Ladies and gentlemen, good day and welcome to the Pidilite Industries Limited Q2 FY 2022 earnings conference call hosted by IIFL Securities Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I would now like to hand the conference over to Mr. Percy Panthaki from IIFL Securities. Thank you, and over to you.
Hi. Good evening, everyone. Thanks for joining in to this call. Pidilite has reported a very strong sales growth as markets have opened up post-COVID. In this relatively very high-cost inflation environment, they have managed their margins also very well. Without further ado, I would like to pass on the call to Mr. Bharat Puri. From the management side, we have Mr. Bharat Puri, Managing Director, and Mr. Pradip Menon, CFO. So they will take you through the result highlights, and then we'll open up for Q&A. Over to you, sir.
Yeah. Many thanks, Percy. Good evening, everybody. This is Pradip here. Strong sales. I'll start with a sort of opening set of commentary from our side, and then we can open up for Q&A. Strong sales volume and value growth was recorded as the business witnessed improved consumer demand environment due to accelerated vaccination, reduced COVID infection, and increased mobility. Growth was broad-based across consumer and bazaar and B2B segments as well as urban and rural geographies. Consumer and bazaar reported growth across all categories such as adhesives, construction chemical, and DIY portfolio. B2B growth led by continued momentum in industrial activities. I'll begin with a summary of the financial performance for the quarter and half year ended September 30th, 2021. On consolidated basis, net sales at INR 2,613 crore for the quarter grew by 41%.
Excluding the newly acquired Huntsman subsidiary, PAPL, it grew by 33%. This was led by 39.5% growth in C&B segment and 41.2% growth in B2B segment. Gross margins have contracted on account of sharp escalation and volatility in input costs. Material cost as a percentage to net sales is higher by 1,027 basis points over the same quarter last year and 375 basis points versus sequential quarter. Moderated price increases as well as sharp focus on operational efficiency have helped us to maintain EBITDA margins in our historic range. EBITDA before non-operating income at INR 550 crores grew by 7% over the same quarter last year. EBITDA for the half year ended stood at INR 907 crores and grew by 56% over the same period last year.
On a like-to-like basis, EBITDA in Q2 declined by 2% and grew by 44% for the half year. Profit before tax and exceptional items at INR 492 crores grew by 3% over the same quarter last year. PBT for the half year ended stood at INR 781 crores and grew by 53% over the same period last year. Moving on to standalone financial performance. Standalone net sales at INR 2,200 crores grew by 36% over the same quarter last year with underlying sales volume and mixed growth of 25%. This was driven by a 25% sales volume mix in consumer and bazaar segment and over 20% growth in sales and volume mix of B2B.
Our key raw material, vinyl acetate monomer's procurement rates have increased over the month from $930 in previous year fiscal to $2,000 per metric ton in April. Temporary softening in VAM procurement rates were observed between July to August 2021 with a price range between $1,600 to $1,750, still much higher than our previous fiscal years. Current rates are at increased levels of $2,300 to $2,400 per metric ton. Q2 VAM consumption rates were at $2,071 per metric ton as against Q2 2021, which is 2021, that is last year, of $840 per metric ton. Q1 2022, which is the previous quarter, which was $1,610 per metric ton.
Material cost as a percentage to net sales for the quarter is higher by 1,102 basis points over the same quarter last year and 372 basis points versus sequential quarter. EBITDA before non-operating income at INR 479 crore grew by 1% over the same quarter last year. EBITDA for the half year stood at INR 787 crore and grew by 38% over the same period last year. PBT at INR 442 crore declined by 3% over the same quarter last year, and again, for the half year it was INR 797 crore, grew by 50% over the last year. About subsidiary performance. Overseas subsidiaries, modest revenue growth in Asia on the back of lockdown restrictions in many countries. Margins impacted on account of input cost inflation.
