Q4 20/21

May 13, 2021

Ladies and gentlemen, good day, and welcome to the PG Life Industries q four FY twenty one earnings conference call hosted by ICICI Securities. 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 0 on a touch tone phone. Please note that this conference is being recorded. I now hand the conference over to mister Jigarsha from ICFC Securities. Thank you, and over to you, sir. Thank you, Rutuja. Hello, and welcome, everyone, to Pidylite Industries q four and q four FY 'twenty one earnings conference call. We have with us today Mr. Apurva Parekh, Executive Director Mr. Bharat Puri, Management Managing Director and Mr. Pradeep Panan, CFO, to take us through this result. I have without much ado, I would like to hand over the call to Mr. Pradeep Manant for his opening remarks. Thank you. Thank you, Jigar. Good evening, everybody. This quarter witnessed robust broad based growth across all businesses and geographies. Despite significant challenges in FY 2021, we have displayed adaptability and resilience while building capability and capacity. I'll begin with a summary of the financial performance for the quarter and year ended thirty first March twenty twenty one. On consolidated basis, net sales at 2,230 crores for the quarter grew by 45.3. Excluding the newly acquired Huntsman subsidiary, PAPL, growth was at 38.2%. This was driven by a 50% growth in Consumer and Bazaar segment and an excess of 20% growth in the B2B segment. Full year 2021 net sales at INR 7,251 crores was flat over last year. Gross margins for the quarter were impacted due to significant inflation in input costs. Material cost as a percentage to net sales is higher by four forty basis points versus same quarter last year and three ninety basis points versus previous quarter. EBITDA before non operating income at INR460 crores grew by 52% over the same quarter last year. EBITDA for the year ended stood at INR1683 crores and grew by 7% over last year. On a like to like basis, excluding the newly acquired subsidiaries, EBITDA in Q4 grew by 413% for the full year. Moving on to stand alone performance, net sales at INR1851 crores grew by 42% over the same quarter last year with underlying volume and mix growth of 40%. There was a 45% growth in sales and volume mix of Consumer and Bazaar segment and 26% growth in sales and volume of B2B segment. Robust growth was registered across all major categories like adhesives, construction chemicals and DIY segment driven by continued momentum demand momentum in both rural and urban geographies. B2B segment posted sequential volume and value growth in excess of 26%, aided by gradual and consistent pickup in economic activities. Net sales for the year ended at INR 6,187 crore, declined by 2% year on year. Our key raw material, vinyl acetate monomer, procurement rates over the last few months have increased from around $930 all the way up to $2,000 There has also been significant increase in other input costs. Capacity disruption at manufacturing sites, overall pickup in global recovery and strong domestic demand have led to this inflation. Consumption cost for quarter four twenty twenty one of VAM is approximately US1200 dollars compared to US925 dollars in quarter four twenty twenty and $875 per ton in the previous quarter. Marginal cost as a percentage of net sales increased by three eighty eight basis points over the same quarter last year and three seventeen bps versus previous quarter. EBITDA before non operating income at INR408 crores grew by 43% over the same quarter last year. EBITDA for the year ended 2021 was at INR1550 crores and grew by 4% over last year. EBT before exceptional items at INR $3.76 crores grew by 43% over the same quarter last year. EBT for the year ended 2021 was INR1457 crores and declined by 3% over last year. Moving on to subsidiaries, domestic subsidiaries in the C and B segment have shown healthy growth. Subsidiaries in the B2B segment have shown early signs of recovery. However, with current inflationary trend in input costs and construction activities being impacted due to extended lockdown in many parts of the country, timing of recovery is uncertain. Our newly acquired subsidiary, Pedalite Agencies Private Limited, formerly known as HMSPL, has shown sequential monthly improvement in sales and business is growing in well over double digits during the quarter. Our business and financial integration has progressed smoothly as per the plan. We expect better realization in margins after the current raw material cycle is settled and growth momentum expected to continue. In terms of way forward, the current second wave of pandemic poses challenges and demand outlook remains uncertain. Despite pricing and cost actions, we expect margins to remain under pressure in the coming quarter. Our focus is to ensure supply, service and customer end user connect when markets are operating. Satellite remains committed to working with our partners to overcome this crisis. I'll now hand this back to Jigar and the hosting team. Thank you, sir. You can go forward with the question and answer. