Q3 20/21

Jan 21, 2021

Good evening. It's a great occasion to be welcoming all of you for the q3 investors meet. I know we are going through the pandemic, and therefore, the entire thing is something which is hosted through the digital media. But I am sure that now all of you are quite used to this kind of Investors Meet. That's the disclaimer for you before you're going through the presentation. We look at the overall, market conditions which have been there for q3. What we see is that, there is definitely a normalization which has been seen through Various activities and the rise of the COVID cases has definitely come down from the peaks what we had seen in q2. And, therefore, I think, overall, the, you know, the country has done a fairly good job in terms of containing the spread of the overall COVID cases. Obviously, we have seen a lackluster q1, which affected the entire industry across the globe. And then we had a second quarter where there was definitely some recovery, and then we've had the 3rd quarter, which has definitely witnessed real rebound in terms of the demand conditions as we see it. What we had also seen that there was a GDP decline in q2 to, about minus 7.5 percent, which now, which showed a good recovery after what we saw is a steep fall in q1. Overall, when we see the recovery is definitely supported by certain reasons which are coming clearly. 1 is obviously A very, very strong festive and a married season which we saw in October. And it was also supported by recovery in real estate and new construction, which we see due to various, reasons across the country, which has happened. And that is something which has augured well across sectors, manufacturing as well as construction. We look at raw material inflation, It is something which is definitely on an upswing. We have seen the lows in Q2, but we see saw the crude prices going up and now, Starting December, I think we are seeing definitely the raw material prices in the coatings industry getting affected both from the point of view of crude, crude derivatives and certain critical raw materials which are there, and that is an impact possibly which will come in the next quarter. Overall, the forex movement has been pretty supportive and we have not seen sorry, We're not seeing too much of an inflation in terms of the, you know, the INR to that extent and what we see it is it's been largely constant and possibly moving into a territory where it is getting a little bit stronger. We look at overall the domestic Decorative business, as far as, overall, paint market and Asian paints is concerned, we see a very, very strong growth in Q3 following a very good and positive Q2 as well. And this is something which is giving an indication that What we have seen, this Q3 growth is coming also on the stance of continued strong growth in Tier 2, Tier 3, and Tier 4 markets. But the big change which we have seen in q3 is that when you look at the metros and you look at the tier 1 markets, Those have also rebounded back, and that is a big change and a pleasant change which we are seeing in Q3. Overall, If you look at the Asian Paints decorative performance, there is 33% volume growth in quarter 3 for the domestic decorative business and a very, very strong, good volume growth coming in each of the months, which is the October, November, December in the quarter, which is something which is heartening and gives us confidence that This is a sustainable demand in terms of what we were able to see after some time. We also see a change in terms of the large projects in the institutional business where we have seen a strong growth, which was not evident in the quarter 1 and quarter 2, and that's another change which is happening. Overall, the product mix has definitely improved in a big way, and we see that the premium and the luxury range is doing quite well for the company, giving us a good value growth as well in this quarter. And we see that it is also well supported through our entire area of smart care and economy immulsions, which has been the focus for some time. The services regime at Asian Paints has been very, very strong and we have kind of looked at safe painting and San Ashore, which is our sanitization service in a strong way. And that is something which has got a real good traction and has got a very strong good equity for the company in this period. When we look at decor, We are largely a very, very strong player in decor with respect to our wallpapers and with respect to our Texture is what we do and what we have seen is a very good impact of our beautiful home service, which we launched in this year and in a short span, we have seen that this is something which has really given us good confidence. Overall, if you look at the gross margins for the quarter, they are much better than last year, supported by lower prices and some real great work which has happened in terms of driving the sourcing and the formulation efficiencies, which has added in terms of bracing up the overall gross margin. However, as going forward, the material prices, raw material prices look quite inflationary, and this is a fact which we have started seeing in December, and the full impact possibly will be seen in Q4. I would now like you to take you through a small introductory, AV which is Hello? Madam Creating your beautiful home shouldn't be this hard, right? For a professional end to end interior design service, Contact beautiful home service with Asian Paints. I wanted to inform you that everything is running on time, and your home will be ready by tomorrow. Thank you so much. Complete home design to execution, your way. Beautiful homes, your way. Beautiful home service with Asian Paints. Book an appointment today. So what you saw was, you know, this new service and As you see, it's an amazing service which basically gives you at home, experience where you can renovate your home, you can do Anything with respect to anything in the home space to that extent, and it kind of is a very good opportunity to connect with the home consumer in a strong way. And this is something which has got a very, very good response. So that's one of the areas which has happened. The second area which I wanted to kind of bring to your notice is the work we have done with respect to decor and looked at in terms of, retailing so that we are able to offer a consumer A very strong service under one roof of a large store which is there. This is a very unique format and we think worldwide worldwide, it is the only format which is, kind of talking of a space of about 6,000 square feet under which we are talking of everything which is in the home available for the customer backed with technology and backed with very super consulting experience, which kind of comes in. Let's see the AV. So what you saw was, all categories within one place on a world class store, and this is something which has met with a very, very good response in the market. Going on in terms of looking at giving you a transition in terms of how things have moved from quarter 1 to quarter 3. Obviously, we saw that quarter 1 is something which was quite depressed given the fact that, April was absolutely A whitewash in May was partial to that extent, but quarter 2 recovered well at 11% kind of a volume and a 6 value growth which came in, but quarter 3 is the point of time where we've got very good demand conditions, some pent up demand which is there and a good kind of festival and marriage demand, which came in, coupled with some of the construction activities which began and got us a 33% volume growth and at 26% value growth. Going on to other businesses, let's take a look at the international business. Overall, in the international business, also the performance has been pretty strong. The volumes have picked strongly in Q3 there as well. We see a good