Good evening, all of you, and thanks for joining us to discuss Asian Paints Q1 FY24 earnings. I'm Sunila Martis from Investor Relations, and I'm happy to welcome all of you here today. Today, we have with us our MD and CEO, Mr. Amit Syngle. We also have with us Mr. R.J. Jeyamurugan, our CFO and Company Secretary. We also have Mr. Parag Rane, AVP Finance, joining us. I would now like to welcome Amit for his opening comments.
Hello, everyone. Welcome to the investor conference for the Quarter O ne of FY 2024. I think it's a pleasure to kind of see all of you here. Let's kind of look at in terms of what are the headlines here. We have always spoken about delivering joy since 1942, and as a brand, we exist to beautify, preserve, transform all the space and object, bringing happiness to the world. I think this is the core value we have been speaking in terms of where the brand is and where we want to kind of go forward.
Overall, when we look at the Quarter One of FY 2024, I think it has been a strong quarter from a point of view of overall volume growth, which we have been able to deliver, has been a consistent promise and what we've been seeing very, very strongly for the last 12 quarters in a strong manner. We registered double-digit 10% volume growth, which came over a four-year period was clearly a strong double-digit 17.5% see in terms of what we see. Even the value number was relatively stronger in terms of what we see, about 8% in terms of what we registered. Please remember, this was a very, very high base last year, where we had grown by value of about 59%.
It was also a price increase base and also growing over a lower COVID base of that extent. I think coupled with that, 8% on that is still a relatively healthy number in terms of what we see. Similarly, the volume base was strong at 37%, over which the 10% growth has come in. We see that across geographies, there's a broad-based growth which has kind of come in to that extent, which is has a confidence that it was a strong quarter in that way.
When we look at overall for the last few quarters, you have been seeing this, that I think this is something which we have been strongly speaking for quite some time, and that the result is consistent in terms of looking at the volume-based growth in terms of that. So the four-year CAGR over the various quarters have been clearly, if you see, the band of about 15%-20% very strongly. I think that is something which is a strong communication in terms of our commitment to overall growth, in terms of what we have been keeping pace over the few quarters as we see previous. Going ahead, I think if you look at some of the parameters in terms of how we would qualify the quarter.
First of all, I think the good part is that compared to Q3 of FY 2023, we saw the rural growth definitely improving. I think that the rural growth was coming closer to the urban markets to that extent, which is a good sign in terms of what we're seeing, saw in Q1. I think we saw almost similar growth. I think over a period of time, we are seeing that in four years, the CAGRs across rural and urban areas are kind of same. The overall product mix was led by, you know, the economy and premium range kind of growing. The luxury range was probably a bit down to that extent, but both economy and premium range did well.
In terms of specifics, we saw the area of, you know, SmartCare waterproofing, which has been on a very, very strong growth over the previous, you know, quarters you have seen. I think that kind of continued to maintain growth. The wood finishes, which is a strong area with lots of premium finishes there, grew quite well. Enamels, again, which has a premium component, grew well. The economy emulsions, which basically get into the bottom of the pyramid in terms of people who are coming from the unorganized sector to the organized sector, did quite well overall to that extent. Our distribution pitch in terms of expanding the footprint at Asian Paints, continued in a strong manner. We had reported about 1.5 lakh retail points earlier till the end of last year.
We've kind of really added good numbers in terms of going there, almost about 6,000-10,000 retail points, which we have been able to add, or in the Q1 period, which is a strong kind of signal to the market in terms of that we would like our presence very, very strongly again in every geography as we kind of go ahead, even with respect to the T3, T4 towns. Services has been a strong pitch, I think this is something which really kind of differentiates the Asian Paints in a very strong manner. Our Safe Painting Service, which comprises of a trusted contractor service as well, has done extremely well.
Now we are present in more than 650 towns, and the revenue almost doubled in Q1, which was signifying that, today, I think the trust levels in terms of the service are very high. We speak of a fairly high NPS score, which comes in this service as we look forward. Overall, from the point of view of retail versus projects business, the projects institutional business grew faster, and it was quite good, led by good construction activity, which propelled the builder success. We saw good spending from government, and also factories did quite well. I think these segments have been strong, and therefore this B2B part of the business has been also spearheading growth in a very strong manner for us.
From a point of view of innovation, again, new products, again, have been fairly consistent, and we've been speaking about the band of 11%-13% contribution to the overall revenues, and I think that we have been consistent. This quarter also, we saw about an 11% contribution coming in there to that extent. Overall, we have already announced that there are various expenditures which we have committed in terms of going forward. We had spoken about almost INR 8,750 crores to be spent over the next three years. Today, I think, the overall capacity expansion has been going on pretty well, and we think we are on schedule for all our capacity expansions, which we are seeing going ahead in this year to that extent.
I think this gives in brief in terms of the larger area which is at work. I spoke about innovation, this being the leader, we kind of really appropriated this product, which is called Nilaya Naturals, in terms of what we have introduced. This is a super luxury product at the highest point, which today, no one invokes in India. This is something which is a totally organic emulsion, which kind of comes in, which is packed with 90%, you know, organic materials, which are earth safe, to that extent, with more than 200 shades.
