Ladies and gentlemen, good day and welcome to the Pidilite Industries Limited Q3 FY 2022 earnings conference call hosted by ICICI Securities Limited. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal for an operator by pressing Star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Arun Baid from ICICI Securities. Thank you and over to you.
Good evening, everyone. I welcome you all on behalf of ICICI Securities for the Q3 FY 2022 results of Pidilite Industries. We have from the management side, Mr. Bharat Puri, Managing Director, and Mr. Sunil Burde, Vice President Accounts. Now I hand over the call to Mr. Burde for his opening remarks, post which we can open for question and answers. Over to you, sir.
Thanks, Arun. Good evening, everyone. The current quarter registered robust double-digit revenue growth, led by staggered pricing actions and steady demand conditions. Growth was broad-based across Consumer and Bazaar and B2B, with growth in urban geographies outpacing rural geographies. Consumer and Bazaar reported growth across all categories and B2B growth led by the continued momentum in industrial activities. We continued investments in our brands through higher A&SP and have maintained EBITDA margins within our historic range through judicious pricing, rising volumes and operational efficiencies. Now I will begin with a summary of the financial performance for the quarter and nine months ended 31 December 2021. On consolidated basis, net sales at INR 2,831 crores for the quarter grew by 24% over the same quarter.
Gross margins continued to get impacted on account of unabated increase in input costs, resulting in all-time high prices for most of the principal raw materials. Material costs as a percentage to net sales is higher by 1,119 basis points versus same quarter last year, and 173 basis points versus sequential quarter. Continued unprecedented inflation in input costs necessitated calibrated pricing actions to maintain margins in a healthy range. EBITDA before non-operating income at INR 550 crores declined by 14% over the same quarter last year, given the input cost-led contraction in gross margins by 11.2% and higher spends on A&SP. Profit before tax and exceptional items at INR 487 crores declined by 19% over the same quarter last year. Now moving to standalone financial performance.
Standalone net sales at INR 2,407 crores grew by 24% over the same quarter last year, with underlying sales volume and mix growth of 9.4%. This was driven by 9% growth in sales volume and mix of Consumer and Bazaar, and 13% growth in sales volume and mix of B2B. Domestic Consumer and Bazaar grew by 10.1%. Our key raw material, vinyl acetate monomer, procurement rates have continued to increase during the quarter and are in the range of 2,000-2,525 per metric ton. Currently, rates are at $1,850 to $1,950 per metric ton, and Q3 FY 2022 consumption rates were at 1,968 per metric ton versus Q3 FY 2021 rates of 876 per metric ton.
Material cost as a percentage to net sales for the quarter is higher by 1,091 basis points over the same quarter last year and 226 basis points versus sequential quarter. EBITDA before non-operating income at INR 480 crores declined by 16% over the same quarter last year. About subsidiary performance. In case of our overseas subsidiaries, modest revenue growth in Asia. Americas declined on a higher previous year base. During the previous year, sales were higher on account of pent-up demand as well as benefits by the government to consumers during COVID. Margins continued to remain under pressure due to higher input cost. Domestic subsidiaries in Consumer and Bazaar reported good sales growth. Performance of domestic subsidiaries in B2B have improved sequentially on account of recovery in real estate and construction-related activities.
Pidilite Adhesives Private Limited achieved sales of INR 149.5 crores for the quarter, with EBITDA margins of 32.2%. Compared to the previous quarter, margins have declined by 2.7% on account of persistent steep inflation in input costs, partially mitigated by pricing actions and other cost-saving initiatives. Going forward, we expect near-term demand conditions to be a little more challenged given the disruptions as a result of the pandemic as well as input inflation to continue. However, we see demand conditions improving as well as input costs moderating by end of the current quarter, beginning of the new financial year. We remain confident of the medium to long-term potential of the Indian home improvement sector and in our ability to deliver profitable volume growth. Now we can open the floor for questions.
