Ladies and gentlemen, good day and welcome to the Pidilite Industries Q2 FY23 earnings call hosted by Prabir Dasgupta, Prabhudas Lilladher Private Limited. As a reminder, all participants' lines will be in listen-only mode. There will be an opportunity for you to ask questions after presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star 0 on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Anuj Agarwal, Prabir Dasgupta. Please go ahead, sir.
Yeah. Hi, everyone. Welcome to the conference call. Thanks the management for letting us host the call. We have with us today, Mr. Bharat Puri, who is the Managing Director of Pidilite. Mr. Sudhanshu Vats, who is the Deputy Managing Director. Mr. Sandeep Batra, Chief Financial Officer, and Mr. Sunil Burde, who is the Senior Vice President Accounts. Without further ado, I hand over call to the management for the opening remarks followed by Q&A.
Right. I'll start, Bharat?
Please.
Good afternoon, everybody, and thank you for joining the Q3 earnings call. I will first begin with a summary of the performance, and then we'll open the floor for Q&A. I'll cover consolidated sales first. On a consolidated basis, net sales for the nine months ended December 2022, stood at INR 9,077 crores and registered a growth of 23%. This was led by a 24% growth in Consumer and Bazaar segment and 19% growth in the B2G segment. Sales for the quarter, was up by 5.1%, which on a three year CAGR, is a growth of 15%. Material costs as a percentage to net sales for the quarter, was higher by 175 basis points over the same period last year.
On 88 basis points lower than the immediately preceding quarter. As we can see that input prices have moderated and gross margins have improved marginally, though, over the previous quarter. This is largely as a result of carrying a high priced inventory, which will get liquidated over the next couple of months. EBITDA margins are in line with the previous quarter, despite increased spend on A&SP. EBITDA for the nine month period ended December 22 was up by 5.5% over the same period last year, largely as a result of higher input prices that have not been passed on. Profit before tax and exceptional items for the nine months, at INR 1,331 crores was 5% higher than the same period last year.
Profit before tax for the quarter, however, was INR 419 crores and lower than the same period last year. If you're looking at the standalone financial performance, net sales for nine months ended December at INR 8,179 crores was higher by 23.3%, led by strong growth in C&B segment, up 24.6% and B2B segment up 18.6%. For the quarter, net sales registered a growth of 4.8%, largely as a result of a very high base. Just for the information of all on the call, in the third quarter of last year, we had taken two increases that would have led to some amount of inventory buildup in the channel.
If you would recall last year's, in the previous year, third quarter, we had reported a revenue growth of 26%. Coming off a high base, and given the fact that there was price increases taken last year, the growth for the current quarter should be better looked at on a CAGR basis, where the numbers are very healthy at 15%. If you look at how input costs have behaved, as I mentioned earlier, costs have moderated. VAM, which is our biggest raw material, the consumption rate in the third quarter was about 2,000 tons versus 2,500 tons in the second quarter. Current spot rates, of course, are much lower. They are around the $1,200 per ton range.
If I look at the performance of the subsidiaries, despite uncertain global economic conditions, currency devaluation and inflation, our international subsidiaries reported moderate sales growth, while EBITDA remained under pressure due to higher input costs and impact of currency depreciation. Our domestic Consumer and Bazaar subsidiaries continue to deliver industry-leading growth as well as profitability. We are increasingly optimistic for the future because the significant input cost reductions as well as the increased construction activity, combined with government initiatives in CapEx and the rural sector augur well for the future. Our focus continues to be to deliver broad-based, profitable volume growth. With this, we'll open the floor for Q&A.
Thank you very much. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and then one on the question telephone. If you wish to remove yourself from question queue, you may press star and then two. Participants are requested to use handsets while asking a question. One moment, please. Our first question is from Amit Mehta of Kotak Securities. Please go ahead.
Thank you, sir. Thank you for the opportunity. This is Umang Mehta from Kotak Securities. Just wanted to check, sir, you had last quarter, you had given a guidance that you will reach 20% plus margins by fourth quarter. Would you still stick to that? Just for your clarification, this 20% guidance was for console or standard EBITDA margin? Thank you.