recovery in all parts of Asia and the Middle East, and that's something which has been very, very strong in terms of what we have kind of witnessed. So all units have reported a double digit volume growth in Q3 and which is fairly heartening to see. Ethiopia, Bahrain and Indonesia are this little bit Exception because of some of the external conditions going on in this country in terms of what we see overall. The other good thing is that the Pickup has been seen across the price segments, whether it is economy, premium or the luxury end, and that is something which has well with respect to both the volume and the value growths coming in. We have done a very strong work in terms of expanding the portfolio in a very, very strong way. And, the big introductions have been in the area of waterproofing, which has now gone to almost all the countries and all the units in a very strong way. And we've looked at focusing on the premium and the luxury emulsions, so that we are able to kind of look at premiumization in a strong way, which kind of really holds very good in terms of looking at the imagery of the brand overall. In Q3, if you look at the margins, The margins were obviously supported by low material prices as well as the benefit of some of the cost control measures, which were put in. So therefore, I think, Overall, margins have been pretty good as is kind of seen in the graph alongside. Overall, international business revenue And Q3 was at about INR 700 crores, which is almost 22.4% growth And on a 9 monthly basis, it was INR17.56 crores, which is a growth of about 1.3%, which is really, really appreciated because of the fact that we had a quarter 1 which was really subdued. International Business over the last year Q3 and on a 9 month level also. We see it is at about INR 147 crores, which is a growth of about 41.6% over last year. So overall, very strong top line and an equally strong bottom line with lots of initiatives thrown in. Some of the initiatives which I mentioned, the waterproofing range has now got launched across Asia, Middle East, Africa, and that is something which is giving us good gains. And also what we have done is that We've looked at the bath business now coming into South Asia, which is Nepal and Bangladesh, and what you see is some of the stores in Nepal and Bangladesh, which is what has been put up. And therefore, truly, we are kind of leveraging the strengths in terms of looking at the India market and looking at going international with them. When we look at the industrial business, We have 2 joint ventures with PPG. The first one, PPG AP, looks at largely the auto OE part. The auto sector sales, you know, and the bills data, which is the work which is done at workshops where, you know, the cars come for painting, The data exhibits a very, very strong continued recovery, which is happening in q3, which is a good sign in terms of what we see, and it is also represented by the auto sales data, which, all of you are aware of. The OE business, therefore, reported a good double digit value in q3, and there was also a pickup in the Refinishes business, which has also been in the positive zone for the quarter. In the other JV, which is the industrial JV, which we call as the APPG, The demand recovery again has been good. We see industries kind of coming back strongly with respect to the work of expansion and maintenance, And, we have seen, this has led to a double digit value growth in q3. Obviously, the segments which have kind of braced it up is The powder coating segment in a strong way and the industrial liquid paints, which also have been showing very, very good uptick, from the last quarter as well. So overall, when we look at profitability in both these businesses, have been quite good and the profitability, Especially if I look at the APPG has been also coming due to the contained cost during this period. So I would say that's the status in terms of the industrial business as you look at it. Going on to the home improvement business, We have 2 businesses here, which is the kitchen and the bath business. Both businesses did quite well in q3, double digit growth in q3 for the components as well as for the full kitchens, which is the big focus of the organization. Project segment also, too, saw a good pickup and on a sequential basis. And Therefore, what we got for the first time, we kind of registered an EBITDA breakeven in quarter 3 for the kitchen business. So I think that is something which is really tremendous. As we look at the Bath business, again, strong sequential pickup, which has been seen in terms of the demand across the product segments which are there. We have been looking at premiumization in terms of some of the products which are there, which is something which is seen strongly in the quarter. Projects business, like in kitchen, has also grown and has shown quite a bit of improvement as the housing sector and the construction really picks up. Overall, when we look at the PBT level, again, a milestone where we are looking at a profit of 1 crore which has come in Q3 on a back of, PBT breakeven in q2 as well. So I think, overall, what we see is that there is a good top Line which is coming overall improvement in gross margins, cost control, and definitely, there is a lower spend in marketing to that extent, but I think the top line is something which has driven the bottom line in a strong way. Finally, when we look at The overall summary at the company level, the in terms of the standalone financials for quarter 3, The revenue uptick is 26.1 percent, which is a strong q3 delivery. 0.7% growth. The PBT is at 56.3%, and the PAT is at about 56.5%. So overall, I think there is a good uptick with respect to the overall PBTI margins, which are at a big increase. When we look at the 9 monthly figure, you know, the revenue is a little bit down negative because of the Q1, which you are all aware, and it is at a negative 3.5%. The PBT IT, however, is at about a 4.9% growth, the PBT at about 6.8, and the PAT, should have been equal to the PBT, but for the fact that, we had given a one time deferment reversal taken last year on account of the tax rate change, which was there. So otherwise, the PBT and the PAT figures would have been the same to that extent. The PBTI margins here have also gone up as kind of indicated. So I think that's the picture which is there at the standalone financials. At the consolidated financial level, in fact, the performance has improved When we look at from the profitability point of view, the top line is at about 25.2 percent value, which is the growth which has come in. The PBT IT is at about 49.5%. The PBT is at about 60.5 higher than over the overall standalone, and PAT is 62.3. So here again, I think there is a margin improvement which is strong in PBT IIT as you see it. On a 9 monthly figure, we have the revenue, which is the value sales is minus 3.3. The PBT IT is 5.3 percent growth. The PBT is at about 7.3%, and PAT is at 1.7% for the same reasons which I detailed earlier in the standalone with respect to the one time deferment reversal taken last year. So the PBITDA margins again are good here in terms of as you see it. So that's how basically the standalone and the consolidated results pan out for you. Looking forward, obviously, I'm sure that a lot of you want to know in terms of What really happens to this, what we see is that the Q4 demand conditions should be good, and There should be continued recovery in terms of the consumer sentiments. Given the fact that now we have the rollout of the COVID vaccination program and the paranoia in the customer's mind is going down because of the lower cases which are coming to that extent. And therefore, we feel that the overall domestic demand recovery to become broad based and really well entrenched. However, obviously, there is a bit