Thank you very much, sir. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press Star and two. Participants are requested to use handset while asking questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. To ask a question, please press Star and one at this time. The first question is from the line of Abneesh from Edelweiss. Please go ahead.
Yeah, thanks for the opportunity. My first question is on vinyl acetate monomer. From a peak of $2,500 now it is more like $2,000. Wanted to understand your comment that by Q4 end or Q1 you expect raw materials to start correcting and gross margins to bottom out. What is it coming from? What is the confidence level? Is it based on the global liquidity drying up or the supply/demand situation is turning more profitable, more supply is coming, the logistics is becoming easier? Could you elaborate on that?
See, good to hear from you, Abneesh. Basically what we are expecting is we have already seen some softening in January as far as vinyl acetate monomer is concerned. Our belief is that once the Winter Olympics in China are over, this is what the experts tell us, and therefore the supply situation normalizes a lot more because it is not demand that has gone up substantially, it is the constraints in supply. Presuming it takes about a month for supplies to start stabilizing, it is thus our belief that hopefully if all things go well by the end of March we will start seeing more softening as far as VAM is concerned.
Sure. Second question is on your segment-wise sales. This quarter and for nine months also, surprisingly B2B has grown faster in terms of sales versus Consumer and Bazaar. Is it just a base issue or here the demand is also higher from a volume growth perspective versus Consumer and Bazaar, both nine months and Q3?
See, basically it is largely the base effect. Last year B2B declined much faster and came back much slower. If you look at a two-year CAGR, Consumer and Bazaar is far healthier than B2B.
Right. Final question on rural. You have said it's still growing in double digits, but you have alluded that some slowdown is happening. From budget perspective or from government perspective, what would be the expectation which can drive rural back to faster growth than urban in your segment?
Yeah, I think the simple key is putting money in the hands of the rural consumer. Clearly, you know, if you look at simple inflation, Abneesh, I mean, if you look at the cost of constructing a house in rural India this year versus last year, if you see the increase in price in steel or cement and a lot of these other basic raw materials, the prices have gone up far more substantially than, you know, in many years in the past. Therefore that is in a sense hurting the consumer, whereas the produced prices have not gone up by any, by the same, amount. Therefore, our belief is that, you know, as long as there's some stimulus in, rural India and that we manage to put some more money into the hands of the consumer, that is what will help rural India.
Having said that, I must say that, you know, unlike FMCG, we believe we still have a fair runway of growth, even in more difficult conditions, simply because our products still have a greater scope for penetration and there is still a greater scope for adoption in rural and semi-urban India.
Sir, one last follow-up on the raw material, and that's the final question. We have seen VAM correct from $2,500 peak to now $2,000, but still it is up sharply and gross margin pressure is visible. My question is different. When we have seen sharp deflation in any year, does Pidilite take sharp price cut also? Why I'm asking this is in FMCG price cut is very rare. You have worked in FMCG also, you have worked in Pidilite, obviously. In Pidilite's case, if you could take us back to the earlier scenario when there was real deflation, how has been the price cuts by Pidilite or it just a volume increase which happens?
See what tends to happen is while the price cuts, we normally tend to therefore pass on prices so that our premium vis-à-vis competition as well as the, you know, semi-organized sector does not exceed a certain amount. While we maintain our premium, what tends to happen is that if you look at it over a large period of time, all of it does not get passed back, but a substantial part of it does get passed back.
Okay. That's all from my side. Thanks a lot, Bharat.
Thank you.
Thank you very much. Before we take the next question, we would like to remind participants that you may press Star and one to ask a question. Next question is from the line of Avi Mehta from Macquarie. Please go ahead.
Hi. Hi, sir. Just had a few questions. First, if you could update us on the pricing. At last quarter, I remember you had said that we have passed on 70% of the inflation. Could you help us how much is passed on or, if possible, a VAM price number of how much cost is being passed on?
See, very difficult to say, Avi, because again, we operate obviously across a series of divisions and it, the pricing is different in different divisions because of different raw materials. But at a broad level, we would have passed on 70%-75%. We have taken some further pricing in the beginning of January.
