Asian Paints (NSE:ASIANPAINT) Q2 2027 Earnings Call

0:00 Hello, and good evening, everyone. I'm Daksharma from Investor Relations team, and it's my pleasure to welcome you all. We are joined today by senior members of our management team, including our MD and CEO, mister Amit Singhal. Hi. Our CFO and company secretary, Mr. RJ J. Murgun. Hi. Our EVP Finance, Mr. Paragrani. I would now like to invite our MD and CEO for his opening remarks. Over to you, sir. Hello and good evening.

0:51 Welcome to the Q2 investor conference. I think great to kind of really be speaking to you once again. So as we look at overall, I think the core value at Asian Paints has always been delivering joy since 1942 in terms of what we are doing, and here we exist to beautify, transform, and preserve all spaces and objects, bringing happiness to the world. So I think this is something which we have been pursuing, and that is something which we stay committed to. So this is a disclaimer in terms of looking at on what context we are kind of talking of today. Getting into the overall areas in terms of what we have looked at from a point of view of the overall year and specifically from a point of view of quarter two, I think these are the six areas which we have spoken of as a strategic intent in terms of what we have been driving.

1:46 First of all, I think today, Asian Paints as a brand has something which has built a very, very strong kind of overall perception in terms of where we are and what we stand for. And that is something which is as an area which we wanted to continue kind of really building on, and therefore building the brand is something which we are looking at all forms of media, whether digital, whether it is above the line, or whether it is in terms of unique integrations, in terms of from the point of view of programming, in terms of what we look at. We look at all forms to kind of take this ahead. The other area which is there is the whole area of innovation, and this is something which we stand committed to so that we are able to kind of differentiate us from a point of view of technology, from a point of view of premiumization as a larger objective in terms of what we can take.

2:39 Then there is the whole area, which is another differentiated piece which comes in, which is the whole area of services, which we want to kind of build in. And that is something which is another piece which we feel that as we kind of go into future, this services piece will become extremely important in terms of as a differentiated offering and also as a source to kind of really reach directly to the consumer. The fourth area which we have spoke of is the whole area of regionalization. And we think that today, this is a very unique place where we are looking at the identity of a region and kind of galvanizing our strategies more from a point of view of a regional context in terms of where we see ourselves going. The other area is about looking at this whole b to b space, and we feel very strongly given the urbanization and looking at the industrialization which is kind of taking place, the whole investment in terms of infrastructure which is going on. This space becomes more relevant and more meaningful for us as we kind of go forward.

3:42 The last area also which I'm going to talk about is very, relevant and something which is a zone which possibly, you know, Paints has taken the first step in terms of kind of taking it. It was the area of backward integration. So that possibly we can look at in terms of what it can do for us from a point of view of innovation, at the same time how it can look at basically propping up the overall area of creating a whole huge margin pool for us to kind of really keep on investing in the market as we kind of go ahead. So I think these are six areas which are very important in terms of what we speak of. And as I spoke of saying that today, we are looking at this whole area of integrations very strongly. This is a new world in terms of what we are approaching very clearly. As part of this, we have tied up with five big boss formats, which is across the five regional markets, giving impetus to the regional stories we can tell and how we can connect to the diversity of the people who come in in this thing. Today, real time shows are becoming a reality in terms of what we see.

4:47 And today, therefore, whether it is Bangla, Malayalam, Telugu, Kannada, or Tamil, we have looked at aligning with all these formats and so that we can reach out to people in its own diversity. And it's not just a media tie up. It is something where we would like to kind of really see that how we can reach out to the people, talk about the color leadership in terms of what we have, talk about the inspiration of homes, and really embody the local culture, customs, aesthetics. And therefore, we are launching shade guides in each of the five regions, are very specific to these regions so that we can take this nuance of color and inspiration very, very strongly. And these are all inspirations inspired from the Big Boss beautiful home set in terms of what we have created in each of these integrations in terms of what is there. Something very unique, something very different in terms of what we think is going to give us a leeway. At the same time, I think the whole regionalization bit makes sense only when you have literally kind of touching people from a point of view of a regional perspective, something which really embodies the art and culture of that region in terms of what it brings. And therefore, this entire perspective, we've kind of really converted into a very strong supply chain challenge, which basically we want to convert in a very strong association with the customers, with the influencers, and so on and so forth. And those are the regional packs which you see in terms of what we have been kind of

6:17 really been doing. It is definitely something which is very unique, again something which only Asian Paints talks about. And more to that, we have also been looking at basically looking at the whole wood finishes pack, which also embodies the whole area of wood and craft very strongly given the higher usage of wood, which we see is happening across homes and across regions in the country in terms of what it is kind of happening. Another very, very different initiative in terms of how it kind of comes by. When you look at from a point of view of differentiation, from a point of view of premiumization, our endeavor is to kind of give customer, you know, really differentiated parameters. And therefore, we look at possibly causing something very different in terms of the Apcolyte new premium version in satin, which we have launched, which is impregnated with some technology which uses the whole area of polyurethane so well.