Got a very good vintage matte look, very popular amongst architect designers, and therefore, this is our attempt to kind of really take on the super luxury space in a very strong manner and offer something from the point of view of organic and green in a strong manner. We look at really enhancing the, you know, the decor on the walls in a very strong manner. As part of that, we bring these finishes from the world. These are large set of Italian finishes, which we have introduced in the market, and this again is very popular amongst the AID segment. Some of these finishes are very expensive and again, in the super luxury category in terms of what we speak.
This really kind of takes the market and really makes it a point at the top end in terms of what we are doing in the market as we kind of go forward. Some clear innovations, products which have very, very strong propositions which kind of come in. We are talking here in terms of a luxury exterior paint, which comes with almost 15, 15 warranty, which is for durability, for algae, and for the waterproofing. A very strong statement again, on the luxury part. We are looking at SmartCare Hydroloc Xtreme, which can be applied on almost 70% damp walls to that extent. Again, a technological innovation which is there. Lastly, an anti-insect paint, which again is something very strong innovation, which kind of keeps common insects away to that extent.
I think all things which are really world-class from the point of view, what really comes in, including Purofin, which is one of the few finishes to kind of really look at the mid-premium segment of wood finishes in a strong manner, which is what, for the first time, a PU coming in this range. As I said, every of these categories in the premium and the luxury space in terms of what we are looking at taking on. Overall, I think the shifting from the surface to the share of space business, which is our home decor. I think this has been a strong journey which we have been pursuing over the last few years.
We today see, we are, at the end of the last year, we are about 4% of our decorative revenue in terms of what is there to that extent, and this is what we are steadily increasing as we are kind of going forward. Today, we have become clearly the number one integrated home player, in terms of really offering customers decor under one roof through our, almost 44 Beautiful Homes stores, which we have kind of put across the geographies in India. This is something which makes us very strong in terms of catering to the customer, because, as we said, that, this whole part of home decor complements the coatings part in a very, very strong manner, because you are part of the consumer decor life cycle in a very strong manner.
We have become number two in the fabric and the furnishing business. We have a co-branding arrangement with Pure Brand, which is there in the market. We have got into areas like wallpaper through collaborations with ace designers like Sabyasachi, Sarita Handa, and we have done also collaborations with partners like Jaipur Rugs. We introduced the area of lighting and, you know, flooring. Lighting, flooring, and also the doors and windows with uPVC in terms of the category, which is also something great, which is happening. Finally, we are also now number one in wall covering and texture.
What you see is that, literally, in terms of most of the categories, we are becoming amongst the top two kind of players in the market, including becoming the number one player in the integrated décor area. As part of this, we already have a kitchen and bath business, which has been there. The kitchen business has been doing well. We experienced growth in the SKD business, which is there. The components business was slow. We had a high price increase base last year to that extent, from that point of view, if you look at in terms of overall kitchen business, we were at a 12% kind of a degrowth, which we saw to that extent in terms of our revenue.
As far as the PBT is concerned, we improved our margins in the kitchen business, and we were at about a -2 growth, kind of a overall PBT in terms of what we looked at. As far as bath is concerned, again, bath was affected by a strong base last year on a price increase base to that extent overall. We almost were break even here against INR 4 crores kind of profit, which we had made last year. I think we were quite affected, given the fact that the bases were very, very high, abnormal because of the price increase. We feel that, you know, next quarter will be much better in terms of what we see in terms of the two businesses going forward, as we kind of look at ahead.
Some of the thing again, luxury kitchens, which are being launched under the Crest brand by Sleek. This is something which all are in the range of about INR 12 lakhs-INR 15 lakhs per kitchen. I think again, a lot of work happening at the luxury end here in terms of what we are looking. We also have now our Nilaya furniture, which is literally having the European sensibilities in terms of what it kind of comes to it, along with the way the Indian comfort kind of seeps in. I think, strong kind of introductions here, which have been introduced at our BH stores, to that extent, and these are getting very popular.
We are also kind of launched something called furniture, which kind of consists of vanity units in terms of crockery, entertainment units and so on, so forth. This is a new launch, along with the wardrobes in terms of our BH stores, in terms of going forward. I think it completes the various areas of aspiration of a consumer from where it kind of comes in. As far as the 2 new acquisitions are concerned, White Teak did extremely well at almost about a 28.4% growth. We also had good profitability in terms of the PBDIT, which was coming from this business. We have kind of added more stores, both company-owned and franchise-owned stores, apart from the fact that the 44 stores are selling this White Teak.
We feel that this is something which is very, very strong. We've kind of acquired another 11% additional stake in June 2023, taking our share to about 60% now, so it has become our subsidiary. Strong business. As I said, we are number one in terms of decorative lighting here. As far as we look at Weatherseal, last year, we had doubled the sale, and this year also, we are doing quite well. We have already registered about INR 9.8 crores of net sales, and therefore, really kind of expanding these businesses. We think both the businesses have done very well in Quarter 1, and we have strong hopes in terms of taking it ahead as we kind of look at the year ahead in terms of what we want to do.