Mm-hmm.
Now, if raw material prices were to remain at these levels, we, which is, you know, if they come down to $1,500-$2,000 level, we will not need any further pricing and we will go back into our margin range. You would appreciate right now we're living in a volatile world. I mean, every day we have one new headline. Sometimes it is Russia and Ukraine, sometimes it is some further problems in the Middle East. I would simply just say wait and watch. We are obviously we have the ability to price. We will remain conservative, but as of now, you know, presuming there are no black swan events, we don't see any substantial need for pricing going further from here as long as we reach a steady-state situation.
If I may just, you know, kind of push this one a little further. What you kind of said is that we expect the input cost to moderate from end fourth quarter, first quarter, start first quarter. Would it be fair to argue that gross margins have bottomed out now and should kind of start expanding in January while demand remains the question. Is that the way to read that comment?
I would say in January, you will still consume what you have bought in December. Yes.
Mm-hmm.
From February, especially March, I think, gross margins should tend to improve, presuming all other things remain equal, and we don't have any further like shocks.
Perfect. No, that's clear. The last bit, I mean, I just wanted to kind of check, get your comment on the crude. I mean, does that in any way you think have a risk, or is there a supply chain, you know, because of that the prices moved up anyway too high? You're not so concerned about crude price rising to about $90 now?
No. We're definitely concerned about crude pricing because a lot of our raw material is obviously from petrochemical, and it depends on where oil finally goes, you know. I mean, this morning I read a report that oil could, you know, go to some really high levels. I would say we're absolutely concerned about the rising oil price and
No, sorry, not the rising crude price. I mean, at current price. At $90-$100, things are still okay, right? I mean, obviously, you know, better off if it won't be.
At 90 or 100, I won't say we are okay. At 90 we are okay, but as it goes further up, you know, again, we will be under pressure.
Okay. Just a bookkeeping, sir. Could you kind of repeat the VAM pricing? I kind of missed that. What was the third quarter impact just the last-
Okay. Third quarter last year our VAM pricing was close to $1,000 a ton. This year it is, the December price was $2,500 a ton, but the average would be close to, closer to $2,000.
2000. Our consumption was around 2000, 1/9 release, right? That's what you said.
Yeah.
Current prices are around $220-$2,000.
Around 2000, right. Yeah.
Okay. Thank you very much, sir. Thanks a lot. I'll come back if there's anything.
Thank you. Next question is from the line of Chanchal Khandelwal from Aditya Birla Capital. Please go ahead.
Hi. Hi, am I audible?
Yes, you're audible.
Hi. Thanks. Firstly, congrats on good set of numbers and consistent performance. My question is, you have done a lot on operational efficiency. If I look at the way you manage the other expenditure, if you can just highlight what are the cost savings you have done apart from the ad spend. Because there is huge amount of operational efficiency I look from two to three or so.
See, as you would appreciate, across the whole board, we have actually all through the pandemic period, kept a very close watch on costs and hopefully become far leaner and far more efficient, you know, with the exception of discretionary costs like advertising, et cetera, which we still spend when we believe we have the need to. Across virtually all our other heads of cost, we have been fairly stringent. At an overall level, I would say that, you know, presuming raw material prices were to come back to normal levels, et cetera, we would actually emerge as, you know, minus raw materials also as a far stronger and far leaner and more efficient company because of all the cost savings we've done.
Whether it be freight, whether it be warehousing, whether it be, you know, any other miscellaneous costs, whether it be in sales, whether it be in supply chain. We have actually pretty much done a zero-based budgeting across the board.
Sure. That's interesting. The margin band which you used to talk about 20%-24%, I'm saying if I were at that point 24 because of the cost saving, this margin band you can easily surpass given if the raw material, et cetera, return back. Is my reading right?