Americas revenue declined on a higher previous year base. During the previous year, sales were higher on account of pent-up demand as well as benefits passed by the governments to consumers during COVID. Domestic subsidiaries in consumer and bazaar business returned to double-digit growth, led by higher sales in premium products. Subsidiaries in B2B business have improved sequentially on account of recovery in real estate and construction, chemical and construction-related activity. However, margin recovery will take longer due to unabated commodity inflation. Pidilite Adhesives Private Limited achieved sales of INR 135.5 crore for the quarter, with EBITDA margins of 34.9%. Compared to previous quarter, margins have improved by 3.9% on account of price increases to mitigate persistent steep inflation in input costs. We have also started selling, distributing Araldite in rural areas using the benefit of wide Pidilite distribution network.
Unabated commodity inflation and supply availability remains a significant challenge and would require continued focus. Going forward, we remain cautiously optimistic on continuing robust demand conditions. Our focus remains on driving consistent profitable volume growth through investment in our brands, supply chain and people. With that, we come to the opening section of the discussion, and I now hand it over back to the host for opening for Q&A.
Thank you very much. Ladies and gentlemen, we will now begin the Q&A session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Avi Mehta from Macquarie Capital Securities. Please go ahead.
Hi. Hi team. Hi, Pradip. Just had, you know, one question on essentially trying to understand the pricing, you know, change in the, you know, impact on gross margin. You highlighted that demand has increased further from Q2. I would assume that the 10% realization growth that we are witnessing, some of it will continue to flow through. Could you help us, you know, understand how to look at gross margins as we go forward and whether we need any further price increases? Thank you.
Yeah. Bharat, you want me to answer or you?
Go ahead, Pradip. Yeah, go ahead.
I think, you know, as we've said in earlier calls as well, Avi, that, you know, we are, what we are seeing is really an unprecedented situation. You know, the prices are, you know, I mean, it's not just 20% to 30%. It's like two and a half times last year's prices. Obviously, in terms of pricing action, we have to take calibrated price increases in a sensible manner so that demand doesn't get impacted. We have continued to do that over the last almost, I would say, eight to nine months. What we are seeing in the current quarter is a result of those actions. We have also been very obviously cautious on the way we manage our costs.
The fact that, you know, we have a momentum on demand is also helping in overall managing the EBITDA margins. As you also know, our intent is to manage the overall margins in the range of 20% to 24%, and therefore whatever action is required to ensure that that range is maintained will be done. What we have done in the first half of this fiscal is broadly cover about 70% of the inflation through pricing. As we see the further increases coming, I mean, this is not just VAM, you know. I mean, we just highlighted VAM as an example. But we have got input cost increases across a range of raw materials.
We are also seeing significant increase in freight. All of these will need to be factored in while doing the pricing. We just briefly talked about the recently acquired subsidiary, PAPL, where again, there's a huge amount of inflation coming through on account of epoxy. So we are doing the pricing category by category, product by product, with the intention to make sure that we pass on pricing in sort of reasonable chunks without impacting demand, overall cover at least 75% of inflation. We are planning pricing in the market for products going forward as well, if this trend continues. Bharat, you want to supplement these points?
No, I think you put it pretty well. The basic stance, Avi, remains we will be conservative on pricing. We will take a hard look, pass on only 75% and wait, manage margin actively, because we believe that, you know, passing on all price is also a detriment of demand.
The way I should kind of look at it is, you know, if the focus would be on sustaining the demand rather than on, you know, and meeting the margin in the 20% to 24% range, more at the lower end. Is that a fair understanding?
As long as, yes. In the current situation, yes. It depends on how prices moderate, because it is also our belief that a large part of this is due to supply chain disruptions and not due to intrinsic demand having shot up.
Mm-hmm.
We do believe it may take three, six or nine months before everything evens out. We do you know, at least in the current circumstances, presume that there is more than adequate capacity and therefore these kind of rates will only sustain if a lot of this capacity was to go off permanently.
Okay. You said about three to six months, is that the expectation? Sorry, that's only on input inflation coming off, right?
Yes.
Okay, thanks a lot.
I would say more six rather than three.
Okay, sir. Okay, I'll come back in the queue for the remaining question. Thank you very much, sir. Thanks a lot.
You're welcome.
Thank you. A reminder to the participants, if you wish to ask a question, please press star then one on your touchtone telephone. I'd like to remind all participants if you have a question, please press star then one on your touchtone telephone. The next question is from the line of Abneesh Roy from Edelweiss Financial Services. Please go ahead.