7:10 And therefore, we are offering a range of things which basically looks at the world class washability in terms of what it gets, and it also kind of look at giving a warranty, is something which becomes a peace of mind for people who are kind of using it to that extent. So that's another innovation which kind of comes across to that extent. The whole area of corrosion, I think, is very important, and that is something which people, given the fact that today India has the extremes of weather, I think it becomes very important. And therefore, we have come out with something which is universal for wood and metal. At the same time, it is something which has got a very, different technology, which it kind of brings again a polyurethane chemistry, which is basically gelling with the alkyd chemistry in terms of what we bring, and it is talking of a four years warranty in terms of what we're going to bring in. Another unique offering, just to give you an idea that these are some offerings which are looking at premiumization very, very strongly as we are kind of going ahead.

8:10 The whole world of services which I spoke of, I think this is something which has now become a norm at Asian Paints in terms of looking at endeavoring, creating differentiated services which possibly become very, very difficult for anyone to kind of really appropriate and take forward. The first in this is the beautiful home painting service. We speak of almost the world's largest painting service in terms of what is there, where basically we have looked at getting technology. We have looked at servicing. We have looked at really seeing that today, we are able to kind of give a differentiated thing, is also giving customer huge choices with respect to color, visualization, and all other elements in terms of mechanization we can bring, so that basically it becomes really a hassle free, really a wow service in terms of what people can see.

9:02 The whole area of Total Assure is another differentiated service basically offered for large builders, large factories, where we basically do an assessment in terms of what is the right thing to be needed for these places. And then we basically also look at, really, an expert execution of these projects. So again, something unique and something which is finding traction all across in terms of what we are doing. The third area is the whole area of waterproofing. While today, I think Asian Paints innovated for the first time in the paint industry in terms of getting waterproofing products, we are now taking the level very different in terms of saying that not only it is the products as differentiators in technology what we offer, we also offer basically a service, so that basically people can get the best of the waterproofing service from an expert, which is Asian Paints in terms of what we bring, and therefore, SmartAssure talks about that. And lastly, we are talking of this whole area of asset management and protection of assets, which largely applies to factories and large areas in terms of what come in, where we are able to kind of really adopt factories across where we would kind of really maintain the assets and really offer them best of the products in terms of going forward. So four unique services, which possibly no one offers today, and that is something which is a big differentiator, actually not in India, but but across the world in terms of what we see in terms of these services.

10:31 At the same time, I think we also want that in terms of these services, we reach out to the customers so the customers get to know in terms of that service is available, And therefore, some very strong campaigns which basically have a clear kind of takeout for the customers in terms of what they can get, and therefore, an awareness that such services are available, and they should kind of step out and take these services. So I think strong kind of innovation from a point of view of creative and the way possibly you can reach out to customer in terms of what we promise, and especially something which is talking of looking at a time warranty, which kind of really comes in in terms of the completion of the job, in terms of what you kind of look at. So that's very strong in terms of what comes in. The whole area of color is something which we have appropriated well.

11:20 Last time we spoke about the color warranty in terms of what we had introduced, which was under the larger umbrella of warranty which we offered to everyone. And as part of that, we had spoken of 5,000 plus colors of freedom. We've launched this whole area of ChromaCosm, which talks of more than 5,000 shades. It's the world's largest color system in terms of what comes in. A very good campaign which got a lot of tractions in terms of the colors of India, really adopting the colors and really kind of marrying it to the whole freedom movement in terms of what we have. So I think it's something which is, again, very strong, something innovative, but kind of appropriates color in a very big way as we kind of go ahead. The area of B2B, I said, I think, again, it's a growing area. It is growing at a very, very fast pitch given the overall area of industrialization, the whole area of government spending on infrastructure which we are seeing. And these are various things which we are putting at as one AP to offer the range of services, the range of products to the entire kind of b to b platform, which is basically b to b, b to c, and b to g, which is to the government as well. And I think today under our Azure program as well as as a juggernaut, know, program, we offer very, very unified platforms so that we are able to reach out to various b to b kind of arms so that we can strengthen this arm and

12:50 really be part in terms of really taking this growth to a next level in terms of what we can speak of. And finally, I think one of the, again, very differentiators which we are very proud of in terms of looking. First time any company has kind of stepped in terms of really taking this space, which basically has dual advantages. One, it kind of brings very differentiated technology in terms of products and consumer propositions, which only this kind of a technology which can give in. And the second it kind of really gives us is kind of really separates the whole area of getting advantages with respect to your raw materials in terms of what we are able to do to that extent. And therefore, have first time we have got into this GenNext green technology, which is about the VAM and VAE chemistry.

13:42 And I'm proud to announce that we September, in September we started, and we basically started our VAE facility, and this is something which has been implemented in a record time, and with utmost safety and so on and so forth. Very unique because it's green chemistry and GenNext from a point of view of very low VOCs and so on and so forth would come in. It is something which kind of offers very unique parameters in the products from a point of view of what appeals to the customer, and basically creating a universality of usage across product categories in terms of what we can look at to that extent. So I think this is the first in India in terms of what we bring overall to that extent. And today, we you know, we are... We've kind of got the phase one of it, basically, which has come in out of the total CapEx of about 3,250 crores, which capacity is quite big in terms of what is there. What we are confident is that as we kind of go forward, within a year's time, we should be able to kind of ramp up to full capacity as we kind of go forward in terms of offering this GenNext kind of emulsion, which kind of comes in a very, very different way.