Some snaps of a new format of Beautiful Homes, which we have put. This is called the Beautiful Homes Studio. This is the next frontier in terms of our journey on the home décor. This is a store which has come in Chennai, in Anna Nagar, and it's about 17,000 sq ft, but it kind of is a store which is comparable to a store which would be in Paris, London, or New York, to that extent. Very high-end luxury in terms of there, and it has really kind of taken Chennai by a storm in terms of from where it comes in. It is really high-end from the point of view of offering, you know, decorative lighting, furnishing, furniture, and lots of other areas in a very strong manner.
I think this is a journey towards taking the luxury, and again, in a strong manner as we kind of go ahead. We look at the international business, you know, it comprises of our operations in Asia, Middle East, Africa, largely to that extent in terms of the overall thing. I think, it was a mixed bag in terms of the international business. If you look at the businesses in Middle East and in Africa did quite well overall to that extent, including South Pacific. I think where we were hit was Asia, largely in the case of Nepal, where we found. Where I think, there is a little bit of an economic crisis going on. There's a liquidity crunch, and I think there is where we degrew.
This had a quite effect on the overall Asia business, and it also had a effect on the overall global business. In fact, what we have been seeing is that in some of the markets like Bangladesh, Sri Lanka and Egypt, there has been devaluation of currency in a very, very strong manner. If you were to kind of see this degrowth of 1%, but you were to convert it into constant currency terms, it kind of comes to about a 4% growth to that extent, which is there. In that sense, I think the overall business is still about 4% positive in terms of how we see in terms of the value to that extent.
As far as profitability goes, a large part of profitability comes from Nepal, and as I said, the Nepal market has been down to that extent. Overall, we registered lesser profits from last year, but there were still overall profits of about INR 27 crores in terms of what we see in this year. I think, the PBT levels have dropped down, but we are hopeful in terms of that Asia recovers as we kind of go forward. A lot of business comes from Nepal, Bangladesh and Sri Lanka to that extent in our international foray. Our industrial business has been the star business in Q1. A very, very strong top line growth coming in.
The PPGAP business, which is the business which caters to auto OE and refinishes market, has done extremely well at about a 13% top line growth, with both auto OE and driven refinishes segment doing quite well. We've got good realizations in the market from the point of view of our price, prices which we had with our B2B customers. There has been an effect of the softening of the raw material prices a little bit to that extent, which has kind of led to quite a very, very strong number coming in terms of the PBT, if you see. The number is really very, very strong and really heartening in terms of, you know, what it augurs for us.
It is almost 17% to about net sales kind of a zone. When we look at the other business, which is the general industrial business, which is PPGAP, which there also, I think the growth have been very, very consistent. If you look at the last almost 10-12 quarters, they have been growing in double digits to that extent. We delivered a strong almost INR 300 crore here, with a 22% kind of a growth coming in. Very, very strong. The profitability numbers are also as strong, which is obviously, I think, aided by the softening of the raw material prices. I think a lot of work in terms of improving the margins overall.
I think both businesses are going from strength to strength, and this is really kind of adding to the brand in a very, very big way. Overall, if you look at it, when we look at Decor business also, I think, you know, the margins, the gross margins have kind of gone up to that extent. We are looking at almost a nine-quarter high in terms of the gross margins to that extent. We have seen deflation in the last quarter, which is Q4 of FY 2023, and we have seen some deflation of about 2% in the current quarter, Q1 of FY 2024.
Therefore, we see that the overall gross margins have gone up to about 43.4%, really, and this has been also aided by a lot of work which had been doing with respect to the formulation efficiencies and sourcing efficiencies in terms of what we have brought into that extent. I think, overall, this is a strong number in terms of what we have been able to get as far as the overall gross margins are concerned. In totality, we look at the financials. At the standalone level, if you look at the top line, it's about a 7% growth led by double digits, almost 10% volume growth, which kind of comes in, which is very, very strong.
As far as the gross margins are concerned, we are almost up by 550 basis points. If you were to kind of look at from the point of view of last year's same quarter to that extent, very strong, 43.4% kind of a margin, which is kind of coming in. If you look at the PBDIT margins, again, very, very strong. They have gone to almost about 24.7% from 19.4% in Q1 last year. Sequentially also, they have gone up almost by about 170-200 basis points to that extent. Strong kind of growth happening with respect to margins, obviously aided by some of the softening in terms of the prices.
This has obviously given us a lot of impetus with respect to even the past numbers in terms of what you are seeing right on the screen. On the consolidated, the numbers are not too different. Obviously, top lines are more or less close to the standalone number of 7% in terms of what we have got. Again, the gross margins are strong in terms of you can look almost about 42.8%, again, a 530 basis points kind of an improvement in terms of what we see. PBDIT margins, again, here, compared to the last year, Q1, we see 23.2% against an 18.1% number to that extent. Even on a sequential last year quarter, we see almost a gain of about 190 basis points to that extent.
I think strong, and therefore the path has been fairly strong in terms of what we have been able to see. There has been some kind of adjustments as one time adjustment in terms of what we have made, which what we have kind of indicated as a note in the financials to that extent. Overall, I think even if we were to take those one time kind of benefits out, the growth in terms of both PBDIT as well as overall numbers has been quite strong in terms of what kind of really comes out. What are we saying? That overall it's I think, over to a good start as far as this FY 2024 is concerned.