It could happen. Again, all depends on, you see, given the volatility today, it's very difficult to say where raw materials will be, where crude will be. Yes, I mean, our overall cost base exclusive of raw and packing materials, we clearly have become far more efficient and therefore get a leverage.
Sure. Thanks. Last question from my side. Given what paint companies are doing in the construction and waterproofing, do you think going forward, I mean, one way to look at it is that the market itself is growing. Do you think that can become a challenge to us at some point in time? Because most of them are trying to be very aggressive in this part.
See, that is inevitable. We've seen this aggression not for the last three, six or nine months. It's been there now for a number of years. However, you know, our stance always is as leaders, our greater job is to expand the market. I mean, today, if you look at any indicator of waterproofing in India is tremendously under-penetrated. Even today, it's only four out of 10 homes that do any you know, formal waterproofing or proper waterproofing. Therefore, the competition has actually helped hopefully expanding the market. I think there is a large runway for growth for each of the organization.
Remember that paint companies tend to play much more in the renovation and the space when repainting happens. They don't tend to play in the new construction because that's where cement, steel, et cetera, that's where new construction comes in. So they play in not the full market, but part of the market. There is in our belief scope for all and, you know, finally, those who have the strongest brands, the greatest reach, and hopefully satisfy their consumers more will keep winning. If I look at our growth rates, I have nothing to complain about.
Yeah. Thanks. Thank you, sir.
Thank you. Next question is from the line of Trilok from Aditya Birla Sun Life Insurance. Please go ahead.
Yeah. Hi. Good evening. Thanks for the opportunity. Just two quick questions. You know, in the initial comment you just mentioned about, you know, the demand being a little challenging, so could you just, you know, elaborate on that point? Because we thought the situation is just getting better for most of the industry. That's the first question. Maybe I'll ask the second one slightly later.
See, very simply on demand right now, the newest variable is the third wave of the pandemic. You would appreciate that in any areas of home improvement, these are eminently postponable. It's not, you know, unless you have a crying need, you can always postpone. What we are finding is from the end of December and in January, as you've got these closures and night curfews and weekend curfews and so on and so forth, et cetera, there is some impact as far as demand is concerned. As I spoke about earlier, there is also definitely some amount of income distress in rural India. That's what is really in a sense therefore impacting the demand in the short run.
However, if you take a little longer term, you know, even a medium term view, if you look at India's housing stock shortage, if you look at the need for renovation and the fact that consumers having spent a lot of time at home are now spending on renovating and upgrading their homes, we are very optimistic on the medium term future of all home improvement industries, so as to say. You might have some, you know, setbacks in the next three months, but frankly, over a longer period of time, I think all the signs are very positive.
Understood. You know, second is more from a longer term perspective. You guys strengthened the leadership team over the last, you know, I think Sanju was the last induction in that particular, in the team. Is there any thought process with respect to you not taking the lead role or you taking sort of little oversighting the whole role going forward? What's the plan, if you can just share your thoughts on that from a longer term perspective, obviously not very quickly. Yeah.
See, from a longer term perspective, we've always said that any good, you know, far-thinking company must look at both the present and the future and set ourselves up for the future. We've got our whole succession plan in place for the future, where we've got a you know, strong bench, where you know, in a sense, making sure that we have enough time that, you know, transitions are extremely smooth and hopefully speedy. I still have a long period of time to go, but it is always great to have like, you know, good bench strength and therefore keep operating across a variety of fronts with a higher degree of aggression.
Sure. Thanks very much. I'll come back in queue. Thank you very much.
Thank you. A reminder to the participants, to ask a question, please press Star and one. The next question is from the line of Ritesh Shah from Investec. Please go ahead.
Hi, sir. Thanks for the opportunity. A couple of questions. One is, we have 4,800+ distributors, 44 warehouses. Is there anything that we are doing on the distribution side? One, adding discount or second is optimizing. The reason I ask is, company is a formidable brand. We have a good presence. Is there something wherein we can actually do better to enhance our reach or...