of a caution that in case there is any surge of COVID cases or a different, strain of, you know, COVID, which kind of comes in. Okay? Now what we are seeing as in some of the geographies, globally, whether it is with respect to UK or Europe and so on and so forth. It could kind of really, impact some of the supply chain and other things to that extent, although we are all hoping that it kind of really doesn't happen. The raw material prices obviously are seeing a sharp inflation, as I said, and this could be in the range of anywhere between 6% to 9% kind of an inflation, which is there. And we see that, possibly, This will have an impact with respect to looking at, seeing very critically whether we need to kind of look at any pricing changes or passing it on to the consumer as we look at Q4. Overall, I think, our focus is very clearly on innovation. We are looking at Lots of new launches in terms of coming, and we'll continue our work through on cost optimization and looking up taking only business critical spends across all businesses, and that is how we are seeing the overall quarter going ahead. Thank you so much for your attention. Requesting all our participants to kindly use the raise hand feature to ask a question to the panelists. Participants who have joined through a video call, kindly keep your video and microphone switched on when given the chance to ask a question. Participants joining through the toll free number, kindly press star 9 I repeat, Participants who have joined through video call, kindly keep your video and microphone switched on when given a chance to ask a question. Participants joining through the toll free number should press star 9 to use the raise hand feature and star 6 to mute and unmute your audio. Requesting all participants asking a question to kindly say their name followed by the company name before asking the question. We have with us our first Peter, the question is coming from Mr. Abhneesh Roy, requesting Mr. Abhneesh Roy to please put your video and audio on And please ask your question. My first question is on the real estate recovery. So we have seen fantastic recovery across cities in terms of new sale of homes. So are you ramping up your capability in terms of SS and SLEAK? Even for the project business obtains, are you increasing the team size across cities, going to more cities? Because this can become quite big because after many, many years, Real estate as a sector has come back. And what would be your thoughts on the real estate recovery? Is it more of near term catch up? Is it because registration Costs have been cut or do you see a secular 2, 3 year rally in the real estate? So overall, what we see is that, we will have to watch for trends in terms of what's happening in the real estate and construction. What we are seeing currently also, it is the larger inflation is coming in terms of the construction activities, which is to the low and the mid income groups to that extent. And the registration process has kind of energized some of the purchase of the houses in some of the metros to that extent, especially Bombay. We have seen a good surge in terms of the number of houses getting sold and, kind of coming in. What we see going forward that we will have to watch this trend more strongly because, you know, a 3 to 6 months kind of an indication is not a very strong indication because till quarter 2, The construction activities were small and therefore, we've just seen 3 months of it. So we would have to really watch whether this is sustainable in terms of going ahead, given the fact that now some of the concessions on registration are withdrawn and the fact that today, you know, people are watching out for the vaccination coming into that extent. So We will have to watch that before we really kind of go big full hog in terms of looking at what needs to be done. Secondly, as far as capacities are concerned, the capacities are pretty comfortable, both with respect to the Bath business as well as with respect to The overall paint business, and we don't see that we have any problems in terms of ramping up the production, which is required. In case there is a surge which kind of comes in with respect to some of the demand from both the construction and the real estate business to that extent. So I think we are pretty comfortable with respect to the overall capacities. Thank you, sir. We will take the next question from Mr. Chetan Shajid. Mr. Chetan, you are requested to please unmute yourself, keep your video on and please say your company name before asking your question. Mr. Chetan, please put your video on. Hello. Good evening, sir. Good evening, Saigail sir. Thank you so much, for a nice presentation, and congratulations for a stellar results. I'm a retail investor. I'm not from any company. I just wanted to know that the home decor segment that you are concentrating, are you taking any CapEx? That is one first question. In view of, like, are you anticipating any, can you give any guidance regarding, that segment that you See, are you seeing that as in a growth segment? And secondly, the growth that we have seen in this q3 quarter, which is like, is it a one off growth? Or do you anticipate this growth momentum to continue Henceforth. Or, I mean, I just wanted to ask whether it is due to just pent up demand or are you expecting, like, Structural growth which is coming in at this pace. Thank you so much. So as far as the capacities are concerned, what we are very clear is that both with respect to home improvement, whether it is kitchen, bath, We are pretty comfortable as of now, and we don't think that immediately for the next 6 months to a year that we need any augmentation with respect to the capacity and we should be able to take care of the increased demand which is coming. 2nd, as I see the overall demand, there is definitely a combination of 2, 3 areas in the demand which has happened. One is, obviously, there is a festive demand which has come in, which was also supplemented by the marriage season, which was there at that point of time. Secondly, what we have seen is that there is a pent up demand for from Q1 and Q2, which has come into Q3 to that extent. And third, we are seeing good demand coming from the construction segment, which is there to that extent. What we definitely see is that Some of the pent up demand will get subsumed now in Q3. And, when we look at the ongoing period, we might not see too much of a pent pent up demand coming in there. Secondly, what we also would kind of see that the festival demand was kind of relative to Water 3 to that extent. But having said that, overall, we think that the demand conditions would still remain quite healthy. And possibly going forward, I think we would kind of look at good growth coming in the further quarters as we see ahead. Thank you so much, sir. Can you give any number for growth guidance? Very difficult to give numbers in terms of looking at future growth. Thank you so much. Good day. Thank you, Mr. Chetan. Our next question is coming from Mr. Mr. Shirish Pardeshi, request you to please put your video on, unmute yourself and ask your question. Sir, please unmute yourself, Mr. Shirish. Yeah. Thank you. I think Host was blocking me to speak. Hey. Hi, Amit. Happy New Year, and thanks for a wonderful surprise. I think I'm more astonished with 30% growth, And I think, we we have seen that, and I'm a strong believer because I recently did some travel across Maharashtra. I think, 2 things I would like to indicate. I think, yes, my experiences Deep down in Maharashtra is that the rural economy is really strong. But, of course, there is a competition angle to it. So my first question is that how are you going to deal with the competition and whether this demand is really going to stay from the Unorganized conversion to the organized