Our foray of double-digit volume growth, kind of continues, which kind of gives us confidence in terms of our performance, in terms of where it comes in. Home Decor, while kitchen and bath have been a little bit sluggish, but overall, a plethora of other categories, fabrics, lighting, uPVC, all kind of giving us good growth. We think as a combined business, it's something which is galvanizing us in a very strong way and giving us strength with respect to our core business as well. As I said, it is making us part of the consumer life, decor journey in a very strong manner to that extent.
The industrial business, obviously on a clear uptick, giving us double-digit revenue growth, and this is a business which has been growing at this rate for the last quite a few quarters to that extent. Clearly, the journey has been strong in terms of what we see going ahead. International, a little bit less up to our expectations in terms of what we expected. I think the ForEx tightness, the devaluation, and so on and so forth, are a little bit of challenges, but we still see that, I think if we are able to kind of overcome Asia business, I think it will kind of give us good growth and good profits as we kind of go ahead to that extent.
Overall, from the point of view of, you know, operational efficiencies and other things, a lot of work which is happening both from the point of view of sourcing, formulation. I think this is adding to the softening of the raw material prices and giving us this kind of benefits in terms of what we are seeing to that extent. Net-net, I think, a great start, what we see. Just a flash onto the ESG. I think all of you would have seen our annual reports, which has a strong component of intertwining the business with the ESG numbers in a strong manner. I think a strong progress with respect to the three areas of environment, social, and governance, in terms of what we have kind of taken up.
I think these areas is something which we are steadfastly kind of pursuing within the organization as we look forward. Just to give an idea, you know, if you look at whether it is from the point of view of water replenishment, or it is with respect to the energy, which is a renewable electricity to that extent. Or it is with respect to the certain areas typical to a chemical industry, in terms of being on a hazardous waste or effluent generation, or in terms of even the scope of 1 and 2 emissions, which kind of come in. I think the progress has been very, very strong. The purpose which you see is what we have kind of achieved in the FY 2023.
We have looked at two buckets, which is the 2025 bucket, which you see in the gray, and the pink bucket, which is a 2030 bucket, which is there. I think, I think it's the audacity of the brand that we are upfront kind of committing to how we are committed to the ESG framework and what we are doing internally. On the social front also, today, a lot of work which is being done in terms of being water positive to that extent. We are getting into a lot of areas which kind of generates water in the environment. Looking at, you know, the whole area of healthcare initiatives and training people from the point of view of making them earn livelihoods to that extent.
Overall, employee engagement, other areas have been strong, but I think this is a strong area of focus for the organization as we kind of go ahead and look at it going ahead. Lastly, I think, all of you would be quite eager in terms of knowing what is our outlook. The outlook, obviously, we are seeing that the Indian economy is still, pretty good as compared to what we have seen some of the signs in terms of the world economy, whether it is Europe or U.S., or even China to that extent. I think, we will continuously push for aggressive growth. Our growth focus, definitely would remain as we kind of go ahead to that extent.
As I said, the rural demand has been good in quarter one, and we see that, given the signs of the monsoons today are quite good in terms of what they are appearing. We would be kind of banking on rural growth definitely going forward to that extent. Raw material prices, while I think they have been going down, we are seeing some increases. Crude is at an all-time high in terms of what we see once again to that extent. We do not know in terms of what trajectory the dollar and the rupee take as we kind of go ahead.
We are watching today's environment in terms of saying where is the raw materials kind of stabilizing, and then we'll take a call in terms of how we do look at our pricing going ahead. As far as the festive season concerned, I think we are looking at it very, very strongly, because this time we have a longer season, and therefore, we think it should be a good season in terms of going ahead. Our home decor initiatives, I think, are strong, and I think they will kind of keep on multiplying going ahead, and the industrial business will keep on adding to the overall deco business there.
As I said, I think we are a little bit watchful on the international geographies because, I think, unless for us, Nepal and Bangladesh, you know, kick off strongly, I think the Asia business would kind of remain under suspect. I think we are hoping that, they also turn around the corner, and it should be good in terms of going forward. Overall, I think, we have a good outlook in terms of, going forward, in terms of how we are looking at the, you know, the coming quarter, and therefore, looking at the performance in H2 in a strong way. Thank you so much.
Been joining on Zoom video platform and audio conferencing. Requesting all participants joined via Zoom video platform, use the Raise Hand feature, ask a question. Kindly unmute when given a chance to ask a question. Please say your name and your company name before asking your question. Kindly restrict your questions to only two due to time constraints. Request all participants to kindly rename yourselves with your name and company name. Participants connecting via Zoom video platform can post their questions on the chat box too, and we shall ask on your behalf. People joined via audio conferencing, please press star one to ask your question. We have Mr. Abneesh Roy joined us via Zoom conferencing. Sir, request you to kindly unmute yourself and ask your question.