Just to clarify, Umang, we as a company don't give any guidance. I think maybe the comment would have been misunderstood. All we had said was that given the trajectory that is there on input costs and assuming that there is no black swan kind of an event and no major disruption in the economy, we are on track to achieve our EBITDA margins in line with the corridor that we like to operate, which is in the 20%-24% range. We have not given any definitive comment on when we are likely to reach that number.
Understood. noted. That was the only question from my end. Thank you.
Thank you very much. Ladies and gentlemen, again, if you wish to ask a question, please press star and then one. Our next question is from Amnish Aggarwal of Spark Capital. Please go ahead.
Hello, good morning. Thank you for the presentation. My question was around the wood coating segment, the business that is done by a subsidiary, ICA. This business has scaled up pretty well in last couple of years. I wanted your thoughts to understand, like, what is leading to growth in this side of the business, and how big of this opportunity is there? Like, could it become an INR 1,000, INR 2,000 crore type of business for Pidilite?
Yeah. Thank you for that question. As far as ICA Pidilite is concerned, it operates at the premium end of the wood finishes market, therefore makes what I would call not even mass premium, but close, you know, super premium wood finishes. These are equivalent to the best available anywhere in the world. In fact, our Italian collaborator, which is ICA, has only two plants, one in Italy and one in India. As you can see, over the last four years, we've registered very healthy growth rates. Largely this is because of, A, a lot of conversion from lesser premium, mass premium wood finishes to premium wood finishes and the increased prosperity across. Without going into numbers, are the growth prospects in ICA Pidilite good? I would say absolutely yes. The past is a great indicator of its future performance.
Okay. Do you remember the nine months revenue numbers for it?
We don't share the subsidiary-wise numbers.
Okay. Okay. Okay. Thank you. That was all.
Thank you very much. Ladies and gentlemen, again, if you wish to ask a question, please press star and then 1. The next question is from Purushottam, Deutsche Bank. Please go ahead. Purushottam, your line is open. Would you like to ask your question?
Yeah. Good evening. My name is Purushottam. Please refer to slide number 16 of the analyst presentation. I would like to know where do you reflect the revenue from Araldite and revenue from DCP , and why is it not really visible to the company?
Araldite as a company has been merged with Pidilite, so the numbers are subsumed in what we show for Pidilite. They're not shown separately. What was the second question that you asked? Could you repeat?
Yeah. How much revenue are you generating out of DCP ? What % of revenue in the current quarter is related to DCP?
DCP. Can you repeat your... I'm not able to understand the alliance that you are talking about?
Yeah. There is a license agreement with DCP USA with the Strongcoat, construction chemical. Where do you reflect that in the chart number 16?
I'm not able to relate to the name of the company that you are saying. Maybe, if you don't mind, you could connect with me separately, outside the call and I can clarify that point. Okay?
Okay. Thank you.
Thank you very much. Ladies and gentlemen, again, if you wish to ask a question, please press star and then one on your touchtone phone. We will hold a moment as we prepare the further questions. We have a question from Kaustubh Pawaskar of Sharekhan by BNP Paribas. Please go ahead.
Good evening, sir. Thanks for giving the opportunity. My question is on the VAM prices. In your initial comment, you mentioned that the current spot prices are around $1,300, the procurement price for us in quarter two was around 2,000. Should we, considering the fact that the inventory of high cost raw material is receding, should we expect our consumption price to reduce substantially in quarter 1, considering the prices remain stable at the current level?
Actually, just to clarify, the current buying price is 1,200. It was much below $2,000 also in the third quarter. The $2,000 that I referred to were our consumption price, so which is a mix of the higher priced inventory and lower priced inventory. Certainly we will see benefit of the lower VAM prices starting from the fourth quarter itself. We will not have to wait till first quarter of next year.
Okay. Okay. Thanks for the clarification. My second question is on the demands also. Like tier two, tier three towns are really under the pressure. Tier one towns are a little, you know, resilient to what the current state of the market is. What is your expectation in the medium terms? Where do you see, you know, demand shaping up, you know, in the medium term?
See, Kaustubh, let me first just do a correction. Actually, we're seeing fairly decent demand across tier 1, two and three towns. It's actually tier four and five that is being under pressure, which is really the rural and the semi-urban markets. We expect rural and semi-urban markets also to start hopefully turning around from January itself. As the money from the new crop starts coming in, the government puts in more spends in this sector. We're expecting a turnaround and better demand in this sector. Again, just to give you a perspective, unlike the conventional consumption mass FMCG, our business, even in rural and semi-urban India, is not declining or constant. It is still growing. The only thing is normally our expectation is that it grows 1 and a half times urban.