14:54 So that's all what we are doing. Coming to the Brasstex in terms of how this quarter has gone overall, I think it has a fairly good quarter. I think the overall volumes, despite the very, very kind of high inflationary environment and the steep price hikes which have been taken, both in quarter one and quarter two, I think we have been able to kind of grow at a good volume in terms of about a 6.4%, which has come in at the base of last year, which was almost about an 11% growth to that extent in terms of a like to like quarter to that extent. So I think this is something which is strong. Back on riding on the good volumes for the last four quarters in terms of what we are seeing. So I think kind of a resilience in terms of what we are seeing, in terms of the volume growth we are talking of in terms of taking it forward.

15:50 When we look at the whole area in terms of looking at from the point of view of overall value in terms of what we have done in terms of the decorative business, so I spoke of a 6.4% volume growth. The value growth has also been very, very strong, 14.5%. Obviously, we've had price increases which are there to that extent, which has kind of really come in. But overall, I think the value growth is pretty strong in terms of what we have been registered. And if you look at from an h one perspective, again, the volume growth is pretty strong at about 8% and the value growth being closer to about 16%. So I think from an h one perspective, still looking very strong. And mind you, this has been the time where basically a lot of uncertainty around raw materials, prices, inflation, which has been there. So I think in a turbulent environment, I think this performance has been good as I see it in terms of what has happened.

16:51 What has lifted this entire performance up is obviously the industrial momentum. I have been speaking about this for the last about two years. And what we see is very clearly the trend of industrial continues in terms of how we have kind of performed. Overall, we see that the value growth for the quarter is about 16.4% in terms of what comes in, because the decorative plus industrial gets lifted by the industrial growth, which is there to that extent. And therefore, deco plus industrial stands at about 16.4 and a volume at about 6.8. And similarly, if we look at h one, I think the growths are similar at about 16.5 and about a 8% volume growth. So I think h one gets lifted because of the industrial performance in terms of what we see together.

17:41 So net net, what are we seeing in the market? I think, first of all, the decorative revenues are up, okay? The volume growth is still pretty healthy in terms of what we have kind of been able to achieve. What trend we see very clearly is that the rural markets are still leading over the urban markets to that extent. I think the only difference here is that when we look at the B2B business, we see strong performances in some of the urban markets, especially the T1, T2 cities to that extent. So I think that is something which is the way it is balancing it out to that extent. From a point of view of overall distribution footprint, that's been the foray at Asian Paints, and we have been kind of really looking at keeping and seeing that any new towns, two new clusters, are there in terms of reaching. And this is a constant kind of strengthening the reach program, which kind of continues.

18:37 And I'm happy to kind of say that even in this quarter, we have looked at kind of extending that reach further in terms of from where we are to that extent. The area of services I mentioned continues to be strong and gives us a differentiated advantage and works very well for the network as well in terms of how we see, and now it's a strong proposition for the customer backed by the high NPS in terms of what we're having. Finally, at the end of the day, I think the innovation has been very strong. Today, I think I'm happy to announce that when I keep on looking at, we keep on testing this benchmark of the new product contribution to the overall revenues. And today, it contributes... The new products contribute to about 18% of the revenues, which kind of just shows that the innovation cycle in terms of what we speak is very, very strong and robust in terms of what we kind of bring about.

19:26 The phase one of the VAE I spoke of, that is something which has been commissioned, and the formulations have started happening. And as we go forward, you will see not only product innovation, you will also see that kind of giving us the benefit from a point of view of cost in terms of what we will kind of look at as we go forward. So I think some of these are some of the highlights in terms of how I see in terms of the business gone in. Shifting to the whole area of owning the homes from a point of view of space along with the surfaces, I think that is an approach we have taken for some time. And I think a lot of categories in terms of what we see because we see that as part of the painting cycle, decor is something which is very, very strong. And some areas of decor are fully integrated in terms of the overall decor cycle.

20:14 I think this quarter, we see, I think both bath and kitchen has been strong in terms of what we have been able to drive. Good growth's coming in there in those categories to that extent. Similarly, weather seal, we saw good growth, which has kind of really happened in terms of what we have taken. White teak was the only one where possibly the growth have been slower to that extent. And I think, overall, from a point of view, bottom line also, I think the kitchen and bath business is something which we are ramping up to that extent in terms of what we see. So I think we have been at it for some time, and we continue basically kind of backing up the businesses from a point of view of how we want to kind of take it, because we feel that the integration from a point of view of decor and paint is very, very strong. The industrial, as I said, has been a real high point. I think the last two years, this trend continues.

21:06 We have two JVs, which we speak of. One is the PPGAP, which is the auto OE refinishes, marine kind of an OE where we can... Or business which we kind of look at. Here, I think the growths have been astronomical in terms of what we see, almost 34% in terms of the growth, in terms of what we have garnered here, largely driven by the auto OE and the industrial segments in terms of what we see. A little bit of an inflationary impact in terms of what we see, although I think the business has been quite proactive from a point of view of looking at passing on the price increases to that extent. We have basically a PVT which is up by almost about 10%, but the margin has fallen a little bit in terms of to about 14.2 by three zero nine bps points.