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. 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 Abhishra Abhishra from EagleWise. Please go ahead. Thanks for the opportunity. My first question is on vinyl acetate monomer. So 2,000 rupee $2,000 pricing is absolutely unheard of. Last quarter, you had said you have not taken price increase, and you said you'll try to manage the product mix rather than taking price hike. What is the situation now, and what is the view on VAM? Is it just a very short term such a tough spike? Sure. So so I think yeah. Sorry. Please go ahead, sir. I do you want me to go ahead, mister Bharat? Oh, sure. Oh, sure, Please go ahead. So, Amish, good to hear from you. See, $2,000 a ton is unprecedented for van vinyl acetate monobrands. So we have already taken price bit at the March, in the March, and we are taking price again in this month, which is in the month of May. We will cover to the extent of about 75% of inflation. Our belief is that this is not due to a demand situation, but due to supply constraints as a result of a number of factors, which includes The U. S. Storm and therefore closures in The U. S, Europe buying from Asia, increased demand and plant closures in Asia. We believe in the second half of the year, this will moderate. We will keep a close watch. But yes, as far as the first six months is concerned, this is definitely going to have a substantial impact on our operations, and therefore, we've had to take price. And, sir, this kind of a sharp inflation, do you see regional smaller players losing market share? Without any doubt. What tends to happen in a situation like this is this is unprecedented, and therefore, the domestic market shoots up much more. People like us, obviously, have larger inventory, and it takes time, for us to work through, you know, in a sense lower priced inventory. For the smaller and regional players, it hits much harder and supply itself was a constraint for some period of time. So if I look at the last four months, I believe we would have also gained market share. Sure. My second question is on two of your underperforming segments. So, essentially, if I see MENA and if I see Middle East and Africa, they have two very similar traits. Hardly any sales growth, EBITDA loss this quarter, base quarter, full year for both the businesses. So if you could tell us what is the way forward and what is the plan here? Do you plan to kind of consolidate and maybe reduce exposure in these two businesses? See, very different. Let me give you a overall picture. As far as MENA percept is concerned, this is our waterproofing higher end contracting arm, which suffered massively as a result of the countrywide lockdown last year. And by the time labor, etcetera, came back, it was probably six to seven months. Actually, in the last quarters of this year, the business started picking up fairly well, and it's unfortunate that we've got into wave two. On a structural basis, the business is a strong profitable one, as you've seen in the past. Actually, in the last five months, our order book has actually become quite healthy because as the government is putting in infrastructure projects, we have gained a fair amount of these projects. But in the short run, again, because of closure, because of lockdown and also this unprecedented raw material situation, it's almost a perfect storm for Neenah. But over a period of time, whether that will be six or nine months, the business will come back to its normal shape. As far as Middle East Africa is concerned, are only, I suspect, looking at the pigilized Middle East subsidiary, you are not looking at the overall as an overall picture, actually, in the Middle East Africa, we've grown this year, Africa actually far more substantially because that also includes exports from here in the nine months of actually, even for the for a twelve month period, our export business has grown. So really, therefore, as far as Middle East and Africa is concerned, it is back in action. And actually, fortunately, even though the current period, it continues to do well because there are no lockdowns happening either in The Middle East or Africa. So two different businesses and therefore different answers. But what is the issue with that business, sir, which is having losses Middle East Africa? That is a very small manufacturing part of the business, which is manufacturing powder. Given the situation again in The Middle East last year where they also closed down the substantial period, labor went back, etcetera. Therefore, we suffered with these sub specific subsidiary. But if I aggregate my Middle East Africa business, it is a very healthy business. Yes. Sir. That's very helpful. And just one small last question. So on funds, sir, you have given the numbers. Thanks for that. So 34 crores EBITDA on a 109 crores sales, that's a extremely good EBITDA margin of 31%. Obviously, far superior than the reported stand alone, etcetera. My