because really unorganized has taken a toll. That's the first part of the question. The second part is that You have seen last two quarters, the urban centers has been still picking up. So my strong feeling is that now you are giving a cautious view, but I I strongly feel that quarter 4 demand is going to come back. So is there any thought on that? And the second question I have on home improvement. Is how much is the project businesses now? Because my sense is that project is one of the business which you have been harping on, and I think there is a way forward, and you guys are going to do a wonderful job. And the third is last, if you can give some more color on home decor, what you have just mentioned that a big store. How many stores you're planning in next 2 to 3 years? I mean, not this year perspective, but maybe 2020, 23, if any indicative number if you can help me to understand. Thank you. Okay, see, as far as, I think overall competition is concerned, What we are very clear is that as an organization and as a leader in the paints market, we look at possibly only growing the market because we feel that the per capita consumption in the market is pretty low. And therefore, in all segments, whether they are waterproofing or finishes or even in terms of the wall courts. We think that there is a very, very big scope in terms of enlargening the market, and that is something which we keep on innovating in terms of looking at growing. Secondly, when we look at, overall from the point of view of rural plus Urban, what we are very clear is that, in quarter 3, we have seen, very strong growth already coming from the metros T1 and T2 cities. And these growths are not only from T3 and T4, which was the earlier observation which was coming in quarter 1 and quarter 2. So that impact has already Come in q three in a big way and we are seeing the growths are pretty healthy, which are coming from the metros t 1, t 2. And this is also because of the, You know that the paranoia about the COVID has come down and people are letting people, in their homes, even in large societies to that extent, and that is something which is an observation across metros and bigger cities to that extent. So therefore, the phenomena of metro t 1, t 2 growing is something which is already on, and That is why I said that it is part of the Q3 growth in terms of what we are already seeing in terms of what's happening. As far as the overall Projects business is concerned that has been a focus area for us not only with respect to home improvement, but with respect to even projects. We are looking at really growing the projects business across segments, it could be large institutional buyers, it could be hotels, it could be industries and so on and so forth and we are looking at a larger footprint there to that extent, and that has been a focus for some point of from some time to that extent. And we feel that it's a strong sector to be in, in terms of what is there and that basically would remain as a focus in terms of going forward and there is a good growths are what is being anticipated. And the last question with respect to home decor, we have currently put in about Steen Stores, which are spanning across various cities across the country. We are looking at this number in terms of looking at doubling this number as we kind of go ahead in the next about 2 years kind of a time, and we think that it's a very, very strong opportunity in terms of looking at now the whole area of the share of space in the homes. Thank you, and all the best. Thank you. Thank you, Mr. Shirish. Our next question is coming from Percy requesting Percy to please Hi. Am I audible? Yes, sir. You are. Right. Sir, I have two questions, and I'll put both of them upfront. So first question is, first of all, congrats on the amazing sales growth that you have clocked this quarter. And the question is relating to that. So when we do conversation and checks with Paint dealers, obviously, always there is some amount of discrepancy between what they say and what the company reports, and that is normal. However, this quarter, the difference was fairly large, much, much larger than what we would normally expect in terms of your growth being much, much higher versus what the dealers were saying, which was very subdued. So just trying to understand what could be the possible reasons behind this. Have you sort of increased the number of dealers and Therefore, each dealer is now serving lesser number of customers. Therefore, when we talk to dealers, we are getting that kind of sense, Or could there be some other reason to this? So that is question 1. Question 2 is Your margins are at all time high levels and now you're seeing input costs going up. And in the past, you've said that 20, 21 percent EBITDA margins are something that is a sustainable level. So, would be interesting to know your pricing strategy broadly going forward. Would you want to sort of absorb this cost increase that has happened and let the margins revert to a more sort of historic levels? Or would you say that the margins have taken a step jump Permanently, and instead of 20%, 21%, probably 24%, 25% is the new normal now. So these are my two questions, sir. Okay, great. So when we look at the overall growths, I don't think so we have done anything substantial or very strong in terms of inordinately increasing our number of dealers or the network to that extent. It has been a normal expansion, which we have been kind of looking at over a period of time. What has really made the difference, as I said, was, one was the pent up demand, which has come in, The festival season being very, very good in terms of what we saw, coupled with the marriage season, which was there, which we saw in October November to that extent. One big large difference which happened was that the Metro's Tier 1 and Tier 2 cities, which were not growing at that pace earlier. In fact, the metros were negative from that overall point of view of growth. They have sharply come back. And, please remember, it's a large potential which is there in terms of some of these larger cities, and they have really augmented the overall growth in a big way, and they have augmented the growth with respect to even improving the mix which has come in with with the luxury and premium products kind of coming into that extent. The other area which has augmented the growth in a strong way, which is there, which might not be Coming from the dealers, very straight is also the large project sales which have come in and there. What we feel is that Large Industries, some of the government spending and lot of other areas have kind of gone up and that has kind of given us a fill up in terms of looking at the overall demand going up. At the same time, as Asian Paints, we've always believed that, there are, you know, always, we can expand the market and we have been looking at expanding the market both at the top end and at the bottom of the pyramid. And in the bottom of the pyramid, what we have seen is that today, We have got a good success in terms of looking at getting the unorganized customer into the organized market to that extent and that is something which is propelling the growth rates. And then there is an upgradation from the economy to the, premium to the luxury, which is the second phenomena which we have been kind of driving very, very strongly. So this is all which is kind of cumulating in terms of giving the high growth which you are seeing to that extent and that is something which as I said earlier, a part of it is something which is definitely sustainable in terms of what we see in terms of going ahead. So I think That's with respect to in terms of the growth which we are seeing. 