21:57 When we look at JV two, again, this is a JV which is largely for general industrial, which encodes protective and powder coatings to that extent. Here also, the revenue has been very strong, almost about a 28% growth in terms of what we have seen in q two in terms of what we have been able to kind of really get in. And at the same time today, you know, it is something which possibly where on the bottom line, I think there has been a little bit of a setback here, given the fact that the price increases came here at a little bit of a delay, something which we will see in quarter three going forward in terms of how we are able to prop up. So similarly, if you see, I think the h one revenues are still looking very strong in terms of both the businesses, in terms of what we have done, which just kind of gives that this business is growing at a very healthy pitch in terms of going forward.

22:47 So that's industrial for you. Coming to our global markets in terms of what we see, this is a representation of all the markets which we are represented and the brands which we hold in some of these markets. I think the whole innovation trail we have carried on to our international markets, where we've looked at a series of product launches across markets. And mind you, some of these markets are in between the whole area of geopolitical crisis in terms of what's really happening. But we have kind of not looked at that and looked forward in terms of what progressiveness we kind of bring in various markets in terms of what we can do to that extent, and therefore product launches across geographies in terms of premiumization, in terms of looking at products which are right at the top and right from Royal Ultima, and Majestic in terms of what we have introduced to a series of markets in terms of what we have to that extent. So quite commendable in terms of what possibly in terms of the innovation has done in terms of contributing to the overall growths which we have been able to get. So overall, if you look at the...

23:48 You know, the growths have been still strong. Both quarter two is at about almost about a 30% growth, which is there. At h one, we are at about 28% in terms of what you are able to see. Growths are across markets, I think, whether it is Asia, Africa, Middle East, I think growths are across markets in terms of what we've been able to get. Yes, on a PBT front, I think there has been a little bit of a setback again. I think the brunt of inflation has been strong. The price increases, while they have been taken, I think they they have been staggered a little bit in terms of giving us this thing. But I think today what we see is that while I think overall PVTs have come down today to about almost about 4.8%, But we are looking at possibly as it goes ahead and we realize the overall price increase benefits, I think the overall PBT will get lifted as we look at going forward into quarter three and quarter four.

24:46 Finally, if you look at from a point of view of... Just to give you an idea in terms of how the gross margins have been moving, obviously, you see that from a higher gross margins in terms of where we have been from 45%, 44%, This quarter, we have seen a little bit of a dip in terms of what we have seen. And this is despite the fact that we had taken a 7% kind of a price increase in quarter one, almost about a 5% price increase in quarter two in terms of what we have taken, but I think it doesn't match the kind of inflations in terms of what is happening. And to top it all, we've had inflation of about 3% in quarter two as well. So obviously, I think that has had an impact in terms of the overall gross margins. But I think we have been very clear that we have been taking calibrated increases so that today, we balance the demand very clearly to that extent in terms of going forward to that extent and see that basically our focus on customer is very clear in terms of when we look at some of these areas and keep on fueling their top line, which is what we are doing today in the quarter two as well.

25:54 So if you were to look at the overall standalone financials, you know, the net sales growth I spoke of about is now about fourteen eight point eight, about 15% in terms of what we see. The overall gross margins we have spoken of is a little down. The PPTI growth is about... Close to about 6% in terms of what you see. Obviously, if you see from a like to like quarter perspective, it is about 17.1% in terms of PPDIT margins compared to possibly, you know, the like thing of last year same quarter, which was about 18.5. I think it is very clear that, you know, historically, we have seen that this has been a little bit of a soft quarter from a point of view of the bottom line, especially because what we see is that today, the product mix in this quarter is a little bit subdued in terms of what we see. It is more seasonal, and therefore, I think it is a very different quarter and not to be kind of looked at from a point of view of successive quarters to that extent. So this quarter is definitely very different, very seasonal from that point of view to that extent. The PAT is still stronger, I think, in terms of almost about 15% growth, which is very healthy in terms of what we see, obviously aided by some of the other income in terms of what we have been able to kind of get to that extent.

27:16 From a point of view of h one, I think the picture is even far more brighter, given the top line is closer to about 16%, given the run-in quarter one in terms of what we had. I think the great thing to kind of look at is that the PVT IT margins growth at a half year level is very, very good. And also from a point of view of, you know, the overall PVTIT margin is in the higher range of the, you know, overall band in terms of what we have been speaking at 19.6%. I think that's a more relevant detail to kind of see because today, given the kind of inflationary environment and the volatility which is there, I think possibly the h one picture is more representative in terms of looking at where the margins and the overall growth stand in terms of the overall business, in terms of how we look at it.

28:07 When we look at console, I think the numbers are not very different, but only a little bit higher from a top line perspective in terms of what we see. You have the net sales growing at about 17% in terms of quarter two in terms of what really comes in. Overall, to that extent, the PVT IT margins, you know, are a little bit lower at about 15.6, lower by about 202 bps points. But overall, PAT is at about 7% growth in terms of what we see from a quarter two perspective, which is there. On a h one side, again, I think which is possibly the right perspective of looking at this quarter, I think the growths are very, very strong at the top line as well as at the PBTIT margin, which is at about 18.2% in the band in terms of what we have spoken of, and also in terms of the pad being very healthy at about 24% in terms of what we see to that extent. So I think these are strong numbers from a point of view of the first half in terms of how we see to that extent, given the environment, the way it has been to that extent.