question is, is this the real sustainable margin? Here also, my sense is raw material will impact. But if I compare Huntsman to your own segment, is it comparable margins or currently some cost in Huntsman are not there? You're not advertising? No. See, at an overall level, we always maintain, even when we took over the Huntsman business, we had signaled that actually it's at an EBITDA margin higher than our business. Having said that, the two raw materials that have seen the sharpest increase in the chemical sector are VAM and the epoxy resin. So this is again, this is another business which over the next three to six months epoxy has its impact. Even here, we've taken substantial pricing, but not to the extent of the raw material increases. And therefore, overall, structurally, this is a solid profitable business. In a steady state, it will probably be at higher than the aggregate margin of Pedalite, but equivalent to Pedalite's good businesses. In the next six months, again, because of the epoxy resin situation where epoxy resin prices are pretty much have, Pradeep will give us the details, but it is pretty much doubled. So therefore, as a result of that, next three to six months, you will see some moderation of margins. But structurally, we're it's it's like a star petilide business, and therefore, it will be at the higher than the aggregate petilide, you know, aggregated margin. Sure, sir. Thanks, sir. That's very helpful and all the best. Thank you, Abhish. Abhish, Abhish, just to just to close the point which, you know, Bharat was talking about. So epoxy, actually, their prices have gone to almost 200 rupees a kg versus about between 150 to 200 rupees a kg. So there again, you know, the prices have indeed doubled. So that is another category where you have to take pricing. So just to close that point. Thanks. Sure. Thanks. Thank you. The next question is from the line of Prashanth Kasi from Syndrom Mutual Fund. Please go ahead. Yes. Thank you very much for the opportunity, sir. Congrats on a very strong sales performance. Well, I understand, sir, it's a little difficult to say at this point of time how things might be at this point of time from a demand standpoint. But generally, just looking at how the recovery happened and the pent up happened pretty soon as far as our categories were concerned last time. And also in terms of the impact that you're probably hearing across the board, construction activity in general seems to be slightly better off. So is there a little bit of optimism over here that the recovery will be much more faster when it comes to a lot of our categories are concerned? That's just the only one question which I had in terms of your thoughts. Thank thank you, Prashad. I I wish what you were saying was true. Frankly, the answer to that is we don't know. As of now, pretty much 70% of the country is closed down. And while there is some construction activity, it is at a much lesser level. How soon it will bounce back? Frankly, it will be directly proportional to the reduction of the pandemic. And, very difficult to say as to, you know, will it bounce back as quickly, far quicker. Last year was encouraging, but I would not hazard any guesses of how it's going to play out this time. Just if I can probably extend this, even in terms of, let's say, even the last three months, how they've gone, they've been pretty strong. Did the trend kind of happen to continue in terms of April until the lockdown happened? And why I'm asking about most of construction activities specifically is we do a lot of project business as well. So are those projects still continuing despite the pandemic going on? That was the context also. See, two things. One is, whenever business was opened in April, what we saw in April is whenever business was not locked down, it was continuing at a good rate. Whenever we started closing out, it started with Maharashtra, then parts of Gujarat, Madhya Pradesh. So it was all pretty much proportional to the pandemic. Even on projects right now, what we are seeing is there are very few projects that are declared essential services. And therefore, even projects are impacted, though there is at least some constructs the basic construction activity is still on, but not at the same pace as it was on earlier. But yes, I mean, projects, you still have some activity, whereas in the retail market, pretty much 75% of the country today is closed. And just if I could probably squeeze in one more in terms of a follow-up. You highlighted that, obviously, because of VAM, a lot of the unorganized would probably struggle. And again, the pandemic too coming in, second wave coming in, it's going to be even more of a struggle this time for them. Any sense in terms of how much are we hearing? Incentives are probably an organizer kind of an issue is probably kind of getting shut or probably you feel that they really don't have a chance to come back in both scenarios where demand is also bad and even my cost scenario is also really bad. So to be