Yeah, thanks and congrats on very good set of numbers. My first question is on PAPL. When I compare a normal quarter, Q4 to Q2, the sales has increased from INR 109 crore to INR 135 crore, which is a good growth. Want to understand is this largely price-led? You also mentioned good scale up and rural areas you expanded. How is the current scale up? If I say total opportunity say 100, where are we in terms of reaching out to more distribution, more rural area? Second, when I see the margins, it's fairly stable in the PAPL. It's broadly 34% margin, so fairly stable.
Will it be fair to say that here, clearly pricing power is much higher and so it's basically cross-subsidizing some of the other segments?
See, absolutely not cross-subsidizing any of the segments. Basically, here the price increase happened earlier and then have not, you know, continued to go up. In fact, they have gone up in the last one month, but otherwise they haven't and therefore the margin has remained a lot more stable. Whereas, given our large mix in the other places, there's been a lot more volatility. In epoxy resin and the number of raw materials is limited. Having said that, I would say the pricing power is probably the same between therefore our strong brands in the core Pidilite business or Araldite.
As far as scope for growth is concerned, while I won't put a percentage for it, we still believe, Abneesh, that we still got a long runway for growth, you know, in terms of using the Pidilite sales and marketing muscle to take it to the next level. We've just started in some states, but we believe that, you know, we would treat Araldite as a category and not as a core category, though, you know, it is a leader. It has more than a 50% market share. The kind of growth rates we would want from it and push from it will be more what we look at from growth categories rather than from core categories.
Sure. That's useful. My second question is on your manufacturing capability. Currently you have 26 domestic plants and 30 co-packers. You are also putting up 12 new projects in India. If I compare your capacity expansion in the past few years versus, say, Asian Paints, Asian Paints has been a bit more aggressive in terms of creating new capacity, maybe because of tax benefits, etc. Is there any change in your thought process in the next three to five years to create more capacity upfront? Because your demand clearly is good. We are seeing real estate recovery. If you could discuss in terms of capacity augmentation, what is the plan in the next three to five years? In the past, you have said 4% to 6% of sales in CapEx. Any change to that number?
See, again, my advice to you, Abneesh, would be don't look at Asian Paints as a one-to-one because all said and done, Asian Paints is 90% paints. In our case, we are across, you know, at least a minimum of 25 verticals, each of which has a distinct product line with distinct production facilities. Therefore, you know, the CapEx per ton and the way each looks at it, you know, because I'm familiar with that, is very different. I would say from a capacity perspective, our utilization of capacity vis-à-vis Asian Paints will be ±5. It's not that, you know, we are at 90% capacity and they're at 60%. We're at similar level. We have drawn up our plans for the next five years, which is why we have all this plant expansion and you will see some more.
Our CapEx, you know, again, as I said, as we are going forward and growth improve, it may go to 4% to 6%, but we don't see it substantially increasing.
Sure. My last question. If I see your gross margin pressure 1000 basis points, whenever we see such a sharp inflation in raw material consumption, we see local and unorganized players lose market share. If you could discuss across different segments, how much is the opportunity? Do you see good gains here happening? Have they also taken similar price hikes? Because for them it becomes very difficult to manage the working capital and limited pricing power.
See, there is no doubt about this fact, Abneesh, that we are gaining market share in situations like this. This is for two reasons. One is obviously our ability to manage supplies and manage prices is from a leverage point of view far higher than them, and therefore in a lot of cases they tend to struggle and they will always have to follow our price rather they can't precede our price. Therefore, I would definitely believe that over actually the whole COVID period, we have consistently kept gaining share. Very difficult to put it in percentage points, but I would say that at an overall level, we would have gained market share in most of our core segments and in our growth categories, largely from the unorganized/small/regional players.
Okay, that's very helpful. That's all for me. Thanks a lot. All the best.
Welcome. Thanks, Abneesh.
Thank you. A reminder to the participants, if you wish to ask a question, please press star then one on your touchtone telephone. The next question is from the line of Krishnan Sambamoorthy from Motilal Oswal AMC. Please go ahead.
