantify the market sizing and where we stand over that? ... Very, very difficult, my friend, because, you know, remember, waterproofing has four distinct markets. In new construction, you have institutional, the real estate, the large real estate players, and then individual housing. And then in repair, you have large institutions, factories. It's very difficult to say. I would say in each of the segments, the competition is different. We are probably the only company now that still plays across all of the segments, but very difficult because, I mean, you know, each of these there are widely differing estimates depending on the company. Sure. Thank you so much for the answers, wish you all the best. Thank you. Thank you. Thank you. The next question is from the line of Percy Panthaki from IIFL. Please go ahead. Hi, sir. My question is on the volume-value gap. You have done a 10% volume, which is a UVG number, and a 4.5% sales. So that difference of 5.5 percentage points, would I be right in assuming that that is just the pure pricing on a YOY basis, and there's no mix included in this 5.5%? And if so, can you give some flavor on the different segments and the rough quantum of price decline in them? I mean, there would not be a uniform price cut across the board, right? So if it would be helpful, if you can sort of give some flavor on the quantum of pricing in different product categories. See, to the answer to the first part of your question, again, good to hear from you, Percy. The first part of your question, yes, because underlying volume Growth anyway takes into account the variable or mix. The difference is largely price. As far as price is concerned, B2B tends to take price much quicker because we are much more used to it. So the B2B price increases would be higher than the B2C. Having said that, you know, again, we have such a vast range. I mean, suffice to say that the woodworking adhesives, which is the Fevicol part, would be the largest price decrease in the consumer and bazaar business. Waterproofing would be lesser, although there is a reduction because a lot of the coatings, also, Roff raw materials have come down. In the consumer product businesses, there's very little reduction because there's very little, again, change in raw materials. There is some, but not substantial. So different for different places. In export markets, again, the reduction would be a little more than in the domestic market, simply because of the lack of duties, et cetera. At an overall level, I would say that B2B has a higher price cut, B2C has a lower price cut, and between these, woodworking adhesives would be the maximum, but then also across the other places. Understood. And also, if you could give some flavor on how much of this price cut, which is at a net level, when we are looking at your net sales, there would be some amount which is attributable to increased trade promotion schemes, margins, discounts, et cetera, and some amount would be the actual reduction in the end consumer pricing. When I'm talking about end consumer, whoever the consumer is, whether it's a carpenter or actually, homemaker or whatever it is. So if you can give some idea on this 5.5% split between these two aspects. See, again, different in different divisions, but remember, it's a mix of both. In some cases where we are clear the price reduction is going to stay, we've taken the dealer price itself down. Remember, in our case, the consumer price that is marked on the pack, anyway, our products, because they are so competitive, they tend to sell much below that. So therefore, as far as the consumer is concerned, when we pass on price decreases, the consumer sees the impact very clearly because of the competitive nature of the product. At an overall level, I would say it's different for different divisions, but it would be a mix of both actual price decreases and, you know, simple in-bill rebates, et cetera, because when we are seeing that the raw materials are soft. Right. Given where the input costs are right now, supposing if you just make a hypothetical assumption that they remain where the input costs are right now, do you see any reason to change your prices, or whatever you have done till now is enough? Largely seems to be enough, unless there are some other areas where they're resisting, but where we seem to be, we've, you know, taken the price cut, so we, we believe our price premiums are appropriate. So if there are no further reductions in raw materials, I don't see price decreases of any substantial nature. Okay, sir. That's all for me. Thanks, and all the best. Thank you, Percy. Thank you. The next question is from the line of Tejas Shah from Avendus Spark. Please go ahead. Hi. Thanks for the opportunity and, congrats on good set of numbers. So looking at the three key factors for margins, demand environment, which is not very buoyant, that you called out, RM scenario, which has some tailwinds to offer, and competitive intensity, which I'm assuming it is as intense as always. How would you like to guide on EBITDA margins, trajectory from here on? See, we are clear. We're, you know, we've always guided that we always maintain a range. We never give a number. The 20%-24%, we are confident of. Now, barring again, I keep saying that, listen, in this new geopolitical, geopolitics influenced world, you have to keep looking at it quarter by quarter. But as I look from where we sit now, I would say the 20%-24% is a safe assumption. When raw material prices are benign, as when they are, as they are now, it will tend towards the higher end. When they become a little more volatile or, there is some fluctuation, they may move towards the lower end. And, you know, at this end, what we would keep looking is how to invest further for volume Growth. ... Got it. Sir, you spoke about, low penetration being the key driver in, waterproofing. So from a distribution standpoint, what percentage of addressable dealer network universe must be stocking Dr. Fixit or our products? See, remember, Dr. Fixit is stocked by three different distinct dealer networks. There is the building materials network, which normally tends to stock products for new construction. Remember, a large part of waterproofing