29:10 So I think going by that, we've announced interim dividend of 5.75, which is there. We've kind of looked at broadly the same payout ratio in terms of what we have kept, almost about 21.4% in the H1 of FY twenty seven as compared to what it was last year to that extent. So overall, just giving a clear signal in terms of where we are headed for this year. The overall outlook, as we kind of see, I think, continues to be a little bit volatile. Obviously, we see a raw material inflation, which is really happening overall. The volatility kind of really continues in terms of what we see, while I think the competitive intensity in the market also kind of really is very, very strong and challenging.

29:57 At the same time, in terms of what we are seeing very clearly is the fact that there are other challenges which also will come, which is about the anti dumping duty which we see in TiO2, which is also kind of coming into that extent has been announced effective October 24. And therefore, I think that is something which is what possibly is are the areas which will keep on kind of really we have to look at in terms of the outlook for quarter three and quarter four going forward. Overall, I think our whole area of connect with the consumer, building the brand, and looking at differentiation, looking at how we fuel the overall product propositions to drive, you know, the top line as well as the profitable growth will continue, and that is something which we are committed to. And therefore, today, I think when we look at quarter three, we will look at a full festive season, which we are kind of really seeing, Okay. To some extent, basically, you know, the last quarter basically saw some deferment also because Diwali this time is the longer Diwali in November.

31:02 So therefore, I think quarter three will kind of really get the benefit of that Diwali, which is going to come into that extent. And therefore also a fading season, which comes in this market. So overall, we look at, in quarter three, the brand building to really continue the innovation coming in, really looking at realizing some of the benefits of the VAE so that we have differentiated formulations and also from a cost point of view, able to balance some part of the inflation, which is kind of coming into that extent. And therefore, we would continue to kind of take a little bit of a calibrated view on pricing, at the same time trying to balance the margins going forward so that basically we don't disrupt the consumer demand, okay, in terms of going forward to that extent. Going forward, when we are looking at in terms of the overall benefits in terms of from the point of view of the ESG framework, which we have been following, I think this is what you're familiar with, a very, very strong framework in terms of where we have looked at water neutrality.

32:04 We have looked at being overall from a point of view of nature positive in terms of the hazardous waste and other areas which kind of come in, or even from a point of view of looking at, saying that we are able to take product stewardship in terms of the renewable and the, you know, biodegradable raw materials in terms of what we use. I think all these areas have been strong. If you look at the achievement at h one level, they are very, very strong, very in line in terms of looking at the target achievement to that extent. More importantly, I think the whole area of social has been very strong, and we have looked at our beautiful Homes Academy, training lakhs and lakhs of artisans today, and that program has become far more inclusive in terms of the artisan community, terms of talking of carpenters, plumbers, painters, and so on and so forth.

32:56 So I think that's a very strong area, and this continues to be one of our strengths in terms of what we have been offering. So I think that's something which was possibly from a sustainability side in terms of what we offer. So that's about it from... In terms of... As as a really glimpse in terms of the various things in terms of what we have done, and I think overall, it's been a good quarter. Thank you. Thank you, sir. We will now open the call for question and answer session. We will wait a few minutes for the queue to form. To ask a question, please raise your hand using the participant tab on the screen. The first question is from Mr. Mihir Shah from Nomura.

33:43 Mr. Shah, we request you to kindly unmute and please ask your question. Would have been lower also because 1Q had seen some inventory fill up due to the price hikes. So how is, you know, a normalized volume growth looking like in October? And and and is the inventory that got filled up earlier, has it normalized? So that is question number one. So overall, when we look at quarter two, I think we've borne the full impact in terms of the overall inventory, I think, in this quarter to that extent. So I think that is why the overall impact in terms of what we see.

34:32 As we also see from a point of view of overall volume, the product mix has been a little bit different in terms of what we have seen for this quarter to that extent. As I said that this is a little bit of a quarter with a different product mix in terms of what we see. We have a lot of products which are seasonal, move in terms of this thing because it's also a stocking quarter from that point of view. So from that context, we see, I think, it's a 7% kind of a volume is quite decent in terms of what we've been able to kind of achieve. And the impact of the inventory has been full in terms of what we have taken for the quarter two. Understood. Okay. Secondly, you know, with the price increases that you have taken, and also two q will have a mixed impact because of no exterior sales, which are higher margin.

35:24 But three q will... You know, exterior sales will come back. So So with that mix coming back, how should one think about the impact on gross margin? Because this this time, it will appear optically to be much higher. So wanted to just understand... You know, I I understand you've... You have a, you know, 28% cost increase, and you've taken 12% pricing. So wanted to understand on what is the kind of normative gross margin that we can revert back to in the second half? So obviously, when we look at... We have taken now further price increases. We've announced almost about a three and a half percent price increase for November, which is already announced to that extent, which takes into account the impact of anti dumping duties as well in terms of what's coming in. So I think what we are looking very clearly is as we go forward, I think that calibration will continue.