It has come at times to the same level of urban or even a little below urban. Therefore, our hope that across the next six months this will see a major improvement. Demand conditions in tier two and three towns are fairly reasonable. We're seeing an increased amount of construction activity. We're seeing an increased amount of commercial activity, both of which really helps the home improvement sector.
Got you. Should we expect any pricing action, you know, if raw material prices continue to stabilize, in the coming quarters, so that would further help you to, you know, see, recovery in demand? The focus would be, you know, on recovering the sales volume, you know, than focusing on maintaining the margins, et cetera.
We have always said that our focus is profitable volume growth, so volume growth is our priority. Thank you know, and again, I don't wanna make any predictions because any predictions over the last three years have not been good. We expect raw material prices to remain largely stable, at least across the next three, four months, unless there are some new black swan events, new Russia, Ukraine or, you know, a situation like that. The depreciating rupee also we have therefore accounted in that. If you recall, we took pricing only at 75% of inflation. We don't see the need now for any further price increases.
Okay. Thank you. Thanks for your understanding, and come back if required.
Thank you very much. Ladies and gentlemen, again, if you wish to ask a question, please press star and then one. Amnish, would you like to ask the questions that you have?
Yeah. I have a few questions on the events scenario. First being that, if you look at the past few quarters, the demand, people were hopeful that the demand will come up. Post festival season also I think the demand has not yet stabilized. Do you believe that, say, not say in the one quarter, that Pidilite will be back to double digits kind of a growth rate in another couple of quarters? Given the fact that now raw material prices are softer, it will be largely a double-digit volume growth kind of a scenario. Is that possible?
See, without again going into prediction, Amnish, we have, you know, actually post the festival season, not seen any drop in urban demand. Tier one, two, three towns, we are seeing reasonable demand. It is actually rural and semi-urban that remains under strain. Having said that, we expect this to continue. As we've always maintained, our plan/objective is we divide our business into three categories: core, growth, and pioneer. We try and grow core categories at one to two times GDP, normally one to 1.5 times GDP. Growth categories at two to four times GDP, and we hope the pioneer categories become growth categories in three years. If you look at this, you know, if therefore the market improves, GDP improves, we will see our volume growth also improve. Without making any predictions, we're not seeing any post...
Actually, we see an improvement in November and December over October. Actually, it was October with the extended monsoon and the long Diwali holiday that actually impacted demand.
Okay. If you look at some of the companies which are, say, on the wire side, which is also used in the, you can say, construction on the residential as a non-residential. They have posted fairly encouraging set of numbers. Do you think that it is going to because, you can say overall activity is there, so that will have a rub-off effect?
While I by no means am I an expert on the wire industry, so I won't make comparisons. Remember, overall, our business, 2/3 of our business comes from repair and renovation, and about 1/3 comes from new construction. I suspect for things like wires, etcetera, it's probably the other way around or even greater. We are seeing that construction activity, both organized construction and real estate in the big cities and individual houses in tier two and tier three are fairly robust. You know, as you know, as houses get complete, that's where home improvement comes in. We see that demand lasting for some period of time.
Okay. sir, in term 21, are you witnessing any, you can say, sort of a breakup that whether your, say, adhesive segment is doing better or your, waterproofing segment is doing or some of the new initiatives? Which one is the bigger driver to this?
As we've said, the growth categories, like waterproofing is a growth category, it is doing better at an overall level. Part of adhesives is core. They are growing. Both are growing as we've indicated when we look at our nine-month growth, we're growing at about 23%, 24%. All our businesses have to grow. They have to grow at 23%, 24%. Our CAGRs in a volume sense are about 14%. Actually we are seeing fairly broad-based growth both across categories and geographies. Obviously, the growth categories, which is waterproofing, tile adhesives, these areas are growing faster than the regular core categories.
Okay, understood. Sir, if you look at the this quarter margin, the margin particularly on the domestic subsidiary, then in the domestic subsidiary, in the consumer and other actually they have reported a loss. Is there any one-off over there or can you throw some light on this?