Thanks, me from Nuvama. Congrats on good numbers. My first question is, when I see your gross margin, which is at a nine quarter high, and when I see, for example, other FMCG categories, like soaps and detergents, wherein also, the gross margin expansion has happened, local and regional players have come back strongly in terms of either pricing or in terms of local marketing. Could you take us through what is happening in the 30% local market share, which is there? Are you seeing players, again, cutting prices, for example, and are they also, starting more of advertising? What is your response to that, because that's a large market, and you are equally aggressive in the lower end of the market.
If you look at, you know, for us, the bottom of the pyramid is a very, very strong market, we look at basically getting the unorganized customer into the organized brand in a very strong manner. I think our work kind of emanates in two manners. One is in terms of expanding our footprint in a very strong manner, so that we are able to reach out to smaller towns very strongly. Second, I think we have a very strong program in terms of below-the-line kind of marketing initiatives in terms of what we place in the market.
Whether it is the work around the influencers, whether it is the work around, you know, wooing the consumer, I think, or it is with respect to even the work around in terms of looking at brand displays at the shops, I think we do a huge amount of work there to that. A large expenditure possibly goes to that extent. Similarly, I think, the differential schemes to kind of really woo the retailers to stock the material and sell them at a strong incentive to the customers is also kind of what we kind of do to that extent. Our concentration has been very strongly led by below-the-line initiatives like this, and upped with a strong focus on above-the-line kind of advertising, which we are kind of looking.
I think going forward, we are looking at really giving an impetus to our advertising in terms of a very, very strong manner and looking at these below-the-line initiatives to that extent. What we see very clearly, I think the strength of the brand is there, where we are able to command a premium with respect to overall the kind of selling prices are concerned to that extent. Despite the fact that we see some discounting by the local players and, in some cases, also advertising to that extent, I think today, our quarter one kind of results also indicate that in that segment, we are able to kind of really get still good numbers and good response overall to that extent.
I think, net-net, our initiative of the above the line and below the line, I think will continue in a strong manner. We would be strong with respect to our initiatives in terms of what we want to kind of put to kind of woo the consumer. We might even look at in terms of saying that as we kind of go forward, depending on how the raw material prices fare out, we might even look at in terms of saying that if we need any price kind of corrections as we go ahead.
We now have Mr. Shirish Pardeshi joined us via Zoom. Sir, request you to kindly unmute yourself and ask your question.
Yeah. Hi, good evening, Amit, thanks for the opportunity. I do understand on a base of 37% volume growth in the base quarter, so the volume is about 10% growth. Just wanted to understand, because you made some remarks, the premium luxury segment is not to the expectation, and the middle and lower end has grown faster. Is this the industry trend? Because the local competition is picked up very well, and I think there is a pressure and, obviously, the demand is higher at the lower end. In that context, I think I do understand that you have prioritized the gross margin. Do you think, in the medium term, we have a pressure to drop the prices?
Overall, I think, you know, there is no middle and lower and premium and luxury. There are only three segments. There is economy segment, there's a premium segment, and there's a luxury segment. What I said was that the economy and the premium segments are doing well, and the luxury is something which possibly is a little bit down. If you look at the market construct, the economy segment is the biggest segment which is there, followed by premium and followed by luxury to that extent. You will have to kind of perform in the economy segment if you are looking at overall volume and value growth in terms of what you have to kind of turn the tables on to that extent.
As I said, I think the premium segment has also done fairly well, riding on wood finishes, riding on adhesives to that extent, and riding on enamels. Overall, we think that the premium segment has been very, very strong. I think the decision with respect to pricing is totally related to in terms of how the whole area of raw material prices pan out. We are now seeing some resurgence in tube prices. They are at an all-time high in terms of what we see. Some part of the raw materials are also going northwards to that extent. I think we are watching it very, very carefully, and overall, I think, if the trends are very clear, we would possibly look at price correction only in that case, in terms of going forward.
Having said that, we are not seeing some of the local companies, at least in the paint industry, really doing very well in terms of looking at what is there. Our thing is that possibly we would have kind of, if nothing else, gained from some of the local competition in terms of the overall economy segment.
Okay. My second and last question on the non-deco part of the industrial business and the home improvement. The industrial businesses showed the momentum. In your sense, is it completely normalized because auto OE and auto refinish business has done exceedingly well despite the high base. In that context, is there further more recovery is expected or this is a normalized base and we can build on this? Second, on the home improvement, exactly what has gone wrong? Because both the businesses, Sleek and Ess Ess, is declining very sharply.
Yeah. Overall, when we look at from the point of view of the industrial business, I don't think so it has reached a place where it cannot grow to that extent, and we did not have any price increase basis there also to that extent. I think they were normal basis in terms of what we kind of saw last year in terms of the overall business to that extent. I think the general industrial business comprising of protective paints and powder coating is something which is up on the rise. I think what we see is that not many industries are coming up.
I think players are expanding, we see a lot of opportunity in the government infrastructure business, which is also kind of a lot of money is getting pumped into that segment overall to that extent. As far as auto is also concerned, I think both two-wheeler and four-wheeler, I think we are seeing strong kind of listing with additional lines, the whole area of EV kind of coming up and so on, so forth. I think both businesses are promising that the uptick should continue in terms of the overall demand as we kind of go ahead to that extent. As far as the overall home decor business is concerned, I think four categories have grown and two categories are down to that extent. I don't think so, that things are terribly wrong there to that extent.