in India, lesser in the world over, it's 70% is new construction, 30% is renovation. In India, because our new construction practices are not great, it tends to be the other way around. So building material stores, those that stock steel, cement, they tend to stock the new construction-related waterproofing products. Paint, hardware, so on, tend to stock the repair and renovation-linked products, because in some cases they may stock both, as would be the case with building materials. And then you have specialized chemical waterproofing stores, which stock the higher-end products, which are for institutional, which are for, you know, larger housing societies, et cetera, which use more sophisticated products. So there is a different dealer network, depending on the consumer that you are catering to. And to further complicate, what tends to happen is, that network is different for metros, that network is different for mini metros, and obviously very different for rural and semi-urban. Yeah. And, sir, in our channel checks, we are picking up that, paint dealer margins and rebates are actually increasing, sequentially a lot. And, there is an, there is an overlap for our distribution, some of our products and the paint products. Are you feeling the pressure of crowding out of working capital? Because there's a rebate is actually coming with higher inventory promises also. So are, are you feeling any such pressure on your, on, on, on our side of the business? That's a good question. Remember, all rebates and extra credits are required when your brand is not strong enough, or your user-related work is not strong enough, or your work with the influencer, which is the architect, interior decorator, is not strong enough. While clearly... Listen, most, in most industries, when margins become healthy, as they have become for paints, and the paints guys have called out price decreases. In fact, I think, the paint industry, just 3-4 days back, has taken another price decrease across their products. So paint tends to be far less digestive of increased margins, and it, you know, therefore, tend to pass it off as rebates earlier and then price decreases later. Now, obviously, we compete in the same market. We believe, again, we know where our product should be priced vis-a-vis the others. We maintain that, but we're not finding pressure either on working capital or credit. Because, again, remember, even today, the strongest brand in waterproofing is Dr. Fixit. When nine out of ten consumers are asked to name India's top waterproofing brand that they would consider, they say Dr. Fixit, Dr. Fixit. Yeah. Sir, last one, any incremental update on NBFC plan that we had revealed last quarter? Well, right, we were saying in the first question that Abneesh asked. We're just in the process of the pilot is just being set up. It will be done in one South Indian city. We will learn from that pilot and then come back and tell you fellows what our plan is over the next two years. So very, very early days. Just we haven't still got on the blocks in terms of disbursing money. Clear. Clear. Thanks a lot, sir, and all the best. Thank you. Thank you. The next question is from the line of Jay Doshi from Kotak Securities. Please go ahead. Hi, thanks for the follow-up opportunity. You know, a bookkeeping question: What would be the contribution of top 20 cities to Fevicol woodworking portfolio, woodworking adhesive portfolio? Again, very difficult to say. Remember, Jay, that there is a substantial amount... See, Fevicol, the fascinating thing is 10% of the cost of furniture is Fevicol, but the consumer changes the shop where she buys the product from, you know, and changes the plywood, the nails, everything else based on the Fevicol price. So there's a high amount of wholesale, and Fevicol, again, in terms of distribution, next to Fevikwik, because Fevikwik is an INR 5 product. Pidilite's most distributed product, all India, would be Fevicol. So I mean, very difficult to say what is the retail sales in the top 20 cities, because for us, tier 2, 3, and 4 also tends to be very strong. Understood. So the idea of, you know, asking this question was we seeing real estate upcycle, at least in top 20 cities, if not more. And, you know, at some point of time, perhaps you've started seeing traction in the woodworking portfolio or adhesive segment as well, but perhaps in the next one year or two years, you'll see more traction. So the idea was to just understand what would be that contribution to your overall sales in the- It'll be close to at least half the sales. It'll be close to half the sales. And yes, but, you know, hopefully, there will be further traction, so on and so forth, with all... You know, now when you open the newspaper, the first four pages are real estate ads. So all this real estate that is being sold will come in for, you know, completion in the next two to three years. So hopefully, we will see that. But as we see it today, I mean, we've seen over the last two years, even as I said, post-COVID, adhesive demand has been fairly healthy. Correct. Thank you so much, sir. That's all from my side. Thank you, Jay. Thank you. The next question is from the line of Ritesh Shah from Investec. Please go ahead. Yeah, hi, sir. Just a quick follow-up, sir. On a full year volume category, you gave a number of 12%-12.5%. Just wanted to check whether this is organic or basically if you could dissect how much would be organic, how much would be inorganic? See, the only large inorganic in this would be Araldite, right? Because Araldite is now part of the base numbers it would have been, but it's not. Again, Araldite is not so substantial that it is going to move the number very greatly. Okay. Okay, so not much of difference. No. Sure. Thank you, sir. Thank you, sir. Thank you. Thank you. Thank you. As there are no further questions, I now hand the conference over to Mr. Puri for closing comments. Over to you, sir. I'll hand it over to my colleague, Mr. Batra. No, no, thank you very much for your interest and continued interest in Pidilite, and wishing all the participants a very good evening and a good day. Thank you. On behalf of Kotak Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.