honest, it's a very sharp gain in our as per organized to unorganized is concerned. Is that a fair assumption? I don't think so. You know, I think a lot it happened more substantially. We saw them slowly coming back. Yes. They were suffer, but See, they have a reason to invest, and that reason, you know, by today is more difficult because of both the, commodities and situation, the pandemic, and actually also, it will start impacting liquidity. So in in our view, they will continue to exist. We do believe that at least in the, shorter period, we will continue to gain market share because, a, our supply chain is far more adapted and resilient and therefore has far more sources of supply. The other thing is consumers also tend to turn, you know, to trusted brands whenever there is adversity, and I think both those things benefit us. Sure. Sure. Thank you so much, and all the very best to you. Hoping for a quicker return. Thank you. Thank you, Prashant. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants, please limit your questions to one per participant. If you have a follow-up question, you may rejoin the queue. The next question is from the line of Parsipanthati from IIFL. Please go ahead. Hi. Good evening, team. Couple of questions from my side. One is on the costing and pricing. So firstly, could you give me an idea of what is the weighted average price increase that you have taken for the portfolio? And secondly, these input costs, as you said, inflation is very unprecedented. So what's the call or view you are taking in terms of where these prices are going to stabilize? Because your pricing your future pricing is going to be based on some kind of view that you will take on these commodities right now. Great questions, Percy. I mean, the first part is that given the breadth of our portfolio and its different sizes, very difficult to look at weighted price, what is our weighted price increase because we just have two large agreements across too many divisions. At a broad level, what I can tell you is currently, we are pricing at 75% of inflation. Our belief, therefore, is that in a worst case scenario, over the six month period, the current raw material prices will come down to at least the 75% level, which will, in a sense, enable us to come back to normalcy. And that's what we are planning on, but we will have to play this, in a sense, week by fortnight by month and keep a close watch and then see as to what's the action we need to take. So if I understand you correctly, what you're saying is if RAM is at INR 2,000, your current pricing is sort of assuming that if it comes down to INR 1,500, you should be okay? It comes down to yeah. Between 1,200 and 1,500 is where we assume it could come down at a at least in a six month period. Right. And I understand it's difficult to give a weighted average pricing. So in that case, could you just give us a couple of examples in your largest selling products, what kind of pricing you have taken without averaging it? See, again, difficult to distinguish, like, take, for example, in Fevicol, again, remember, because even brand Fevicol in woodworking has a large number of SKUs and the pricing is different across SKUs. Pradeep, would it be fair to say that the aggregate price increase between March and May for FebiCol would be in the range of between 4% to 6%? Yes, that will be correct. Okay. Got you, sir. Second question is on the demand scenario, and I know it's very difficult to forecast out, but just wanted to get a sense on what is the situation right now. You mentioned that 75% of the shops are completely closed. Did I hear that correctly? Yes. Pretty much 75% of the country today is under lockdown, which means shops are closed because a large part of our shops, with the exception of very few, are not classified as essential services. Right. And construction is, I think, classified as essential. So even I mean, there there would be some amount of direct sales that might be happening construction. So what kind of percentage of your portfolio is exposed to that which would not be effective? There is some amount of sales happening, but again, it is less than 20% of the overall portfolio. Okay, sir. That's all from me. Thanks and all the best. Thank The next question is from the line of Abhi Mehta from Macquarie. Please go ahead. Hi. I just had two questions. First, I wanted to clarify this $2,000 essentially, is there a very wide range? Is there a lot of volatility in the bank that you're witnessing? Or is it like it's broadly going to be remaining at that level, A? And B, is the is mix going to be a lever that you will use again in this quarter to kind of offset this impact, the product portfolio mix? Thanks, Savi. Yes. I mean, the two there is a substantial amount of volatility in NAND prices, but unfortunately, volatility is only one direction, which is going to now because of the various problems. We saw it start at $800 and it is inched its way up to 2,000. We haven't seen it start moderating yet. We believe, by