See, one of our, you know, avowed objective, Ritesh, is we want to be by far the deepest reaching home improvement company. You know, we have therefore a number of initiatives, whether it be in emerging India, whether it be in rural, whether it be the famous Pidilite Ki Duniya. We believe, for example, you know, today pretty much all, forget the towns, all villages between five and 10,000 also we now have a direct presence in. We are now, you know, we for example now actually got over 2 lakh dealers on our Pidilite Genie app who are actually ordering electronically.
If you look at our reach, therefore, on a consistent basis, quarter by quarter, we keep enhancing it and getting deeper because we believe that's a source of competitive strength, and we are one of the few organizations that has a wide enough portfolio to be able to access markets not only profitably, but also being able to reach markets from a logistics point of view. Clearly, reach and the quality of distribution will remain a focus for us for at least the next 3-5 years.
Sir, anything different that we are doing from a technology standpoint to actually optimize it? Is there a part of a cost which actually can be squeezed and which can actually come to the margin profile? Anything that we are doing over here which actually enhances our reach as compared to the competition, given we have a presence since quite long?
See, basically what we are doing is because we are able to combine and go as one Pidilite to the smaller towns. That gives us economies of scale that also gives us quality of distributors because then we are one of the prestigious distributorships to have in the smaller places. What we are also doing is this is all digitally equipped. Actually all of these distributors are actually on auto replenish. None of my sales force takes any orders or, you know, the old this thing of actually taking manual orders is all. Everything is in auto replenishment. The sales force is also actually on tablet and is actually working on a speedometer, which is gamified.
We've got a fairly deep degree of digital penetration right till the last outlet, largely making sure that, you know, we're the first to reach there and hopefully stay there. We've obviously done the post GST, we've done the warehouse optimization, where we should have our warehouses, where we should have this. That is an ongoing exercise anyway.
Sure, sir. Sir, my second question was on competitive intensity. Most of the cement mills now they also aspire to be in a more attractive space, wherever Pidilite is. I did some basic product to product mapping across companies, and there is a lot of overlap, be it tile adhesives, grouting, waterproofing, silicone sealants. But when it comes to, say, construction chemicals, primary construction, how should one understand basically that we will continue to have the right to win? I appreciate the market will continue to grow, but when it comes to Pidilite offering in the marketplace, how is it that it will distinguish against a cement mill, where they can actually also look to bundle the product along with cement or white cement or putty?
Sure. See, if you look at it, you know, worldwide, all cement companies tried construction chemicals, and over a period of time, most of them have divested their construction chemical businesses. If you look at all the major players in waterproofing and construction chemicals, they tend to be specialized companies like Sika or, you know, they're not cement companies, largely because, you know, the mechanics of selling one, you know, four-litre or 20-litre can is very different from selling a truck full of cement. You know, both of these normally don't tend to go together. Having said that, we keep a close watch on the cement companies, and see where, you know, in a sense, where they could have advantage over us or where they could not.
As of now, what we are saying is this is again a field where, you know, it's a cycle. People will go in, then they realize that, listen, is the view really worth the climb, make some decisions because when you're used to a volume play, it's very difficult to do a value play. What we are looking at is making sure that we have A, product advantage, B, brand advantage, and C, we have our network which is moving forward aggressively. Now, how this will pan out, say, in the new construction space, basically the cement company, because they tend to offer very basic products. They're not in the specialized ranges at all. Therefore, over the period of time will tell whether they last in this market or not.
Sure, sir. Just an extension of this. Sir, when it comes to the last mile retailer, are we looking to tap into more aggressively into more points basically as cement mills actually increase or get more aggressive in this space?
Definitely, yes. We are making sure that, you know, again, we are reaching, for example, we now have over 7,000 outlets in villages between 5,000 and 10,000, which are called Pidilite Ki Duniya. These are purely with the objective of A, educating the consumer, and B, over a period of time, making sure that, you know, the first experience that the consumer has in our product range is with our products.
Sure, sir. This was quite helpful. Thank you so much. I'll join back with you. Thank you.