The two businesses which have regrown a little, we had very high bases because of the price increases which were there to that extent, and I think which could possibly get corrected as we kind of go ahead in terms of Q2 and Q3, in terms of possibly the quarters to that extent. I think as far as the kitchen FKD business is concerned, I think we are very, very buoyant because we are number one in terms of that FKD business to that extent. Even with respect to the bath business, I think it will definitely come up going forward to that extent. Overall, I think net-net, four categories have done well, very clearly, in terms of what is there, and two categories have come down.
I think, overall home decor, I don't believe that it is something which is not very great. Overall, I think it's a really good growth we have kind of got in the home and decor category, given the other categories have grown well.
You think second half is going to be better, as compared to the quarter one weakness?
We think the business will definitely improve because the weakness was coming also because of a little bit of a base, which was very high to that extent. Definitely there will be improvement.
Okay. Thank you, Amit. Thanks for the opportunity, and all the best.
We now have Mr. Avi Mehta joined us via Zoom. Sir, request you to kindly unmute yourself and ask your question.
Hi, thanks a lot. I just wanted to kind of build on the margin point a little to understand that better. Basically, are there any one-offs in the other expenses that we saw this quarter? The second bit also related is because you are pointing towards resurgence of input costs, would you suggest that the current gross margin performance is something that could be at risk?
I think there are if you take the two one-offs which are there, one is in terms of some dividend income, which we have got from our industrial JV. The second is that there has been a provision reversal with respect to the sick leave kind of entitlement in terms of what we have made as a positive change for our employees going forward. I think if you take out the one-offs, I think the margin provision is still very, very healthy in terms of what it kind of really augurs. I don't think so the one-offs is kind of really influencing the numbers in a very, very strong manner to that extent.
Secondly, in terms of going ahead, what we feel is that, you know, the overall margin numbers also are very, very closely kind of governed by how the raw material prices kind of pan out in the market to that extent. We have seen that during the whole period of inflation, when the inflation levels had gone to about 20%, 25%, 30% level, despite taking price increases, you know, the PBDIT margins had gone almost to about 15%-16% levels to that extent. I think today, the raw material prices and the environment makes a huge impact with respect to that. We feel that, for the year, our commitment on the overall band, which we have kind of made of, the PBDIT remaining between 18%-20%, I think should be sacrosanct in terms of going forward. I think that is something which we are committing that for the year, that is something which should kind of remain.
Okay, sir. No, I mean, I was trying to push the bubble, saying that given the Q does not have any one time, not a material one time, what we saw almost about 23% margin, there logically does not seem any risk to that continuing, and then that could be possibly an upside risk to your guidance. That is what I was trying to appreciate or understand better.
Yeah. I think it depends, as I said. Yeah, you're right. As it depends also in terms of that, if we really look at some changes with respect to pricing in other areas, then possibly it would, you know, kind of come down and might not remain in this level in terms of as we see it in terms of going forward. I meant only that to that extent, that if which is there or there is in going forward in H2, we see a larger inflation kind of coming back. I think we are in a good positive band in terms of what we're looking for the year.
Got it, sir. Sir, just a clarification, the festive demand strength should reflect in the next quarter because the channel gets built. That's just I want to reconfirm that part. The longer festive period benefit should go through in the second quarter. Is that understanding correct, sir?
What happens is that, see the retail season, is about at least about 45 days before the festival. If Diwali is in the first week of November or in the first 10 days of November, normally what happens is that the period from, say, 15th September to, you know, October end, would be a strong retailing season, which kind of comes into that extent. We feel that the larger impact would come into Q3, but an impact should come into the quarter Q2 as well, because there is a retaining period which kind of gets impacted by the festive area to that extent. We would see that both quarters possibly should show an uptick with respect to the long, festive season, which is there.
Perfect, sir. That's all from my side. Thank you very much, sir.
Requesting participants to restrict their question to only one. Moving ahead, we have Ms. Sheela Rathi joining us via Zoom. Ma'am, requesting you to kindly unmute yourself and ask your question.
Thanks, thanks for taking my question. My first question was with respect to the distribute, you know, the dealer network, which we have added this quarter, about 6,000 dealer points, and this year we have guided to about 10,000-15,000 dealer points. Just wanted to understand that, you know, and we are looking to get more into smaller cities. So here, what I wanted to understand is, do we have a number in mind in terms of how many AP and AT dealers a small town could have? You know, generally, how long does it take for the dealer to generate the requisite ROI? Has there been any change in terms of the timing now on generating the ROI? You know, companies like yours and other competition are also talking about being more aggressive with respect to adding the dealer points.
What we see is that today the opportunities, obviously, in terms of the dealer points is that dealer and retail points is that we keep on looking at one, not only the smaller towns and which are coming up, but we are also looking at a lot of suburbs of the bigger cities also, which are expanding quite a bit to that extent. It's a combination of looking at retail points coming at both these points to that extent. We also feel is that today it's a journey in terms of what the retailers start. They might do a certain amount of business in a year, and they kind of keep on growing progressively over the next three to five years to that extent.