2nd, as far as the input raw material prices are concerned, definitely as I said, In December, we are seeing an upward trajectory. Crude had been already going up, and we feel that the raw material prices are definitely going to up. But as an operator, as a company, we have always believed in the philosophy that, we need to kind of keep on offering customer a certain value for money and if that elasticity of pricing kind of gets upset, it would upset the demand also to that extent. So I think, what we are watching out is that Whether the high inflationary pressures are there or are they going to settle, we are also watching the rupee very closely as to How the rupee kind of comes in and based on some of these trends, we will take a decision whether we need to kind of pass on the entire thing as price increase kind of a thing to that extent or we want to kind of look at in terms of absorbing some of the inflation which is coming in. So that's a decision we will take in terms of after observing what the trends are around. Okay, sir. Thank you. Our next question is coming from Mr. Avi Mehta. I request you to please ask your question. Hi. Am I audible? Yes. Sir, thanks for the opportunity and congrats on the performance. I had three questions, if I may. Just first, on a broad basis, you have Indicated a focus on home decor with the new stores. I wanted to just get your thought process over here. Are you looking to be a retailer of Multiple brands in which are third party in nature or is this a test ground for you to evaluate setting up of manufacturing your own brands That is more a strategic question if you could answer. The second bit was other peers have indicated that There has been very strong growth in niches in the coating segment, which is either stuff like ceiling paints, roof paints. I wanted to understand your thoughts on those segments and whether you are exploring them or is it not worth our company, just if you could kind of share your thoughts. And lastly, a bookkeeping, sir. Is it possible for us to break the growth rate that we have seen this quarter into what could be possibly driven by pent up and which is more in your view other factors. That's all. Okay, when we look at the overall strategy with respect to the home Decor segment. What we have taken a call is that we are looking at providing the customer one of the best technological experiences with respect to visualization, which we can offer to the customer with respect to what's available within the home, before the customer really gets into the home to that extent. So I think the visualization and therefore the execution is a very, very strong strategy in terms of what we've taken. As far as the ingredients of that kind of go, we already have a kitchen and a bath business where we have invested and that's a strong investment, which is already there, which will kind of get subsumed in this strategy in terms of going ahead. In addition, what we have done is that, we have looked at certain stronger tie ups in terms of some of the other categories which have come in. And as the business kind of go ahead, we are taking strategic decisions in terms of getting into some of those segments, whether it could be furnishing with furniture, flooring and so on and so forth to that extent. Right now, the entire thing is in terms of giving the customer a very, very strong experience which comes in and that's how we are kind of looking at the entire area going forward, that's one. Secondly, when we look at the entire area which you spoke of in terms of the standardization of the sale. The overall growth when we see it is very difficult to say that out of the total growth which have happened, What percentage is pent up and what percentage is festive and what percentage is kind of coming segment or from the metro's t 1, t 2 kind of a city to that extent. However, as we see it today, possibly, some of the indicative things are that Earlier, we used to call talk of a multiple of the GDP to that extent, which is also not true now to that extent as we kind of go forward. So what we see is that possibly, we will have to live with this kind of a zone that the growth will continue to be healthy. It's very difficult to kind of really peg a number in terms of what could be the pent up demand which would have gone in, which would not come in the Q4, what would be the construction demand which would be there to that extent, and therefore, Segmentation of that is something which is not really possible to that extent. I forgot the second question which you had asked. Sir, the question that I was there are peers who have indicated that niches are growing, which is we have seen very strong customer uptake. Yeah. Yeah. So So as far as Asian Paints is concerned, we really think that today when a customer is buying for various usages in the house, okay, The surface segmentation as a strategy has not worked in India because the consumer awareness with respect to paint is very, very small And surface segmentation has worked largely globally to that extent where you have kitchen and bath paints and you have ceiling paints and kind of differences which kind of come in from the point of view of flooring paints and so on and so forth. But having said that, what we see is that interiors is a very large portion which is there and largely anyone who's buying paints buys it for everything which is ceiling, walls, and everything combined. Nish's work only with respect to certain of the products which are at the high end, which could be with respect to luxury and premium products where sheen levels can be different in terms of the gloss which you get to that extent or with respect to your wood finishes where possibly with the higher premiumization and the luxury courts, you get more durability and more gloss and so on and so forth to that extent. So we feel that surface segmentation It's not a very strong growth vehicle as you kind of go ahead. Thank you, Mr. Ravi. Our next question is from Ms. Sunita Sashdev. Ma'am, please ask your question. Not allowed to unmute. We can hear you, ma'am. Please ask your question. You muted. No, I can hear you. Unmute. All right. Thank you for the opportunity. I had 3 questions. The first is, I think we've seen a very benign raw material price strategy, which has kind of helped us to expand our product breadth as well as Go deeper into distribution in the country for the last 3 to 4 years. Now that we are at the onset of a huge inflationary kind of a move, Does this strategy change in any way? Or what would be the way forward in terms of how should we look at your product Breadth and depth strategy. Okay. When we look at the overall product strategy, What we need to kind of take care is not inflation or deflation which is happening, but what we need to kind of keep in mind is the consumer. And so long as you are offering a product which makes sense for the consumer, has a unique selling proposition, that is what really matters. So when we look at possibly A value for money smart product, they are the I think, even if there is an inflation, we would like to kind of see that at a certain price point, whether the product is making sense for the customer with respect to the budget of the customer and what the customer perceives as a value coming out of that product. And similarly, for any high end product, we see that today, it's not that the inflation and the deflation would kind of alter our product strategy in terms of going ahead. We would kind of be committed more to the consumer rather than looking at in terms of pricing inflation and deflation in terms of deciding what the product strategy is. So taking that forward, one would assume that there would be quite a lot of absorption of your raw material cost as you kind of press ahead to grow volumes. So there are 2 views on it. So obviously, for the value for money Smart Consumer, the elasticity of price is pretty weak in terms of what we have