Thank you.
Thank you. Next question is from the line of Kunjan Gupta from ClientFirst Wealth Management. Please go ahead.
Hi there. This question is about the points and the cashback. The other brands like Astral Bondtite, they're offering direct coupons, cash coupons. Are we planning on doing something like this? Because carpenters are like liking those products. Hello? Hello?
Yes, you are audible. Please go ahead.
Yes, my question is, other brands like Astral Bondtite, they're offering cash coupons and more points than Fevicol, I guess. Are we planning to be more aggressive on those? Hello?
Hello?
Yeah. Hello.
Yes, Kunjan. You had just started your question.
Am I audible now?
Yes, you're audible now.
Sir, my question is about the points and the cashback. Other brands like Astral Bondtite, they're offering cash coupons, I guess, if I'm not wrong, and carpenters are liking those products above 5 kg. Are we planning something on that, like-
See, we already have that program. We have a full Fevicol Champions Club program where we have a whole range of gifts. When it is required, we can convert that into cash. Our flanker brands, which is both Leokol and calcofix, also have a similar program. Frankly, we are just. Am I audible?
Yeah, now you are audible, sir.
Did you hear my reply or not?
Yeah, half of it.
[See, basically what is happening that we have a full Fevicol Champions Club. We have a whole digitally enabled gift redemption. When it is required, when customers require, we do deals with Paytm and convert that to cash. Our flanking brands, which is Lukol and Calcofix, also have the same. Really, this is not something new that, you know, Astral is doing. This is something that is common.]
Mm-hmm. Hello. Sorry, your voice broke.
Mr. Puri?
Yeah. Can you hear me clearly?
Sir, your voice is slightly breaking, sir. We couldn't hear the last bit.
You were not coming here.
Is it better now?
Yeah.
Kunjan Gupta, what I was saying was that as far as, you know, cash backs and redemption of gifts, et cetera, is concerned, this is a normal practice in the industry. Our flanker brands, we have a Fevicol Champions Club. This is not something new. All of us have been doing this for some time.
Okay. If we compare it to the bond, are any of them better, like carpenters are liking those better, above 5 kg, if I'm not wrong?
Sorry, say that again.
If we compare to bond, the cash coupons, are we offering cash coupons just right inside the box?
We offer, for example, at times we offer cash, at times, you know, they have a loyalty scheme. Like, you know, you have loyalty points with an airline, so we have loyalty points. So over time, you know, people can buy actually large gifts for their home, et cetera. We have a full repertoire of stuff which we do.
Okay. Thank you. That's what I
Thank you. To ask a question, please press Star and one. The next question is from the line of Rashi Rathod from Sykes & Ray Equities. Please go ahead.
Hello. Thank you for the opportunity. I wanted to know about your current capacity utilizations and your manufacturing facility utilization?
See, currently, Rashi, we are at about between 70% and 80%, depending on various products, depending on the product line. As we speak, we have just completed expansion in 5 of our current brownfield factories. As we speak, we are constructing nine new factories as far as Pidilite is concerned. In many ways, we are completely ready for the next phase of growth. By the end of March next year, we will be back to, you know, between 60% and 70% capacity utilization and having a good 2- 3year runway for growth.
Okay. In the last phone call, you had mentioned you had 12 new projects coming up.
Yes.
What is happening to those projects and where are these projects actually coming up? In which part of the state?
Of the 12 projects, some have already moved forward. We have, for example, a massive factory which has got commissioned in Vizag, which is the largest factory in South India. We have plants, for example, coming up for some of our powder products in two in southern India, one in Ludhiana, one in Lucknow, one in Alwar. In different places, we have three new plants coming up in Gujarat, one for tile grouts, one for Tenax and one for expansion of our current ranges. Across both Western, Southern and Northern India, we've got plants coming up, and Vizag is in a sense Southeast.
Okay. Thank you. That's all.
Thank you.
Rashi, does that answer your question?