Therefore, the dropout of a dealer, what we observe, from the point of view of year one dealing with us to kind of going to year three, year four, is not very high to that extent. We look at putting a tilting mechanism also at a lot of retailers to that extent, which gives them the flexibility in terms of earning more money, given the fact that the retailer is able to cater to a larger range of SKUs, which he can offer to the customer as he kind of goes forward.
In our experience, what we feel is that this is a kind of journey which will continue, where we will, given the vastness of our country and given the opportunities of now, the larger road network, government infrastructure, the way it is kind of developing, I think, the opportunities are fairly huge. For example, if you look at the entire J&K portion today, what the opportunities have opened are very big. Similarly, you look at Northeast, given the connectivity of roads, which is coming. I think, these areas of expansion, will going to continue. We feel that, right from year one onwards, I think, people get their ROI to that extent, because at Asian Paints, we offer them a very, very high rotation of the inventory to that extent.
Therefore, year 1 itself, they get the ROI in terms of growing, and they keep on growing as the years go by. Yes, some 5% of the retail network might drop out because of some liquidity crunch or some other personal problems which might come in, but overall, I think the business model is pretty strong.
We have not seen any change in terms of the pattern versus, say, three years ago, in terms of, you know, the competitive intensity among the dealers?
No, I don't think so, because I think the expansion kind of really continues only because of the fact that, as I said, overall connectivity, the whole economic activity is only increasing all across, and so is our population. I think the consumption is also kind of going higher, given the housing, which is kind of coming to that extent. I think, we will not see any change in this, for the next, I think, five to 10 years.
Thank you. That's it from me.
We now have Mr. Rishi Mody joining us via Zoom. Sir, I request you to kindly unmute yourself and ask your question.
Mr. Syngle, my first question is, we've seen the kitchen and bath business now kind of struggling to scale up immensely. If you could take us through the journey, what have been the challenges? What are the bottlenecks today? How are we solving for it, and where are we in the journey before we can push the pedal on the gas to scale this up massively?
Okay, I think to my mind, when you look at the last three years of journey, first year in kitchen and bath, we grew at almost about 35%. Second year, again, we would have grown at about 30%-35% overall. Last year, we grew almost about 10%-15%, kind of a level in terms of the business, so last year was a bit slow. This year, in the first quarter, we are seeing to some extent, basically, the business slowing down because of the large bases in terms of what we have seen. I would not kind of really say that the business has not grown.
I think last three years overall, today, I think the combined business of the two entities is about close to about INR 830 crores as we look at the last financial year closing, to that extent. Therefore, this business has grown from about INR 500 crores to about INR 850, INR 830 crores, to that extent. I think that's a good increase, which we have seen in terms of the last three years. As we go ahead, I think, we should be able to add overall good growths, kind of going forward, both, as I said, in terms of the kitchen and the bath business, to that extent. Kitchen, obviously, is a strong sense.
Kitchen also has a hardware business to it, which is called the components business to that extent, which also contributes to about 40% of the total kitchen plus components, kind of a business to that extent. I think that is the business which has kind of slowed down in terms of what we see in the market, because of certain price changes we implemented in the market. Also as I said, that these price changes were done in the last year, first quarter to that extent. Overall, I think for both the categories, we are still fairly buoyant in terms of what we see, more buoyant towards the kitchen very clearly in terms of what is come, because it is in sync with our strategy on home decor when we look at our Beautiful Homes stores.
44 stores today across the country, these stores are going to about to 65-70 stores this year, to that extent. Therefore, we feel that these stores will also give an impetus to both the categories along with the project B2B business, which is there to that extent. I think, overall, we still see that these 2 businesses from a trajectory are going to be strong as we kind of look at, because the opportunity there is huge.
Hello, can you hear me?
Yeah, I can hear you.
Yeah. Just wanted to get the clarification. We are happy with the 13% growth rate for this kitchen and bath business. You don't have aspirations for a doubling of business year-on-year. Like, if you have those aspirations, what are the bottlenecks for doubling or multiple growth in this category?
Happiness is a relative state of mind. I might be happy with trebling the business also going forward, but you need to be kind of practical in terms of the way you want to kind of grow and not really kind of strain the system. We have just kind of put additional capacity for both the kitchen and the bath, which has come up in Maharashtra, so that we are able to kind of really put a strong impetus in terms of going. I think going forward, we are happy we are able to grow the business by about 25, 30% each year. That's a fairly healthy rate in terms of growth, in terms of what we see.
I think the idea here is that, you look at strong consumer propositions, and you look at possibly, equipping, your stores, your this thing in terms of really carving a niche for yourself out to that extent. I think we are taking really measured calls in terms of the way we want to kind of go. As I said, I think we should be happy in terms of, you know, getting about 25%-30% growth in this segment, which should be, I think, a good indicator in terms of our overall growth. We've always said that going forward, we are saying that the whole, home decor segment, should be closer to about, you know, 7%-8% of our, decorative sales as we look at the financial year, overall, 2025, 2026. At the end of 2026, that's the number we are gunning for. I think that would be a strong number if we are able to reach that.