seen, but as far as the premium and the luxury segments goes, The elasticity can be increased there to that extent. And therefore, as I said earlier, we are watching trends and we are looking at whether these inflationary levels are there to stay and whether What's really happening to the rupee, dollar parity to that extent? And depending on how the trends kind of come in, we would kind of take a call with respect to What segment, what products we would kind of look at increase in the market as we kind of go ahead? And lastly, just switching gears, I know you guys have gained a lot of market share. Any sense of What kind of market share gains have we gained in the last 2 to 3 years in this product penetration strategy and market growth strategy? See, those overall figures, as we see it, are published figures available from each of the competitors which are there. What we have seen is that over the years, we have been gaining market share every year. And even this year, if you look at the first half, We have been the fastest growing company as compared to all the organized companies. So to that extent, there is a good market share gain which has happened to that extent. And I think that's the strategy going ahead that we not only kind of look at market share gains, we also look at in terms of exploring the overall market. And as a leader, we believe that is a good approach to kind of take in terms of keep on looking at newer areas where you can really kind of get your production. Thank you, sir. Thank you. And all the best. Thank you. Thank you, ma'am. Our next question is coming from Mr. Kunal Chandak. Mr. Kunal Chandar, please ask your question. Requesting Mr. Kunal Chandra to please ask your question. We will come back to you, Mr. Kunal Chandak. We will take the next caller. We have our next participant, Mr. Richard Liu. Mr. Richard Liu, request you to please ask your question. Mr. Richard Liu? Yes, we can hear you, sir. Please ask your question. You can hear me? Hello? Hello? Yes, sir. We can hear you. Please ask your question. Okay. Thank you. Now we can't hear you. Mr. Richard, you muted. Yes, please ask your question Mr. Richard. You have muted your mic, Mr. Richard. Yes. Am I audible? Yes, we can hear you. Okay. Sorry about that. So if I look at pre COVID, right, The confidence on demand environment was not all that strong and this is true for paint companies as well as for These as well as for other consumption related categories. Post COVID, we see that everybody seemed to have become More confident in terms of growth, including yourself, considering the kind of numbers that you have reported. As an outside observer, isn't this rather counterintuitive that confidence level of businesses have actually picked up post what is possibly one of the worst human crisis that we've seen in recent time. And I've heard you in earlier quarter talking about, yes, people wanting to feel good about their homes, etcetera. But this level of growth from 6% to 8% that used to be there pre COVID, going up to nothing less than 30% now. We can't hear you now. Sorry, we are not able to hear you. I think we'll take the next question and we'll come back. Yeah, I think you are muting yourself. Please unmute yourself. I am not, Yes. We are able to hear you. Now we are able to hear you. Yes. Okay. Thank you. So that was the first part of my question regarding pre COVID and post COVID growth. And related to this is that If I go back in time, you guys used to say that we will not be satisfied till we get to a Sorry. Am I audible? Yeah. You are. Keep on speaking, please. Yeah. Keep on speaking, please. Yes. Yes. So I wanted to ask that so earlier you guys used to talk about mid teens volume growth being a good volume growth from your perspective. And now that you are in the 30s, When you do your business plan for coming years, how are you going to look at growth that is satisfactory for you? I mean, is 30, The new mid teens as far as, you know, what you will consider as good growth. You know, those are my 2 questions. Thank you. Sorry about the trouble. No. It's okay. See, first of all, your question is absolutely relevant in terms of saying that when we were looking at pre COVID, Obviously, there was a little bit of a cautious optimism in terms of the way economy was behaving. But I must clarify, even at that point of time, we used to kind of Register growths which are in double digits to that extent, and that is something which we have been doing for the past few years. 12 to 15% was a norm in terms of what we have been doing, and that is something which was at the pre COVID levels also to that extent. How we see is that, you know, obviously, 30% is not a norm going ahead for sure because what we see is that there is a pent up demand which has kind of come in in this number. And there is also a festive sales, which has kind of come into that extent as we see in terms of going forward. And there is an irregularity in the pattern because, as I said now, there are metros in t 1, t 2 which has started growing, which were not growing earlier to that extent. As we kind of go ahead, possibly, we will have to, for some time, look at very closely doing month to quarter kind of a planning and not Look at our yearly planning as we kind of go ahead because that's the best way to kind of look at this little bit of uncertainty to that extent in terms of going forward. It's very difficult to kind of say that, what kind of levels the growth would kind of stabilize at because it will also depend on What the GDP levels really kind of stabilized at in terms of going forward. So I think as a combination, we would kind of look at A little bit of a short term planning at this stage and keep on looking at a month to a quarter kind of a planning and then kind of as it stabilizes, We would be able to kind of better kind of predict in terms of what the growth rates would come for future. Okay. And how do you reconcile this 30% post COVID. I heard you about festivals and weddings, etcetera. But even if you take that into account, The corporate level of businesses? So as I said earlier, when you look at the 30% Kind of a growth as I have been saying earlier, there is obviously a pent up demand component, there is a festive component which is kind of embedded in it to that extent. There is also the entire component with respect to the metros tier 1, tier 2 cities kind of contributing to the growth, which were earlier the growth was negative and you can well imagine that the growth has turned positive there, which has added to the numbers, especially in the luxury premium segments to that extent. What we also see is that the construction segment and the large institutional business is back. So there is a component which is coming from that as well. So and there would be components which would be in terms of the, market share gains which would happen from both the, organized and the unorganized segment. So I You can really break up into, 4 or 5 clear slices which are there. Now I'm not very able clearly able to tell you that What slices, what percentage to that extent? But these are the 5 slices which you could see in terms of the overall growth. Okay. Thank you. Thank you, Mr. Richard. Our next Question is coming from Mr. Anshooman Atri, requesting Mr. Anshooman Atri to please ask his question. Yes. Hi, sir. My question is Hello? Yes. We can hear you. Yes. My question is regarding the change in behavior of customers during the COVID in the rural and urban. So are you seeing more repenting cycles or people who were going for unorganized or unbranded products now asking for products From Asian or other branded categories. Do you see a change in overall behavior which can lead to better demand going forward, More sustainable. Yeah. So, I think one of the trends which we have seen that whenever there