Yes.
Thank you.
Thank you.
The next question is from the line of Mr. Arun Baid from ICICI Securities. Please go ahead.
Sir, just wanted to understand one thing. Do you believe based on whatever you see today, that in next year we will be looking at least double-digit volume growth and going back to our historical range of margins? Whatever we see today based on raw mat and demand scenario.
It's very difficult to say, Arun, because, you know, these new variables of this Russia, Ukraine, the crude. If you had asked me the same question a month back, I would have said, "Looks quite likely." Right now I would say let's wait and watch. Let's wait every month, because right now, June, it's all of these factors are actually outside India. We have very little influence on a lot of these factors, but they're going to impact both crude prices and raw material prices. I would just wait and watch, but I would say we are cautiously optimistic.
Assuming, sir, those scenarios don't go as bad as, you know, people fathom, then we would be there, right?
Oh, yes. When the raw material prices come back to same levels, we will be back up and running. Yes, absolutely.
Sir, any segment where you are seeing more traction right now, given the market? Any particular segment where you're seeing more traction?
Actually, across the whole construction, both renovation and fresh construction space, we are seeing good activity. Actually the growth is fairly broad-based, you know, across pretty much all of our divisions.
Sir, ballpark, what percentage of our total revenues would be linked to new construction? Broad number, if you could indicate.
Very difficult to say. I would say 2/3 is renovation, 1/3 is new construction.
Okay. Thank you very much, sir.
Thank you. Anyone who wishes to ask a question may press Star and one at this time. Next question is on the line of Hiren Kumar Desai, an individual investor. Please go ahead.
Thank you for taking my question, sir. I assume that our products form a fairly small part of the overall cost in a renovation or house construction or something like that. Is it still difficult to pass on the cost to the consumer as much as we are seeing in the input costs?
No, it is not difficult to pass on, Mr. Desai. It is just that we are being conservative because we don't believe it is a long-term trend, because we believe these are supply disruptions that have happened because of global factors. Overall, see that, you know, for example, the difference between our value and volume growth, you can see that we have already taken pricing close to about 15%. Passing on price is not the issue. We just, you know, in a developing economy, our belief is you must be conservative because inflation is the single biggest tax that a consumer pays, and over a larger period of time, it tends to impact volume growth.
Okay. Sir, the second question is, are we looking to get into some adjacent areas of products or into new geographies, whereby it can help us sustain volume growth and overall growth?
Yes. We are definitely on a consistent basis, we keep going into newer categories. For example, we are putting up a factory for tile grouts, which is a completely new category. We are putting up a factory for marble adhesives, which is another new category. On a consistent basis, Mr. Desai, Pidilite's our policy is we have a set of core categories, we have a set of growth categories, and we have a set of pioneer categories which are new, where we develop the market. You will see us every year enter at least 2-3 new categories on a regular basis. That is part of our strategy going forward.
The second part of the question was related to new geographies.
New geographies, absolutely yes. In fact, now our international sales has crossed INR 1,000 crore. We are doing extremely well. Our focus is the world's emerging markets. In markets like Africa, we're growing at very, fairly good rates. We've just set up a new factory in Kenya. We've set up a new factory, a second factory in Bangladesh. In expanding, we now have 14 factories outside India.
Okay. Thanks a lot. That answers my question. Thank you very much.
Thank you very much. As there are no further questions, I now hand the conference over to Mr. Arun Baid for closing comments. Over to you.
I would like to thank the management for allowing ICICI Securities to host the call. Thank you. Mr. Puri, do you have any closing comments to give?
No, I think most of them have been asked in the questions. I think no closing comments as such. We remain true to our model. Our focus remains profitable volume growth. We're, you know, given the sector, fairly confident of the prospects of the sector, and therefore we remain optimistic.
Thank you very much, Mr. Puri, sir. Ladies and gentlemen, on behalf of ICICI Securities, that concludes today's conference call. Thank you all for joining us, and you may now disconnect your lines.