36:16 And from a gross margin point of view, obviously, will depend depend on in terms of the kind of inflation, which will further come if it is further, which is kind of coming. I think this band of about 41 to 43% would kind of really be the band I think we should be kind of looking at in terms of going forward. Perfect, sir. So lastly, just one quick question on the next gen emulsion that you spoke about. I know in India, it is the first that you just couldn't get produced with... From your side. But in the market, is... Are these kind of products available with anybody, or these will be the differentiated one with... That nobody will... Else in the market will have? And that 18% also NPD that you mentioned are also the differentiated products that may not see any kind of, you know, major competition?

37:06 Just a clarity on that one, sir. So if you look at, you know, two things. First of all, from a point of view of VAE, which we are making, it's a very, very differentiated VAE and not the general VAE, which is even available worldwide to that extent. So I think there is a clear technological ingenuity in terms of what has gone, and this ingenuity kind of really looks at giving us two, three things. One, it kind of gives basically in existing products some varied qualities which are consumer focused. At the same time, it also gives birth to some of the differentiated new products which might come, which also would kind of go into the patent zone in terms of how we would kind of see. So that's one part, which is the whole area of differentiation which is there. From a point of view of our NPD, I think that's also been a continuous continuous program where we look at possibly not only kind of filling the consumer gaps or kind of looking at basically the unstated needs of the customer in terms of what comes in. We keep on really seeing that some of these initiatives are really differentiated, and we have a reason to believe that this part of the NPD in terms of what we pursue is reasonably differentiated and keeps on giving us a very, very strong differentiated offering in the market.

38:29 Got it. So thank you very much, and wishing all the best. Thank you. Thank you. The next question is from Avi Mehta from three sixty one Capital. Yes. Hi. Hi. Am I audible? Yes, you are. Hi, sir. Sir, I just wanted to kind of pick up on, you know, margin pressures. Now you did kind of allude towards pricing being taken, but given where the gross margin and the EBITDA margin profile is trending, do you see any risk to that 18 to 20% band that we were kind of looking to stick with at the EBITDA margin level? If you could kind of just share your thoughts on that. See, as I said that, you know, given the whole area of volatility in terms of what we are seeing, I think even for quarter two, as I said, I think if we look at the h one picture, okay, both at the stand alone level and as at the cost... At at the console level, I think we are in that band in terms of what we have stated. And as we kind of go forward, while I think it's a little bit of a calibration of price increases, we have also launched a very strong cost excellence program. And we also have the VAE coming now to that extent in terms of getting really incorporated in our formulations.

39:48 We believe as we go forward, I think for the year, we should be able to maintain the brand, the band in terms of what we have spoken of, 18 to 20%. Perfect, sir. And just a follow-up on there, that VA, any range of what in potential benefits, how much can it accrue from the phase one? So see, right now, we are in a phase where we are really kind of normalizing the whole area of formulations. But I... We believe that when it kind of really works to its full potential, you know, it should kind of really give us some advantage of 300 to 500 basis points. This this... So so this is not... These are all phases kind of coming. Right? The 300 basis points plus. So it is basically right now looking at, you know, what we can do from a point of view of an extension of phase one and into a a good part of phase two.

40:38 Got it, sir. Got it. And, sir, last bit, if I may, just from a volume growth perspective now, but you did allude towards first half being more representative of where it is. Is that how I could see it from a volume growth and a value growth perspective of how we would be looking at the demand environment? And any thoughts on the same vehicle? That's all. See, overall, what we see is that, you know, given the longer Diwali, I think we will... We should get a good traction from a point of view of the October, November period in terms of the quarter three to that extent. We also have a wedding season, which is kind of coming in to that extent. And overall, from this point of view, while I think rural will come into some question with the kind of monsoon deficit in terms of what is really we are talking of. But overall, we feel that it would be reasonable to, in fact, see a volume growth of about 8% to 9% in terms of going forward in terms of what we would kind of look at.

41:38 Perfect. That's perfect. Thank you very much, sir, and wish you and everyone else a happy device. Thank you. Same to you. Thank you, sir. Mr. Aditya Bhartia from Investec. Sir, we kindly request you to unmute and please ask your question. Question is on the profitability of industrial and international businesses.

42:28 If we look at the stand alone decorative business, at least we have managed to pass on price increases to the extent that we are seeing an absolute EBITDA growth. However, on the industrial and international businesses, it seems that there is a bit of a lag. Just wanted to understand the outlook for the same and whether you feel confident that all the increase was, especially given that cost support are going up, can get passed. So how we see it is that even in industrial, we divide it into, you know, the, you know, the JV one, which is the auto OE and the refinishes industrial kind of a business in terms of what we have. You must remember that most of this business in industrial is more like b to b business. And typically, in a b to b business, basically, there is definitely a lag in terms of the price realization in terms of what really happens, and that's what has really happened. I think in that JV one, which is the PPGAP, has done relatively better, and I think they've been able to kind of really get some of the increases to that extent, but that definitely is a lag. I think definitely in j v two, which is the a triple p g, there has been a greater lag in terms of seeing some of those increases in terms of what we are taking. But I think we are really mindful in terms of looking at saying that there are no options in terms of looking at it, and that is something which we have done. And I think we will see gradually some improvement happening when we look at the further quarters which are coming. As far as AP Global

43:59 is concerned, I think the situation is a little bit more complicated given the geopolitical situation which is there. And there is a little bit more extremity which is happening in terms of what we see in various markets. I think markets of Asia, we have been a little bit more comfortable, but I think the markets of Middle East and Africa have been a little bit more problematic in terms of what we are seeing to that extent. And it also depends in terms of possibly, you know, the kind of strengths which we have in various markets in terms of what we are able to kind of take some of those increases. So I think there has been definitely a lag in terms of looking at to that extent, but at the same time, I think the top lines you have been able to drive at almost about 30% in quarter two to that extent. So there, we are also anticipating some improvements happening in the coming quarters to that extent. And definitely, I think we'll try to build up on this lag which has happened at this stage.