is a crisis or whenever there is a larger natural kind of calamity which comes in, people tend to kind of make safer choices. They kind of go tend to go to a brand they can trust to that extent. So, there is clear reason to believe that possibly, people would have navigated to possibly more trusted brands which would be there in the overall organized sector to that extent. So that is something which is clearly evident in terms of what really comes out and that's a behavior which we have seen in the past as well to that extent and that is something which possibly would have happened during this point of time as well. And in the rural market, over the last three quarters, how has been the trend in terms of growth? Are you seeing it tapering down As the migrants, come back to the metro or the rural is holding strong. In fact, what we see is that both q1 and q2, the rural markets which we coqualify as the t3, t4 cities. They were growing very well in quarter 3. In fact, that growth has continued to a strong level as well. However, I think the big changes I've been saying, what has happened is that the T1, T2 and the metros, which were almost at Negative growths are not growing very, very strongly are the ones which have turned around the corner, and they have started growing at a good pitch. To answer your question, we are not seeing that there is any tapering down in terms of demand at the T3, T4 rural markets. And sir, lastly, in terms of margins versus competition coming from newer categories, some like steel blares have entered the paint category, Seeing good margins. So what kind of margin range do you see as a safe margin for not attracting customers, New players in the competition in the market. See, that's a very relative thing in terms of, you know, if the new Competitor who's coming in is they are operating in some low segments at 6% to 8% or 10%. For them, even 15% would be higher. So I think it totally depends on their orientation in terms of what they consider as a good margin. As I said, we are very clear that We will look at margins which are sustainable, and we will look at possibly the consumer with respect to our pricing so that we are able to offer a customer A good, you know, value for the price we are charging to that extent. And therefore, at the moment, what we see is that that the consumer is a far more stronger area to look at rather than looking at competition and what they can get in and what they want really. Thank you, sir. Sir, our next question is coming from Mr. Adith Soman, requesting Mr. Adith Soman to please ask his question. Yeah, hi. Thanks for the opportunity. A couple of questions from me. Firstly, did you see any sense of any increase in channel inventory in the period? Because as we sort of in anticipation of price increases or is this something that is also giving you sort of some confidence in volume growth in Q4 for example? So till the time the price increase is not announced, people will not stock, and that is something which we are seeing in the market very clearly that, People, there is no inventory in the network which has gone up or in the pipeline to that extent. What we see is that we have also not put any pressure in terms of talking up inventory with our retailers to that extent. And we have a strong reason to believe that whatever has possibly got sold from us has got sold in the secondary as well. Understand. That's very clear. And in terms of pent up demand, is there a better way of looking at it just looking at 9 month growth given that Some of those consumers who missed out on paintings in April or May came back to paint in October, November, December when conditions were better. So there's still I would still think that there's some room that in 4Q, since you still are down y o y on 9 months, that some consumers would Incrementally still come back in terms of pent up demand. So see, actually, what, the trend is very clearly that, You know, if the if there is a whole painting which is related to the repainting or the maintenance, Okay? That will always kind of, never go down. It will get only deferred. So it's very difficult to kind of say that what component of the deferment has kind of got subsumed in quarter 3 and what possibly will come in quarter 4 or quarter 1 of next year to that extent. That is point 1. 2nd, I think, where there would be an opportunity loss would be that, occasionally painting where people would have kind of got into a marriage or in terms of at the home. I think that is a painting cycle which you would have kind of missed and possibly it would not come back, till the time there's another event happening in the same house to that extent. The 3rd area is the overall area of construction. So construction, led painting, which is a new housing which is coming, We'll always have a component of deferment to that extent and not an opportunity loss to that extent. So what we have reason to believe is overall to that extent, Even if in terms of some pent up which has got consumed in q3, there could be some pent up which would come in q4 and q1 as well, but very difficult to quantify really that what percentage is pent up and what percentage is new kind of a zone. Understand. Very clear, sir. And just one, in terms of the gap between volume growth And revenue growth, so this would largely be newer customers being added at lower price points, right? No, If you see that these gaps have been there for some time in our overall value and volume sales over the various quarters to that extent. And we have been very clearly saying that there are segments which are like waterproofing, undercoats, The value based emulsions, the smart products which are there to that extent and some of those products are going at a far larger clip as compared to the luxury and the premium products and that is what is kind of creating this gap between the value and the volume. It's not the new customers who come in because the new customers can come at any price point. It could be at a luxury point. It could be at a premium. It could be at the economy. But in this quarter with some of the demand coming back in larger cities and with larger remulsions, it should have narrowed, right, but we haven't seen that happen as well. Yeah. But, what we are also seeing is that, with the luxury and premium also growing very well, the other set of products which I mentioned are also basically growing much higher than what they were growing earlier. So it really balanced that whole thing and the gap is there as you see it what it is. Understand. Very clear. Thanks for the clarification. Thank you, Mr. Aditya. Our next question is coming from Mr. Varun Pratap Singh, Requesting Mr. Varun Pratap Singh to please ask his question. Sure. Am I audible? Yes. Yes, sir. You are. Okay. Thank you very much. Sir, congratulations on a very great set of numbers. And I think most of my questions have been already answered. Just wanted to, Amit sir, have your comment on this home decor segment? I understand, last quarter, you mentioned that we want to move from a surface decor to entire decor solution for customers. So and it was a very nice video that you played, during this conference. And as a customer, I could, you know, Kind of, and, emphasize that what kind of solution that Asian Paints is, willing to offer or what I could get, get as a customer. But, sir, if you could highlight in terms of what are the competitive strength that we are creating You know, to make this category very, very large, I understand currently it is highly unorganized. At the same time, you I mean, anything that you wish to comment on IKEA? Because Aikai is also getting very aggressive into this entire home home decor thing. So on product level, how do we wish to compete? And second question in same category is, who are we creating this solution for? For