Hi, Krishnan. This is Krishnan from Motilal Oswal Institutional Equities. Hi, Bharat. Hi, Pradip. Congratulations on a great set of numbers. Bharat, my question is on the pioneer categories. We understand from various companies that scale-up in the newer businesses has been affected by the volatile environment. Could you just highlight the progress on brands like CIPY, on Roff, Tenax and Grupo Puma? Anything that has scaled up satisfactorily and where have you lagged?
Thanks, Krishnan. Good to hear from you. I think that's a good question. See, there are two things. Actually, from a market perspective, the scale-up on Roff, you know, the B2B business. I'll first separate the two. Where it is B2C, Roff, Tenax, Grupo Puma, these are more B2C. Where it is B2B, which is a CIPY, a Nina Percept, it's different. The scale-up has been more difficult in B2B, largely because B2B has taken a lot more time to come back and, you know, it's only now that we've had one quarter and hopefully more quarters of normalcy. What is, however, got impacted in some of the pioneer categories like Roff or like Litokol, actually is your capital plan because of all of the delays around, you know, first COVID, then shipping, et cetera.
A lot of our projects are running, you know, three to four months late because of factors completely outside our control. From a sales perspective, we're still continuing the scale-up and, you know, for example, if you look at Litokol, we've now tested across two large markets, established a success model. We've now got permission for our plant. The plant construction has started. It got a little delayed as a result of COVID. From a sales per
Excuse me, sir, we are unable to hear you.
Can you hear me now?
Yes, sir.
Do you want me to repeat the answer to the last question?
Yes, please. If you can.
I think, Bharat, you were talking about from a sales perspective, what's been the impact where we lost it.
Yes. From a sales perspective, we are making great progress. I think as the more distributed manufacturing happens, this will obviously improve sales and margins further, and that's in process. That got a little delayed because of largely COVID and then the related shipping-related, you know, the supply chain disruptions across the world.
Okay. Understood. Thanks. Thanks, Bharat.
Thank you. A reminder to the participants, if you wish to ask a question, please press star then one on your touchtone telephone. The next question is from the line of Jaykumar Doshi from Kotak Securities. Please go ahead.
Hi. Thanks for the opportunity. My first question is on other expenses. If I look at your other expenses in this quarter, it's almost flat as compared to September 2019 quarter, while, you know, on two-year categories, your volume growth would be like more like 14% to 15%. You know, there is a related acquisition also that you've done. Want to understand what are the steps you've taken and other than A&P cuts, which is understandable, that you've taken, what should we think as a, you know, a normalized run rate of other expenses, you know?
Yeah. Pradip, do you wanna-
Yeah. Yeah, I'll try and answer them, and Bharat, you please supplement. You know, see there are. When you look at other expenses, there are, you know, some components which actually vary with volume. You know, for example, certain expenses such as power, fuel, you know, that there is a variation with the production and the volumes that you operate in. But then there are certain other expenses like travel, you know, certain fixed costs where, you know, things don't necessarily vary with the kind of volumes that you're talking about. Travel is a classic one where, you know, of course, over a two-year period, there has been a number of actions that we have taken in terms of digital connects with end users, et cetera.
Some of those elements you are seeing coming through the sustainability of this, you know, why you are seeing this in Q2, because in Q2 or in Q1, there were still certain restrictions on travel and so on and so forth. How much of that will really sustain, you know, going forward is difficult to, you know, sort of even gather or even try to model. Suffice to say that there is some benefits which are creeping in because of the fact that certain fixed costs are not going to expand in the same proportion as the volume, and that scale benefits or productivity benefits is what you are seeing coming through. Again, very difficult to sort of model, you know, some of these things.
Understood. Would you be able to kind of give us some color in terms of what are your savings in terms of A&SP spends or where it was as a percentage of sales? Normally, it is in 3% to 4% range. What is the kind of
Yeah. Typically we operate in that range. It varies by, you know, in one quarter versus another. Suffice to say that as far as this quarter is concerned, we have operated at a range or in terms of absolute spend at a spend higher than last year in terms of growth. Maybe in similar lines as top line, we have elected behind our A&SP. As a percentage of revenue, it has not really moved significantly higher. That we will decide depending on how the various inflationary situation comes. To answer your question, A&SPs grown in proportion to sales versus last year. In terms of the percentage of revenue, not a significant movement versus last year up.