No, no, there is no loss. I think these numbers are not reported separately. I think if you are only subtracting from the consolidated numbers, that may not give you the correct number. None of our subsidiaries have domestic subsidiaries have reported a loss. In fact, they have reported significantly improved performance over the same period last year. Separately, Amnish, maybe after the call I can connect and clarify to you. Just to confirm, none of our domestic subsidiaries have reported a loss.
Okay. No, I was just tracking. I think one of the tables which is given. Okay. If you are on slide number 12.
Yeah.
Sorry, slide number 12, right-hand side.
Yeah.
EBITDA there is -4.9%.
That is previous year, yeah, Amnish.
Okay. Okay. Operator you can take other questions, please.
Thank you. I just want to bring this again. If you wish to ask a question, please press star and then one. Our next question is from Amit Purohit, Elara Capital. Please go ahead.
Yeah. Thank you, sir, for the opportunity. Sir, just two points, questions on my side. One, you highlighted the growth, pioneer and core categories. Would you be able to share some salience of each? Is it possible to share that? Second, I mean, just wanted to understand what are the new channels are you exploring in terms of from a distribution perspective, what you are seeing from industry trends which are looking at new channels. What I mean is that we've been seeing this dealer spoke distribution channel and now there are large retail formats which are coming in, which are kind of becoming a one-stop shop. How do you see that shaping up plus the online channels?
Just wanted to have your thoughts, how do you see three, four years down the line things changing and how are we placing ourselves? Thank you.
On the first question, just when you talk about the salience of core growth pioneer, are you asking really as to what constitutes core growth pioneer?
I'm saying in terms of percentage wise, like I understand construction chemical has been our growth in that sense. Pioneer are the right new innovations, right? The core part remains the Fevicol. Broadly, when I look at, is that the way to look at when you share in your PPT, a pie chart which talks about 50% is adhesive and sealants, but within adhesive and sealants probably there would be some pioneer categories some sort of-
Absolutely, yes.
Yeah.
You can't go category-wise.
Yeah.
There are, you know, some parts of the category may be in growth and pioneer...
Yeah.
One may be in, core. Broadly speaking, how do we look at core growth and pioneer?
Mm-hmm.
In core, we have already created the category. Whether it's a Fevicol, it's a FeviKwik, it's an M-Seal. This is where we've created the category and our job is to grow the category. Because we have a market domination position as far as the category is concerned. In growth categories, we have to create the category. We are normally a lot of times competing against non-consumption. You know, for example, if you take a waterproofing.
Mm-hmm.
Even now, six out of ten homes in India don't do any proper waterproofing. The job is to make this six, reduce it to three, and you know, automatically the market becomes far, far larger.
Mm-hmm.
This is about creating categories. Whether it is like, you know, tile adhesives where people normally just use sand and cement and don't use an adhesive, these are all growth categories. You could also have growth geographies like Bangladesh. You can have growth channels like e-commerce and in fact, that segues well into your second question.
Mm-hmm.
As an organization, obviously we're dynamic, we're always experimenting both with new channels and new initiatives. Just to give you a perspective, we have an initiative called Pidilite Ki Duniya, which is a small rural stores in villages with a population of below 10,000. We now have close to 7,000 Pidilite Ki Duniya. In these villages, there will be practically no other home improvement company that reaches directly. We will be the only one in most cases, there may be some getting it from wholesale.
Mm-hmm.
That's in our channel. For obviously e-commerce, three years back what we were selling in a year, now we sell the same in 20, every 20 days. If you go to Amazon, the number 1 drain declogger, the number one rust remover, the number 1 leak kit, all are Pidilite products. We are obviously looking at a whole lot of action there. There's the modern trade, the emerging channels. We keep experimenting. We keep carrying along. Remember, you know, it's difficult, Amit, to make a prediction of what will happen in thee to four years. In India, things move slowly, but they move surely. Our job is to make sure that we are in each of the emerging channels without trying to disturb the balance across channels.
Sure. Sure. I mean, probably on the first question, which I was trying to understand is that over a period of time, the variance of growth categories which have gone up and probably the core categories, if I'm not wrong, I mean, should we assume that it should be now core could be less than 30% of the total sales or the Consumer and Bazaar, let me put it, or is that the way to think or?
Five years back it was 75% core and 25% growth in five years.
Okay.