a premium customer, economic customer? I mean, How if you could give some clarity on the competitive strength on product level as well as the target audience or customers. Okay. You know, how we look at in terms of what are the unique points in terms of what we want to bring in, in terms of our Whole home home decor strategy is very clear. We have moved on from the point of view of just a share of surface to a share of space within the home in a very strong manner. When we look at the share of space, we don't look at only the premium and the super luxury customer. We look at, customers who are at all the price points in terms of what we see to that extent. The unique point which we are bringing on to the table is the fact that Our all our stores and our service are very highly technology led. Okay? So in terms of looking at AR, VR, kind of a situation in terms of what we have introduced, so that people are able to visualize their homes like never before and that is something which is a very strong strength, which we are really giving them a technology which is on world class standards in terms of what we have put in, and it is from a consumer's point of view and not from our point of view as a vendor to the customer to that extent. That is point 1. The second area is that, even if there is a good visualization, the customer really struggles from good execution, which comes in. And, there is a lot of anxiety which comes in with good execution and people don't really deliver what they show. So to that extent, there's the trust of the Asian Paints which come in, where we are delivering strong execution capabilities in terms of delivering what we are able to showcase to the customer. And we believe that We are doing it, in a manner that it is a very, very unique model where possibly the IKEA's of the world are possibly in a far more larger format, and they can't look at this kind of a personalization and customization, which Asian Paints is bringing as a very, very strong alternative for the customer to that extent and therefore not offering something off the rack which the customer can assemble or in terms of look at doing himself or herself to that extent. So that's something which we are looking. So, obviously, lot of unique prepositions and basically for all customers to that extent, they're not looking at only the premium customer. So sir, are you saying that we are competing on technology and execution primarily and not, more of the product point of view or some kind of strength that we wish to create on that front? See, you can never compete only on visualization and this thing. As I said, You will have to give a product which is design led. You have to give a service which is design led. You have to give something which really looks good and feels good to that extent. So it's a combination of some great products, some excellent visualization, and some impeccable execution. Sure, sir. So that's very helpful. And in terms of customers who would so we will be targeting almost every category of customers, not just 3 of them are popular. Thank you very much. That's very helpful. Thank you. Moving on to our next question, which is coming from Mr. Neel Thakkar. Mr. Neel Thakkar, please ask your question. Hello. We can hear you, sir. Please ask your question. Yes, sure. My question is we have not seen such Interest rates in a long, long time. Consequently, the home sales are materializing, and we are seeing that effect in paints industry. And also, we have seen some effect in timber and plywood industry also. And the tailwind is here to stay because these lower interest rates are here to stay. My question is empirically how momentous lower interest rates have been for Asian Paints? And secondly, Any backward integration plans? So as far as, you know, Demand is concerned, it's a combination of lot many factors as per us and interest rates are not the only area in terms of what we say. It is One of the catalysts which kind of come into the process where people tend to kind of get into more, but it is also a function with respect to A lot of things which would happen with respect to personal taxes need low income to mid income to premium housing to That extended all varies depending on which kind of consumer is really spending. So what we see currently is definitely inflation happening at the low end and the mid end. And to some extent, given the benefits given by the governments, I think we saw some something happening at the premium end as well to that extent. We are not very sure that only interest rates would be a big kind of a catalyst continuing in terms of looking at this real estate because the past records in terms of what we have seen in terms of the real estate, construction seg segment has not been very, very strong to that extent. And today, what we see is that, while the market, the money position in the for builders and so on and so forth is not so No. Great. But given the fact that the, today, the interest rates are low, it could kind of trigger off a good revolution in terms of looking at housing sector growing, but I think that we have to kind of wait for trends to kind of stabilize and see in terms of what really happens. Okay. And the second question, about any backward integration plans? With respect to what? With respect to your supply chain, any of the supply chain? No. So currently, We had 2 chemical plants as well which were the ingredients which used to go into the paint, one was penterythritol and the other was thalic. We have closed down our Thalic facility to that extent, and as such, we don't have any other plans in terms of getting into a backward integration as far as as far as raw materials are concerned. Okay, okay. That's all. Thank you. Thank you. May I request Mr. Bhavik to take The next question, please. Mr. Bhavik, please ask your question. We can hear you, sir. Please ask your question. On the water mesh plant that we have installed. You have to speak loudly, we are able to just faintly hear you. Hello. Yes, can you hear me? Yes. Yes, yes. Sir, I have two questions. One is on the water waste plant that were installed 2 years ago. Can I know the capacity utilization of those plants? So overall, today if you look at the capacity utilization is roughly at about 60%, and that is what we are kind of utilizing and therefore there is umpteen capacity available for the growth that we see in future. Okay. Sure, sir. And second one is on the kitchen business. Like we have seen the Breakeven EBITDA in this quarter. So sir, do you foresee that this growth would be sustainable in the near future and ahead as well? What we see is a very clear correlation that, if we are able to kind of, drive the top line very, very strongly and, drive the whole objectives in terms of, premiumization going ahead. I think, we would be able to, definitely give a fill up to the bottom line in these categories going ahead. But having said that, we have to be very cautious here to that extent given the fact that Because of the current conditions, the overheads have been lower, the marketing expenses have been a bit lower. So we will have to really watch the situation going ahead in terms of how really demand pans out, how we are able to look at the premiumization. But I think the fact that we have got it, I think, is a good boost to looking at what we have done in the current quarter. Thank you, Mr. Bhavik. With that, we close our question and answer session for today evening. May I now request Mr. Amit Singhal to kindly share his closing remarks. So thank you all for joining us for this Investors Meet. Sorry for the glitch in the Meet. Sorry for the glitch in the beginning in terms of getting the presentation on, but I think it's been a great session in terms of lot of incisive questions coming from all of you and wishing you all the best.