44:55 Sure. Understood, sir. And so my second question is on the potential impact of antidumping duty on TiO two. How much does that increase our cost by? And and if we look at the divergence between cost increases that were required and price size that we've taken, there appears to be a reasonably large gap, and especially given the cost have again started going up. What are the other levers that we have other than pricing? Is it that discounts, the market had kind of gotten elevated and we are shrinking them very sharply as well, which means that effective pricing fees can be higher than what the headline numbers message is? So I think, you know, this is not something which we are not used to. I think if you remember, the ADD was kind of clamped some time back earlier, and that had basically kind of given us a heads up in terms of the various initiatives which we have kicked within the organization.

45:52 So I think one of the bigger initiatives which we have kicked is in terms of how to rationalize the overall use of TiO2 using various chemistries in terms of what is to that extent, and that is something which we have been kind of doing for some time to that extent. The second area is the use of differential grades, which kind of come in and how do you kind of really maximize in terms of looking at, because the ADD varies from grade to grade in terms of how it kind of really happens to that extent. And that is something which is another area in terms of what we looked at. But having said that, it could have an impact from anywhere between two percent to three percent in terms of the overall kind of thing. We have tried to basically see that we marry it in terms of some of the increases, in terms of what we are kind of taking because we knew that this was something which was coming to that extent. And as we kind of go forward, obviously, we'll have to watch out in terms of how the overall, you know, the China pricing basically stands because last year, what... Last time also what we had seen is that I think given the larger kind of produce with China, as they tried to basically see that the effect of the overall duty is something which is marginalized by the kind of subsidy they put themselves at in China to that extent. So I think it is to be seen, but I think roughly it should be in that range in terms of what I've spoken.

47:10 Perfect. That's very helpful, sir. Thank you. Thank you, sir. The next question is from Mr. Manoj Menon from ICICI Securities. Hi, team. Just a couple of follow ups here, actually. A good performance on the revenue per volume side, etcetera. Just just trying to understand the performance on the decorative side. While I understand that the absolute cost increases, you know, has been attempted to be passed on, etcetera. You know, just from a relative competitive activity intensity point of view, you know, how do you see this currently that, let's say, if there is an x percent inflation at an industry level in decorative, you know, is the industry able to pass on, you know, all the increases or is it still some time away?

48:00 No. As I said, I think, you know, in the market, we have been very clear that some of the increases in terms of what we have taken are obviously not kind of matching the kind of inflation. You know, I think that gap is very, very obvious from a point of view of what is there to that extent. What we see is that possibly, you know, the competition has done also the same to some extent in terms of looking at basically following the same trajectory in terms of what we have been following. So there are no, you know, different riders from the competition in terms of what we see. However, what we also see is that the competitive intensity in terms of what you do, possibly at the network level, overall in terms of promotions and so on and so forth, remained the same.

48:46 In fact, I think it has only gone up in terms of what we see to that extent. So I think overall, possibly, you know, a lot of players would be in the same boat in terms of looking at possibly not covering the full inflation at the same time, the expenses being high to that extent. We have basically looked at balancing it in some way from a point of view of looking at focusing, going ahead on premiumization. As we see, I think quarter three should be a better product mix in terms of what we should be able to get. Second, at the same time, in terms of the whole area of cost excellence, which I spoke of. Third, we have the VAE, which is kind of coming in. And as you look at it, I think at an h one level, I think we've been able to kind of retain the band in terms of what we have spoken of. So I think that gives us confidence that going forward, we should be able to manage in terms of going forward with some increases as we have taken.

49:37 Thank you. Thank you, Amit. Just a follow-up here before I ask the second question. You know, is it fair to say that, you know, let's say, you as a market leader and maybe the industry... Other industry players also, you know, is probably a little worried about the price elasticity adverse effects and to that extent because you said competitive intensity, it has been high. It's still high. What I'm trying to understand is that the difficulty, let's say, passing on, you know, all the input inflation at, like, an absolute unit level, is it to do with the fact that, you know, consumer sentiment checking it, you know, because it's end of the day, price increases are not not a science? You know, I'm just trying to understand your reasons for, let's say, you know, the the absolute profit loss or if it's in in some some cases, percentage as well, you know, that why why the entire thing couldn't be recovered, you know, directly speaking.

50:25 So if you look at this, you know, in the past also, we've had inflation to that extent. And, you know, from a price elasticity point of view, I don't think so. It's only an art. It is also also a science to really understand in terms of how consumers would kind of really look at because we are especially in a discretionary category. It's not a category which is everyday used to that extent. And therefore, one of the levers which customers kind of really get into a bind is that at least the maintenance part of this thing can get deferred very surely when the prices kind of go. And the second impact could be that basically people can look at downgradation in terms of what possibly they were supposed to use and come to a little bit lower end of the product to that extent. So I think we are mindful of that, and today I think you can look at calibrating that today when you look at a certain estimation of a demand, a customer would kind of look at a certain inflation and if the inflation goes beyond a certain mark, obviously I think it would have an impact on the demand to that extent.