It's now about 2/3 and 1/3. In the next three years we will make it 50/50.
Okay. Okay. More in favor of growth in that case. Okay, that's helpful. Lastly, on that, the second part, just a follow-up on that, I wanted to understand is that, are you setting some, I mean, broader variance? I mean, do you think this one-stop shop is a kind of, could scale up very significantly and could be, let's say, double digit or, I mean, I don't know what is the variance in the industry mix, so, pardon me for my limited understanding. I just wanted, your what would be the mix like just to get a sense, of this, how this, I mean, distribution is shaping up. That's it.
When you say one-stop shop, you refer to?
I mean, it could be, I mean, there are stores which are coming up like, Hippo by Dalmia Cement.
We are participating there, yeah.
Correct. Correct. There are standalone. I mean, there are many players who are actually looking at this as an option in terms of building a format. I actually, I know this it will be very small. Maybe say, if you could share what is the e-commerce right now, like you indicated the growth trends, but what would the variance would be? Whether 2%, 3% of our total or 5% or what would be fair then?
As far as e-commerce is concerned, it's best to look at it as a % of the consumer products business.
Yeah.
Because a lot of trade businesses, e-commerce is much, much smaller.
Mm-hmm.
We are slowly reaching the same FMCG averages.
Okay.
As long as these one-stop shops are concerned, it's too early to say. We participate in a lot of them. We actually hold hands with a lot of them. From a consumer perspective, I don't see any of them which has been a you know, a runaway success.
Sure. Okay. Thank you. Thank you so much, sir.
Welcome.
Thank you.
Ladies and gentlemen, if you wish to ask a question, please press star and then one. The next question is from Akshaya of Canara Robeco. Please go ahead.
Yes, sir. Thank you for the opportunity. One question is that if I recollect, VAM is just 25% of your raw material basket. There you did talk that it has corrected from 2,000- 1,200. Sir, if directionally if you can give sense on the balance 75% of the raw material. I know there would be many, but just a broad sense if you can give, like do you see some cooling off there also or how do you see them?
I think we have seen softening in most of our input costs. VAM since it is the largest by far, we specifically call out the cost trends of VAM. In the others also there is cooling off. Just keep in mind that the other raw material basket had not increased at the same pace as VAM. VAM, just for your reference, kind of more than doubled in a very short period of time. There the correction also has been equally steep. In other raw materials also there has been a softening in prices.
Okay, sir. Thank you, sir.
Thank you. Ladies and gentlemen, to ask a question, please press star and then 1. The next question is from Tanya of ICICI Prudential Life Insurance. Please go ahead.
Hi, team. Sir, the question is, in general when most of the consumer goods companies are talking about some kind of demand slowdown, any specific, company specific factors which gives us optimism about the demand for our category?
In our categories, what we are seeing crude oil, there is a tailwind. Ever since the, you know, reduction stroke, coming down of COVID, consumers seem to have evaluated their relationship with their own homes. Therefore, we've seen a lot of consumer attention to both renovating and expanding stroke, therefore looking at new homes. Which is why one of the reasons we are seeing real estate come back so strongly. Now, that obviously, serves as a multiplier for us. Also, as you see, you know, things like hospitality, malls, shopping, As the consumer goes outdoors, if something, you know, a hotel has not been used for two years, so on and so forth, it needs a certain amount of renovation.
Both from a commercial activity as well as from a household activity, both in new construction and repair and renovation, we are seeing a certain tailwind, and that's probably why the home improvement sector is still fairly sanguine about demand conditions. Let's see how that turns out in the next six months.
Okay. Okay. And sir, those subsidiaries, Nina and Percept used to be a separate subsidiary, which saw some slowdown as well as we chose shrinking some of our business to be more conservative. So are we seeing a pickup there also in terms of B2B application business of waterproofing?
Actually, the B2B business of waterproofing is picked up, has come back very strongly because, A, there is a lot of investment happening both in, you know, corporate, whether it is offices, manufacturing factories and of course government infrastructure. Actually the Nina Percept business is the whole actually large user business is coming back very strongly in the waterproofing segment.
Okay. Sir, lastly, in terms of, I mean, without naming the building or both of our categories, adhesives, as well as waterproofing, where other large players are entering or have entered in last two years, when now, raw material basket is in our favor, any upside cap beyond which we would not like to go in terms of EBITDA or gross margin, and would like to go for growth, any cap or any, say, broad guidance on the profitability?