Understood. Understood. There have been bit of changes at the board level. We have a new chairman, and we also have a new members joining the board. Just wanted to get your understanding on what are both of these guys bringing to the respective roles that they have been assigned? How are you viewing this appointment?
I think this is in regular course. We have Mr. Deepak Satwalekar, who was the chairman. I think his term comes to an end in September end, to that extent. Therefore, we had to announce the new chairman. We have Mr. R. Seshasayee , who kind of takes the chair. He comes with a very, very rich background in terms of heading Ashok Leyland earlier and being at the helm of lot many other companies to that extent, including in, so on, so forth, to that extent. I think he comes with a very strong area of expertise, and I think has been a strong kind of directional leader at Asian Paints in terms of his contribution to the board to that extent.
I think that's the kind of transition in terms of what we are seeing, which is a natural transition and a strong one, too, in terms of what we are looking at. Second is that we have one of our directors who had completed his term, Dr. S. Sivaram, and in place of him, we are taking Ireena Vittal, which is coming. She comes in again with a very, very strong kind of experience. She has been with HDFC and other boards to that extent, Wipro, and so on, so forth. We think, she brings in a very, very strong area of, you know, the capital to kind of really energize us from the point of view of, our thought with respect to newer businesses, technologies, and also with respect to the overall financial, kind of management as we kind of go ahead. I think that's the thought in terms of looking at these two people.
All right. Finally, just a brief briefing question. When we say entity contribution is 11% of sales, how do you define the entity? Like, what period of launch of, for these products launch within?
Okay. Normally, what we look at, the new products are defined as, you know, it takes us almost about one to two years to kind of launch the product and then sustain it. We normally define it as, you know, entity over three years to that extent in terms of the thing. That's how a new product is defined.
Okay, got it. Thank you. Got it from my end.
We now have Mr. Amit Rustagi, joined us via Zoom. Sir, request you to kindly unmute yourselves and ask your question.
Yeah, thanks, sir, for giving me opportunity. I have a question relating to margins. If you look at the Q1 margins, they were very strong, versus our guided range of 18%-20%. What do you think is the best utilization of margin from here? Would be more channel, discounting or reinvestment, or you think the price cuts? What do you think, that is the sweetest score is there? What do you like to achieve from the excess margins you have?
I think we don't really act on quarter to quarter in terms of the margins you get. We have seen the last two years, given the inflation, I think the margins have gone even lower than that band also to that extent. I think we take a considered view in terms of how the margins are emanating, and whether they are stable from a point of view of overall business and environment in terms of going forward. We would obviously be aggressive with respect to our above the line, below the line programs, in terms of what we do in marketing.
Also in terms of, possibly our share of voice in the market, in terms of our media spends and our other marketing activities, including, you know, various measures on really exciting the market through various schemes and discounting mechanisms to that extent. I think, that is first and foremost, because, we are committing ourselves to the growth, and we will not let that growth go away to that extent. We are pretty aggressive about that in terms of our, real thought, in terms of taking that forward.
I think, overall, as we kind of go ahead, and as I said, there could also be an occasion in terms of saying that, depending on how the raw material prices pan out, how the rupee dollar parity pans out, we might look at even pricing corrections as we kind of go forward. I think we will really be watchful in terms of seeing what is there, and just not react quarter to quarter, saying that, "Now I have a good fitting, let me go berserk." I think I will take a considered call in terms of going forward, and that is something which possibly is the right mechanism as we see from the Asian Paints point of view.
Okay, sir. My second question relates to, if we have to resort to a price, pass on to the consumers. We have seen in some of the consumer companies, the channel inventories get impacted, and, the channel inventory comes down, impacting the kindly sales. What do you think in our case, how the price is being implemented, and how the channel reacts to those price cuts?
As far as Asian Paints is concerned, I think we don't really depend on channel inventories a lot, because our channel inventories are to a minimum level because of the fact that, you know, we are able to really service the, you know, the retailer at least almost about two times in a day to that extent. Therefore, I think we don't really encourage too much of really loading the retailer in terms of inventories. However, in some months, obviously, if there are some stocking months which happen to that extent, and if it happens, and if there is any price corrections, we are willing to kind of give the concession to the retailer in terms of a backlinkage, which kind of happens on certain stocks to that extent.
I think, it is something which goes in conjunction in terms of really seeing that, both the organization, the brand, and the retailer, I think, we all benefit from what we are kind of doing. I think the considered call is very clearly that we take them along with us, so that even if they are stocked for some time, they should not be at a loss in terms of their stocking.
Okay, sir. Got it. Thank you, sir, and best of luck. Thank you.
Thank you.
Thank you so much for all your questions. Requesting Mr. Amit Syngle to please give his closing remarks.
Okay, it was good, in terms of, you know, hearing some of those questions, coming from your side. I think it's been. Overall, as I said, I think it's been a good quarter. I think, we are fairly satisfied with respect to the kind of overall numbers which have kind of come in. We are looking forward to the long, you know, festive season, which is coming to that extent. We feel that, today, the Indian story is still live in terms of the overall demand conditions and so on, so forth. Good monsoons coming, to that extent, and I think these are all positive, kind of indicators in terms of indicating that I think the coming period should be good one, as far as overall business goes. Thank you so much for coming and being with us today.