June, it will start moderating, in our belief. Mhmm. So that's the situation on when? And the the second part of your question was? Was essentially mix. Do you would you look to kind of play the product portfolio like, you know, SKU mix? That that that as a matter of strategy, we keep doing, which is the whole game around premiumization, innovation. But in a situation where currently, the, you know, demand itself is strained, very difficult, but that is I mean, the mix an improving mix is, anyway, part of our regular strategy. Okay. And just the last bit, you know, just a clarification, if I may. I was a little surprised to see the FY '21 performance, basically, positively surprisingly, this is segment and a little bit, kind of surprised to see the waterproofing segment performance. So, we have seen quite healthy growth while waterproofing is more or less flattish. Just wanted to understand you know, my expectation was waterproofing will actually continue to do well. So what am I missing? Yes? No. No. What what you are looking at is only the the organized high end institutional waterproofing, which is by Anita Percept. Right? No. No. I'm looking at the shared so what I'm doing is I'm looking at the shares that you give out. The f y twenty one shares that you've given, if I compare it with the f y twenty shares, they're more or less flattish in the waterproofing side, which suggests that the waterproofing is close to zero minus one. That is because you've seen a substantial decline in the Dina Percept business last year, you know, given that the high end waterproofing was closed pretty much for six months of the year. Yeah. So the large one large part of waterproofing, which is institutional waterproofing, is where everybody suffered. When I look at my overall waterproofing portfolio Yeah. Actually, waterproofing has grown at a rate much higher than the average. So, actually, one of our big growth drivers over a nine month period has been waterproofing. So actually, waterproofing is leading the growth rather than lagging. Okay. And adhesives would be would be a little bit of a laggard, if that's the way I should would that be a fair bit? I think and and issues have all remain very close to the averages. Last year, because of all of the issues, b two b would be a little bit of a laggard. Okay. And so where I was going with this is for the second wave, I mean, first lockdown, while it may not be an exact mirror image, it gives you a sense on how you can expect. Would that would you what would you say the risks to that assumption? I would say there are three risks to that assumption. The first is last time, rural and small town India was not impacted pretty much through the whole pandemic. This time, we are clearly seeing signs of that being impacted, and therefore, will that leave the growth or not is to be seen. That is typical. The other thing is last time, because it is a full lockdown with everything closed, B2B tended to suffer a lot more. Right now, we are actually seeing that B2B is suffering far less than retail because B2B is a large case of manufacturing is open, etcetera, and therefore B2B this time suffering less rather than more. And the third thing is last time, the pandemic was worldwide and the world was closed. Unfortunate for us, but in the second wave, we are amongst the worst impacted. So for example, when I look at April and I even look at May, our export sales is pretty much going, as per plan. Okay. Okay. It's only our neighbors like Nepal, etcetera, that are impacted, Middle East, Africa, etcetera, as well. Sir, can you hear me? Yes, I agree. Yes, sorry, sir. So from a product portfolio side also, it would be busy. I was essentially looking from that aspect as well. That would be okay. I would say so. I think in this time, retail will be impacted. B2B will be better. Exports will be better. And waterproofing would be better than some of these Portuguese I would think so. See, by the very nature of the waterproofing product, even if you take a city like Mumbai right now, pre monsoon work is allowed. So even if there is urgent repair and renovation work in waterproofing, that is allowed, whereas the regular retail shops are closed or, you know, renovation is not allowed. Perfect, sir. Perfect. This this is very, very helpful. Thanks a lot. Wish you lots of luck for the future. Thank you very much. Thank you. Thank you. The next question is from the line of Anam Midra from Credit Suisse. Please go ahead. Yeah. Hi. Thanks for taking my question. My question was again on your price increases. So given the extent of inflation in some of your other commodities, I'm a little surprised that the price increase is still four to 6% because what we've seen in the past, I mean, almost ten years back where inflation was very high in some of these commodities, you put in double digit price hikes, and we are seeing that kind of price hikes in many consumer categories where inflation is actually much lower. So is it just that you feel this is a transient phase