We've always maintained that we would like to focus on profitable volume growth. We've always indicated that we are comfortable with margins in a certain range, which is the 20%-24% range. Because that we believe reflects the right priced equity for our brands, that's where we intend to remain. As far as competition is concerned, obviously we are no strangers to competition. With the kind of market shares we have, we will have new competitors pretty much every quarter, that has been happening now for, you know, at least the last 10 years.
Okay. Got it, sir. Thanks a lot and all the best for the future. Thank you.
Thank you, and all the best to you too.
Thank you very much. Ladies and gentlemen, if anything else to ask a question, please press star and then one. Our next question is from Rajesh Gajra of Informist. Please go ahead.
Yeah. Hello, Mr. Puri. I just wanted to ask you that your B2B sales and profit, they were down year-over-year in the December quarter. Just wanted to ask, how is it going in the current quarter so far in the first 25 days of this quarter as compared to the December quarter?
As far as B2B sales is concerned, just let me give you a background, Rajesh.
Sure.
Basically, there are two aspects to the business. Wherever there is strong domestic business, like for example, waterproofing, there demand conditions are strong and the business is doing very well.
Mm-hmm.
Where the business is suffering is really wherever we have exports, especially to the Western Hemisphere and where our customers have exports, you know, whether it be leather, whether it be textiles. The largest impacted of this is pigments.
Mm-hmm.
where our pigment exports have been substantially hit. If you look at all the other pigment companies, you will see the extent of the problem.
Mm-hmm.
In the first 15 days or 20 days of January are no different from December, at least for the international export-oriented businesses. The rest of the domestic businesses are normal.
Okay. Okay. Thank you. Thank you.
Thank you very much. Ladies and gentlemen, if you have anything else you wish to ask a question, please press star and then one. Our next question is from Sheela Rathi of Morgan Stanley. Please go ahead.
Yeah. Thank you very much. Hello, Mr. Puri. You talked about the market share trends, you know, and you said that, you know, competition has always been there in the space and you are the leader there. Just one question I had here was that, have you seen a resurgence of, you know, smaller and regional players in the last one quarter? You know, inflation has eased and, you know, all the supply chain related issues are behind us. Is there a higher competitive intensity which has picked up? Not in general for your sector, but in general across the space, you see that as a theme playing out.
Thank you, Sheela. Always a pleasure to hear from you. I think your observation is an astute one. We haven't seen that in the 3rd quarter, but we are seeing signs of that beginning because obviously a lot of the small regional players who had suffered greatly because of this raw material inflation situation now are finding the situation a lot more to their liking. The way I would answer that is in the next 3-6 months, we definitely expect a lot more increased competition from them. Obviously we are prepared for it.
Then how should we think of margins going ahead? Things are in favor, but at the same time we will see competition.
See, that's why, you know, a lot of times, a lot of analysts keep asking us the question as to why don't we take our. You know, we had quarters where our margin, when raw materials have been benign, have gone up to 27%-28%. We've always said that we prioritize volume growth and market share over a greater margin. We believe this margin range allows us the right, you know, price to equity relationship for our and also keeps competition at bay. That's where we remain.
Sir, would you like to give any sense on how the margins could, you know, play out, say, you know, by the end of the year?
Very difficult. See, as we consume all of the higher priced inventory, the margins will steadily go up.
Mm-hmm.
I would suggest that the best margins will be the exit March margins, and quarter one will follow. I mean, I think we'll be at fairly our normal range during that time. I know, Sandip, you want to add something? No, no, I think absolutely. I think we will see, as I said earlier, margins improving throughout the fourth quarter. We would certainly look to hit the range by the time we exit March.
Understood. Thank you. Just one more question. I joined the call a little late, so I'm not sure whether this was addressed. Sir, you had talked about the CapEx plans last year. If you could give us some update in terms of where we are, and also on the distribution side in terms of how much distribution we have added in the last 3 months.
Okay. As far as the CapEx is concerned, as we've always maintained at Pidilite, we are prepared for the next phase of growth. In the course of the last 24 months, we've expanded and completed expansion of seven of our brownfield factories, and we've completed five new greenfield factories. There are another six brownfield expansions currently going on, and there are each new greenfield factories in progress. All of these will complete in the next financial year. That's as far as CapEx is concerned. As far as sales and distribution is concerned, at Pidilite we've always been clear that sales and distribution is a very strong driver of growth.