Understood. Second question is.
Just to add to what Pradip said. Jay, what we also do is we don't manage A&SP on a quarter-wise basis. You would see it, you know, based on, for example, construction seasons, et cetera, the marriage season, so on. Normally, we also tend to avoid as much as possible advertising in the one month before Diwali, because that is simply the most crowded media environment. Over a period of time, actually as we speak in Q3, et cetera, you will see some new campaigns, et cetera, from us, which are part of the plan. Because normally we find post-Diwali actually new construction, et cetera, sees a boom, and that's a far better time to advertise than during the festive season.
Thank you. No, the idea of asking was, see, normally, you know, if you look at the historically your other expenses has been in the range of 18, 19% of sales. Now, this quarter it is 14%, and I can understand that A&SP, you know, A&SP cannot give you more than 100 basis points leverage. Travel cannot give you more than 50, 70 basis points leverage. There is a good 200 basis points or 250 basis points of cost savings that you've managed, which is very impressive. Part of it could be operating leverage and some of the, you know, fixed cost do not change much. The idea of asking this question is, have you taken some hard decisions which has reduced your cost structure from a structural perspective?
When the environment normalizes, would you sort of settle at lower other, you know, other expenses as a percentage of sales?
I would say a mix of both. Very difficult to say. Pradip, you wanna go?
Yeah. No, I see. Again, you know, as I explained upfront, I think there is a very big impact of the volume leverage you get, you know, in a P&L. You know, like if your volumes are growing, or your values are growing by 35%, as I said, some of these costs don't grow in that same proportion. Other than, you know, power, fuel and, you know, some of those variable kind of expenses like freight and so on and so forth. What you are seeing here is partly coming from the fact that we are able to do the same sales with similar spend like travel and so on, so forth.
In other cases, it is simply the fact that you're getting a benefit of the larger, you know, value, not that we're doing a deep cut in costs or structurally we are changing the costs. That's maybe the answer, you know, to your question.
Understood. Thanks. A quick question, if I may, on demand. See, you know, we tend to compare Pidilite's growth, volume growth as well as revenue growth with paint companies for the lack of, you know, other comparable peer. You know, our understanding is, at least my understanding is that, you know, in a good real estate cycle, you know, some of the categories that you operate in benefit from new construction, whereas paint as an industry depends more on repainting. After many quarters, for the first time, we have seen that on a two-year CAGR basis, your growth is almost matching up with, you know, the category leader in case of decorative paints.
From here on, as we think about the next two, three quarters, do you think we are at a point where, you know, new constructions is driving or is, you know, the demand from that side of that segment is fairly healthy and your growth rates kind of should match with the paint category? I mean, is that a way to think about it or?
See, I would advise you, Jay, not to think about it that way for two reasons. One is paint is, you, as you have rightly said, more than two-thirds of the demand comes out of repainting rather than out of fresh construction. We have a little greater multiplier from fresh construction. The other thing is we go across a much broader spectrum than paint, and therefore we don't tend to compare ourselves with paint. I mean, you know, with due apologies, if you look at the paint companies over the last four quarters and you take out the volume that in a sense they have bought via putties and low price products.
Okay.
Frankly, on premium products, our sales would, you know, we don't operate on those segments at all in our part on the market. Largely because we find those as, you know, pure commodity, largely commodity segments. I think that while I know that there are no easy comparators of Pidilite, largely because of its pioneer nature, I think comparing us with paint is in many ways a disadvantage to both, depending on the kind of quarter it is.
Understood. Do you see a better outlook for fresh construction cycle and the associated businesses than what you may have seen in the past two, three, four years?
See, there is no doubt about the fact that organized real estate has picked up in the last six months and specifically in the last three. Will individual housing starts with, you know, individual, what is called these, what we call IHBs, the independent housing units, will they also pick up the next three to six months? We'll see. But it does appear that. You know, the consumer's focus on home and getting the home, to be, A, upgraded, B, renovated seems to be greater than it was prior to COVID.
That is helpful. Thank you so much.