and you don't want to kind of disturb the market or there is some worry of compression of demand due to elasticity, why your price hikes are not more aggressive than what that could be the same level? See, two things, Arnav. One is, remember when you're comparing with ten years back, our operating margins used to be 10% lower, right? So therefore, the need for us keeping our head above the water and therefore taking aggressive price was different as it is now. You would also appreciate that if you look at the second quarter or the third quarter of last year, normally, we indicate a margin range of 20 to 24%. We were way above that margin range. Right? So therefore, we anyway felt there was a need to moderate margin. Otherwise, we're actually opening our back doors to a lot more of competition. So it's a mixture of two things. One is we believe that we had a certain amount of compression in the margin that we intended to do anyway given the situation that we were in, and therefore, our margins were at a high. The second is, yes, we do believe that these raw material prices, the trends are transient, these are not permanent because there are no permanent factors. There are no demand based factors. These are all related to disruptions in supply. And therefore, we believe that it is far better for us to be the while we may moderate margin for, say, two or three quarters, it's far more sensible rather than us to take price and actually impact the demand on a longer term basis as well as, in a sense, also disturb the market. Sure, sure. That's very helpful. And just one follow-up question on your subsidiaries. So ICA, you had a good ramp up last year going to second half. So in the wood finish market, do you see the prospects here? I mean, in terms of growth, is there a lot more growth now you can do that? You've had a couple of years of this business. I just wanted your thoughts on that. See, ICA remains one of our strong growth drivers. It is we believe the premiumization trend in good conditions is not a long way to play out yet. And we are in the super premium conditions, we are the number one player. And now that manufacturing, we have seen the advantages of that. So we see a fairly long runway for the AICA business and where it's gonna go. Okay. Thanks, Harv. That's very helpful. That's it from my side. All the best. Thank you, Arnaud. Thank you. The next question is from the line of Krishnan Sambamurthy from Motiva Looswal. Please go ahead. Hi, team. Congratulations on a great sales numbers. My question is more structured, Bharat. The broad guidance was that growth in Pioneer category was a medium term would were expected to grow from a third of sales to a half of sales. Now I understand some of these categories, so the growth would have may have been disrupted in FY 2021. A, what was the proportion of broad proportion of Pioneer in those categories in FY 2021? And the time lines by which you are expecting it to be about half of sales now? We had always said, Prishan, firstly, good to hear from you and great question. We had always said that, listen, this is going to change over a five year period. In many years in many ways, last year, it's somebody has pressed the pause button on everything. And therefore, for example, we were building three factories for Pioneer products across Lytrochol, 10x and Grupo Puma. Those have obviously got delayed by six, six months as a result of this. So actually, the plan has got put me at best pushed forward by a year. But when I look at my nine month sales, it is still the growth in Pioneer categories that are behaving as growth in Pioneer. They've grown much faster than the four categories. So we know that the core strategy that we have or the basic strategy we put in place is the right one. Frankly, three or six months in these unprecedented times, frankly, is something that we can live with. Sure. Anything that you'd like to point out where you are particularly pleased with the performance on the finance categories? And any any category that you think the the scale up has been lower than expectation, excluding, of course, the the the the current environment led tightness. See, for example, we've always maintained that irrespective of competition, the waterproofing category is a growth category, and we've seen that evidenced. We continue to be strong leaders and grow strongly in that market. We're now finding a great amount of traction and initial success in the whole area of tile adhesives, which we called out as a pioneer category. So pretty much what we said last year in terms of our strategy has been playing out despite the pandemic. Understood. Understood. Thanks, Praveen. Thanks, Raj. Thank you. The next question is from the line of Ritesh Shah from Investors. Please go ahead. Hi, sir. Thanks for the opportunity. Sir, I have two questions. My first question is on the working capital. If I look at the receivable days, it's the highest one we see in the last twenty years. That's that's what my model is up to. I don't