51:27 And also I think it gives basically the environment of uncertainties and over other rider which kind of comes on it to that extent. And therefore, I think from that point of view, we have tried in the last three months also to see that we create a era of stability, so that the customer also sees that it's not every now and then the prices are kind of going up to that extent. So I would say that there is multitude of factors is something which is all in the consideration, which we make so that possibly we can assuage some of the apprehensions of the customer level in terms of what it can go, and therefore, I don't think so it's reasonable to kind of look at passing the entire impact in terms of what we see currently. Loud and clear. Sounds... No. Absolutely like a leader. So second, sir, actually a question or a clarification on the the earlier understanding that the backward integration, all the project which you have undertaken, let's say, will result in an approximately 200 bit, you know, sort of benefit, you know, for for you particularly because of, you know, that that is supposed to... That's the plan few years back.

52:28 Where are we currently in terms of timelines? And more importantly, you know, is it something which the way you see it, you know, is a true competitor, don't they? So, you know, I've said it many times. I'll say it again because currently, as you said that we've kind of commissioned the plant. And I think it's a good thing it's a record time in terms of how we are commissioning the overall piece. As we go at possibly, you know, we will be looking at a part of the overall capacity in terms of what we will utilize till March. And what we plan is that next year, we will be able to utilize the full capacity in terms of this phase one, in terms of going forward to that extent. So I think that is a plan in terms of what we want to do, and this will kind of really give us strong benefits from two points of view, in fact, three points of view. One, think it basically looks at giving us very good advantages in terms of our existing products, both from a point of view of differentiated offerings, green products, and also from a point of view of giving us advantage from a point of view of bottom line in terms of the overall margins and cost savings in terms of what comes in. The other angle where it kind of really works very strongly is to kind of really see some of the newer products with the newer kind of areas for the consumer which come in, which will also kind of give us, you know, revenues to kind of look at in the premium end very differently in terms of how we

53:59 are seeing it. So I think there are a lot of advantages in terms of what we are seeing to that extent in terms of going forward. And as I said, I think the full capacity of 150 kt, we should be able to kind of utilize in the next year. Thank you so much, and season's greetings and good luck, sir. Thank you. Thank you, sir. The next question is from Mr. Amit Purohit from Elara. Thank you, sir, and congrats for the second Just on the follow-up on PA itself again. Sorry. But you indicated that 300 bps improvement. Would it be fair to assume that this would be largely towards the premium part of the portfolio and hence restricted to that, or it will be across the portfolio and this 300 bps at an overall level or specific segments that we should look at?

55:00 So I think, first of all, it is across the category of products. Okay? So I think that's the innovation we are bringing because the the myth in the market is that it can only kind of really bring it at the premium. I think we are trying to basically disrupt that part very strongly and very strongly onto that part which is there. And as we see it, I think at least this is the minimum in terms of what we see we should be able to get. I think it could be higher in terms of going forward as well. So just to understand this better, you are saying that the overall company level, there could be a 300 bps benefit, which you may choose to do... Reach it out to market in a different way, whatever in savings or use it in marketing. That's how we should think about it. Absolutely. Okay. Okay. And, sir, lastly, on the on the demand itself, basically, when I look at commentaries, you have been talking about good growth in the premium side. You've been working pretty well, and we see advertisements, especially on the painting service side quite frequently nowadays.

56:06 If I take that into consideration, is it a fair assumption that now the demand environment which used to talk about, like, economy is doing better than luxury and that is kind of... Tables have turned and now luxury seems to be doing better and hence, second half margins would be better than the first half margins. That's a fair assumption, Vikram. So as I see it, see, India is a very large market, and I think we give, you know, the whole area of even economy and economy emulsions a very strong precedence because that's something which basically a large part of the population, consume to that extent. And as an overall contribution, it is also fairly high to that extent.

56:51 At the same time, I think Asian Paints has been working in terms of looking at seeing that the upgradation is very, very important in terms of showing the customer in terms of how they can upgrade to premium and luxury and to super luxury going forward to that extent. So I think we are kind of into all the buckets in terms of what we are kind of approaching. Obviously, the attempt is in terms of saying that we drive the premium luxury in the super luxury bracket possibly higher than the eco segment to that extent. But at the same time, I think the eco segment is also going to be very important from the point of view of looking at how we look at galvanizing our network, how we look at possibly reaching out to every start off consumer in the market.

57:38 Sure. Thanks. Thanks. Thank you, sir. The last question is from Mr. Prateek Gotti from HSBC. Sir kindly unmute and please ask your question. Are you able to unmute yourself? No response. So mister Prateek has been facing some glitch from his end, so we would like to conclude our question and answer session over here. And on behalf of Asian Paints Limited, this concludes today's conference.

58:34 Thank you for joining us. You may now disconnect your line and accept the webinar. Thank you, everyone, once again. Thank you all. Thank you.