Thank you. A reminder to the participants, if you wish to ask a question, please press star then one on your touchtone telephone. The next question is from the line of Shirish Pardeshi from Centrum Capital. Please go ahead.
Hi, Bharat. Hi, Pradip. Good evening. Thanks for the opportunity and congratulations. Just one quick question from the previous participant. The construction business is showing. If I extend the thought, are you really witnessing on ground? I'm not saying per se what is the growth in the month of October and early part of November, but are you seeing these factors are panning out for your business, especially into B2B part of the business?
First signs, yes, but too early to say. You know, a lot of this will get clear in the next three to six months on whether it's a longer term secular trend. There is also, remember, a fair amount of pent-up demand. You know, as things have opened, whether it be tourism and therefore hotels and restaurants, shopping malls and, you know, shops and shopping malls, there has been a fair amount of pent-up demand that has also got fulfilled. It'll be good to see whether the new construction continues at the same rate over the next six months.
My second and last question, if I take a cue from the Q2 numbers, there is a large amount of volume-led growth which has come, and you in such a way elaborated, saying that our demand has been very, very cautious, and that's why you are not aggressively taking price increase. That could be a good strategy. Is that understanding correct that at this point of time the primary focus of the company is more on a volume-led growth and then maybe later on if demand stabilizes, we will take price increase or whatever price increases happened is yet to get implemented and seen in effect in the P&L?
We have always maintained that our focus is profitable volume-led growth. We want to operate within our margin bands, as an organization, but focus strongly on volume growth because when you are a leader in, you know, and we are leaders in pretty much most of the categories we operate in, then the thing that sticks the best is our ability to grow volume aggressively, because that, in a sense, you know, helps us create categories and gives us greater leverage. I mean, the fact, if you look at this over a longer 10-year period and you see the improvement in our operating margins, one of the reasons is because the volumes and the leverage we now have is far greater than we had five years back and far more greater than we had 10 years back.
Okay. My last question, Bharat, on the waterproofing and construction chemical business. Although this, what we found from the trade that this is last over five, six quarters growing fast. Would you provide some qualitative comment, why such a large growth higher of 40% to 50%, which we are witnessing in the industry? Is that purely because of the old construction is coming up for refurbishment, or is it because the new demand which is really driving?
See, there are two things happening. One is traditionally the quality of construction in India has been poor and there has been little or no waterproofing. The fact even now is in independent housing it is only about four out of 10 homes that do any form of formal waterproofing. Therefore, you know, and if you look at waterproofing vis-à-vis, for example, paint. Vis-à-vis developed other developing markets, I'm not talking of the U.S. and the U.K., but I'm talking of the Thailands and the Brazils. Our waterproofing market is much, much smaller, which is why also you have so many people rushing to get into waterproofing because everybody believes there is a scope, rightly so.
Absolutely.
The fact of the matter is that, yes, this, there is a large runway for growth. But it, you know, whenever you have to create categories, you have to do three things. You have to, A, educate the consumer, B, you have to create a brand, and C, you have to provide service. Over the period, whoever does that best is going to, you know, continue to win and hopefully we will continue to do that.
I completely agree. Hello?
Yeah.
Yeah. Thank you. All the best to you.
Thank you so much.
Thank you. A reminder to the participants, if you wish to ask a question, please press star then one on your touchtone telephone. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference back to the management for closing comments.
Right. Just wanted to thank everybody for joining the call. On behalf of the company and the management, just wanted to you know convey all the best wishes for the year ahead and belated Diwali greetings. Bharat, you want to say something?
Yeah, you know, firstly, thank you all. Thank you all for being there. A very happy Diwali also to everybody on the call. You know, I thought I'll just spend two minutes. We spend a lot of time on the hard numbers and what is behind the numbers. You know, I'd like to spend five minutes on why we also believe in Pidilite, where we have momentum. The work that we have done, for example, in digital, the work that we have done in rural/emerging markets. The investment that we have made obviously in supply chain, and finally, the way we have managed the whole culture and people agenda.