have view on that. So wanted to understand why the reason for receivables to jump up sharply. And secondly, also, basically, inventory days have also moved up both at standalone as well as console. I think it will be a good thing if more of it is on the cost side. So that's the first question. So I would like to understand this. Pravin, do you want to take that up? Then I'll give you a Yes. Yes. Sure. Sure. I'll take it. So I think maybe we should connect offline. Frankly speaking, on working capital on data, actually, in fact, because we've done that review, our data days have, like, sharply come down over the last one year. In fact, our old dues are at a all time low. So I guess we should pick that up and have a conversation. Certainly, between the last two to three years, our data days at the March was the lowest. Even on inventory, whether it is, you know, inventories which are beyond a certain period of time because we keep a very close watch on our undesired we call it undesirable inventory, those have also sharply come down in the last one year. So maybe, you know, we should pick this up. Frankly, we've done we believe we've done a pretty decent job in the in the Friday to meet us here to manage both. Yeah. So I'll I'll be connected to you separately. Sure. Sure. Sure. My second question is we have given numbers on PATL separately on the file slide. Thanks for that. I just wanted to understand when we had done the transaction, I think the number which was indicated was around 500 crores, if I'm not mistaken. And that number actually looks like a pretty steep growth on a year on year basis. So sir, can you give some more color on what it means on a year on year basis? Secondly, is it on back of market share improvement? And what it also implies to the existing products that we had in the same chemistry? Aturva, you want to answer that? Yes. So I think what we had indicated at the time of acquisition was that the business size was close to 400 crores. And our annualized number, if you see for this quarter is about 20% higher. So the business has got off to a good start. And during the last quarter, our other epoxy brands have also done reasonably well. So overall, as a portfolio, we have done quite well in the last quarter. Sir, would we have grown on the market share side as compared to the peer set? There may have been some market share gain. But as you know, it's only first five months since acquisition. So we may have gained some market share. But as our integration happens, full integration happens with Fidelight, then we would expect better market share gain in the future. That's great and quite encouraging. And sir, last question, you did indicate about the price increases. Just wanted to touch upon, have we changed around the discounting or the incentive schemes given the demand is a bit subdued in the current scenario? Thank you. See, we keep doing that on a consistent basis. We keep flexing and so on so forth based on the market, but there's there's no substantial change. But, yes, on a regular basis, like, for example, demand is subdued. Right now, a dealer's concern really is safety, security, and, you know, servicing what orders he has. He's not really worried about who's giving him a greater discount. So, obviously, in periods like this, that's not the focus. That week, on a regular basis, keep flexing that. Sure. And that helps. Thank you so much for the answers, and this should be better. Welcome. Thank you. The next question is from the line of Sejesha from Spark Capital. Please go ahead. Hi. Thanks for the opportunity and congrats on good set of numbers in this context. So now inflation across board, across commodity basket is steep. And obviously, WAM is slightly unprecedented, but otherwise also it looks steep across. So in a hypothetical scenario of inflation staying where it is, what would be your pricing strategy, let's say, for second half of the year? Would you prefer to pass on the pressure to customers? Or would you prefer to let go margins for a while? See, we have always maintained pages that we manage margins in the range and that range is between 20% to 24%. When we are lucky or when we have a great run like we had, say, in parts of last year, it may go up to 25%, 26%, 27%. Hopefully, there should not be a time, but it could in one or two quarters even go below 20%. But at an overall yearly basis, we'd like to keep our margin range between 20% to 24%. We believe that is a sustainable range. That's also a range that allows us to focus on volume and volume growth rather than just purely value. And we're fairly confident that over a larger period of time, we should be able to maintain that range. Now if pricing was to sustain and therefore to be in that range, we need to take greater pricing, we will do that. But my push always is that every inflation situation is an opportunity for us to become a little more efficient. So therefore, we will keep looking at all harder. If you look at our cost management last year, you would see that