In the first nine months of this year, we've actually added a little over 2,100 towns, which actually are villages with a population of between, you know, 5 and 10,000, to our direct distribution reach. We actually now cover about 32,000, you know, towns/villages directly. That process is an ongoing process. We now have 7,000 Pidilite Ki Duniya, which are the small retail stores in villages between 5 and 10,000. Our dealer app, which is the Pidilite Genie app, now pretty much gets 10% of our sales is coming via the app. It doesn't need a salesman or a distributor to call. It's directly via the app. We've got a whole set of initiatives which is around, you know, A, sales and distribution expansion, both quality and, you know, with width and depth.
We've got a set of initiatives around a resilient supply chain in terms of both factories and warehouses. We've got a whole initiative around digitization, which includes, you know, whether it is e-com, whether it is analytics, and whether it's our internal digital programs. Obviously we've got a whole program around innovation. We've introduced a whole range of new products across all of our major divisions. Piacciolar has a new premium variant called Hi-Per Star . In the waterproofing business, we've introduced a new economy waterproofing solution for exteriors called Raincoat Neo. We're doing very well in the roof acrylic coating segment with a brand called Roof Seal. In our consumer maintenance businesses, we've launched this product called Home Fix, which we're testing in Kerala, which is a substitute for nails. You don't need nails.
Like this, I mean, I can, you know, we can take you through a whole round of innovation where pretty much every quarter you will see one major and two minor innovations from our divisions in Pidilite for the next 12- 18 months.
This is very helpful. Thank you, sir.
Thank you.
Thank you very much. Now we can take the next in queue. If you wish to ask a question, please press star and then one. Our next question is from Shashank Krishnakumar of Kotak Investment Advisors .
Hi. Thanks for taking the question. You called out that you saw an improvement in November and December over October. Can you just comment on how the demand trends in the consumer and DIY segment have been in these first few weeks of time?
I think I mean, we've seen the same trend continue, Shashank, in January.
Okay. Okay. Just a second question on innovation. Can you just call out what the contribution from new products have been in the first nine months of FY19?
See, we have a very simple objective at Pidilite that one-third of our growth should come out of innovation, ±10%. We keep focusing there.
Okay. Thank you. Thank you.
Thank you, sir. Ladies and gentlemen, if you wish to ask a question, please press star and then one. Our next question is a follow-up from Purushottam from Upstox. Please go ahead.
Yeah. Thanks for taking my question. Sir, I'm referring to slide number 16 and this is related to Araldite. Sir, where do you reflect Araldite in this industry segment composition? That is my first question. Second question is, when we acquired Araldite brand, you must have prepared the projected revenue. When we look at this first three quarters performance of Araldite sales, are we on track with reference to the assumed revenue that we expected out of Araldite acquisition? Thank you.
See, I'll need to answer the question, the first part of the question. On the second part, Purushottam, we are absolutely, in fact, we are beating our acquisition case on Araldite from a revenue and a profitability base. I mean, if you, when it was reported as a standalone business, if you look at the kind of growth rates that we had, I mean, Huntsman grew it at an average of 6%-8%. Obviously, we've grown it at a much better rate. Yeah, and your question on how we report Araldite, we report it as part of the Consumer and Bazaar segment. Because the company has got merged with Pidilite from 1st April 2022, so we are showing Araldite sales and EBITDA as part of Consumer and Bazaar segment.
Okay. Thank you.
Also to make a comparison, to make the previous year data comparable, whatever the Araldite sales were in the same period last year have also been added, so that the numbers are comparable.
Okay, thank you.
Thank you very much. Ladies and gentlemen, again, if you wish to ask a question, please press star and then one now. We will pause a moment to see if we have any further questions. It would appear that we have no further questions. I would like to now go back to management for some closing comments.
No, no real closing comments. Just thank you to all of you for your continued interest in Pidilite. All of you have a great evening. Thank you.
Thank you, everybody. Hello? Hello?
Ladies and gentlemen, on behalf of Prabhudas Lilladher, we need to limit it and conclude this conference. Thank you for joining us, you may now disconnect your lines.