There are whole steps that I'm obviously not going to go into each of these, but one of the reasons why we believe as an organization we have momentum is that we are spending a lot more time strengthening the enablers and not just the numbers. Therefore, when we take a step back, whether it be the investment in supply chain, it be the investment in digital, you know, there is probably a one-hour presentation that we can do for you in digital, which is about how it is now carpenters, plumbers, masons are all digitally connected with us. They're actually now being educated digitally. Dealers, we've now got over 100,000 dealers actually ordering on our Pidilite Genie app, which does not involve either a salesman or anybody.
The extent of our distributor computerization is now pretty much complete amongst large amounts of the population, and therefore it's all on auto replenishment. The cultural piece around an organization that is, you know, a great place to work for, which is what we've been voted now on a regular basis. There's a lot more happening beneath the surface in the enablers, which we are focusing on, which continuously keeps strengthening us and hopefully, you know, not directly, but actually enables the numbers a lot more. At any point in time, I'd be happy to answer any questions or any observations on that. Pradip, would you like to add anything?
No, Bharat, I think you've covered all the points. Yeah. We can take any questions if there are. Yeah.
Perfect. Fair.
Yeah. Percy here, am I audible?
Yes, sir, you are. You may please go ahead.
Yeah. Just a couple of questions from my side, a couple of data points, actually. What's the quantum of price increase in Q2 this year versus Q2 last year?
Pradip, do you wanna go there?
Yes. No, I didn't get that. You're saying this year versus last year, is it?
Yeah, over the last 12 months.
Q2 versus
What is the price increase?
That's a, you know, it's a bit of a sort of a difficult question to answer because, you know, it varies by category and by product. Suffice to say, as we said, that, you know, broadly, we are covering up 70% of the inflation with the pricing that you're seeing. That really varies. We have been taking pricing. Some of the B2B categories, for example, the pricing has been almost 100% inflation. Whereas in the case of some of the consumer and bazaar business is more a proportion of the pricing. Yeah.
Okay. Because what I'm trying to do is just this 40% YoY growth. I just wanted to understand how much of it would be volume-
Okay. That way. Okay, that is clear enough. If you look at, you know, what we have published, we have published a set of numbers where we said year-on-year, the growth is essentially about 35%. The average, the volume kind of growth which is sitting inside that is 25%.
Okay. Okay.
That is on a standalone.
Probably the same proportion would exist on a consolidated basis also.
Yeah. Yes.
Understood. One more question. I know there was already a question about CapEx, but if you could just give a guidance as to in terms of INR crores, how much of CapEx you would be doing in FY 2022 and FY 2023?
See, last year we spent close to almost INR 400 crore as a company on CapEx. I think that's a similar set of number that we would expect. Again, you know, as we said, all the time, you know, it varies typically between, you know, somewhere between 4% to 6% of revenue. That's the kind of number you can expect.
Okay. One more in terms of growth that you've witnessed, and this is not just this quarter, but even let's say in normal times, I mean, over the last five years or so, how much difference would you have in between your growth in the large towns, let's say the top 20 cities, versus rest of India? Is there a big difference in the growth or it's almost at the same level?
I would say over the last three years or so, the growth in the small towns and rural would probably be one and a half times that of the large towns.
This is just because you are actually penetrating those areas and getting the growth from there, and that's what is driving the growth, right?
penetrating, and more importantly, in our categories, Percy, what you also have to do is educate. We've actually, ever since we created this division called Emerging India, which also has a whole demand generating sales force. When you've done that automatically, therefore the growth rates have gone up because we are doing a lot more work with the users and consumers now in these towns, which we were not doing earlier.
Mm.
It is not only distribution penetration, it is also obviously consumer penetration.
Right. How much is the revenue split between these two, like, your top 20 towns versus rest of India? What would be the revenue split currently?
I won't go to top 20. I'll say what we define as, you know, rural versus the rest of India. Rural and small town India tends to be 30% and 70% is the rest of India. It's not 20 towns. It will probably be the top, I presume, 50 or 60 towns.
Okay. Understood. Yeah. That's all from me. I think, Janice, we can close the call now.
Thank you very much. Ladies and gentlemen, on behalf of IIFL Securities Limited, we conclude today's conference. Thank you all for joining. You may now disconnect your lines.