we've upped the game substantially as far as our own cost management is concerned. The challenge will always be, can we keep getting more efficient and therefore not pricing at 100% of inflation, but maybe at 75% or 80% or 85%, but at least getting some out of cost will be our is the objective we would work with. Sure. This is helpful, sir. So second, you touched upon waterproofing demand. So considering that at least in some markets, are seeing that waterproofing and other construction work has been allowed. So and this demand seems much more nondiscretionary in nature versus, let's say, adhesive or other woodworking demand. So are we seeing any divergent trend in that part of the portfolio versus the rest of the business? See, right now, given that the lockdown is pretty much just less than a month, very difficult to see a larger term trend. But if I was to look at last year, the first business that came back was actually waterproofing, which suggested that, you know, if consumers are spending more time at home than they want to address their home the first. So, if if this, know, depending on how long the lockdowns persist, I suspect we will see a repeat of that this year also. Sure. And sir, last one, Booker Thing. Our portfolio business has also expanded in different direction in the last many years. So ma'am, a percentage of total iron basket, is it still very high? Or what would the number be now? It is let me just simply put it, it is still our number one raw material by a long distance. And therefore, it is still critical to our success. Okay. Okay. That's all from my side, sir. Thanks and all the best. Thank you. Thank you. The next question is from the line of Anand Shah from Axis Capital. Please go ahead. Yes. Hi, team. Thanks for taking my question. Just a couple of questions. Firstly, on waterproofing segment, I mean, you have done pretty well this year, and we are picking up the same from a lot of paint companies as well. So I mean, are we seeing a big market expansion sort of happening? And I mean, is this driven by sort of more consumer awareness or sort of the usage increase or all consumers sort of picking up for connecting their undercoat and all these. I mean, so I mean, what is really driving because we're seeing multiple entries as well as the significant growth rates for all players, including you? The simple answer to that is we've always maintained that as far as, waterproofing is concerned. If you compare equivalent markets, which are similar to India, whether it's Brazil or Thailand or China, the proportion of waterproofing to paint, for example, is amongst the lowest in India, which suggests that India's penetration of waterproofing is extremely low. Now at best, proper waterproofing is done by four out of 10 new homes that are built in India. Thus, as a result, is this a growth segment for the future? Absolutely, yes. And over a large case of that, and we've always said that we said a certain amount of competition will actually help this segment because more of the people greater the awareness, and therefore, it becomes an essential part of actually construction activity. And we have seen the first signs of that. I can't say that it has already happened. It is still a long distance to go. But yes, the waterproofing market, we see the market itself growing substantially. Our objective remains to hopefully get the largest share of that growth. Got it. And within the waterproofing segment, I mean, is it possible to share what would be unorganized of these regional local players? And is it that disorganized by gaining quite a bit of share from that segment as well? Unorganized is not so large. Actually, in waterproofing, you are competing against non consumption because the consumer doesn't know. So they do very basic or no waterproofing. So actually, it's not so much about unorganized and small scale sector as it is about non consumption itself. People are not doing anything and therefore, then suffering leakages and problems later. Got it. Got it. That's very clear. And my second question on this, what do you mean the trade channels that you are developing essentially very relevant in these times? I mean you've seen big pickups in ecom or in trade and you operate like Kibimiya. I mean, any color you can share on the salience of this and what particular portfolios are working for you in this? Absolutely. You see, the simple thing that we have done last year in a sense is focusing on making ourselves stronger. And one of the things that we've done very aggressively is both aggressively expanding in rural and small town India. For many years, we have called that out, for example, as an opportunity. So like, for example, in the year like last year, while most people were holding their manpower constant and not cutting down, we actually added people in rural and small town because we saw that growing. We added about 700 new sub stockists in rural India. We added about 60,000 new outlets. We are covering 7,000 new villages. So therefore, at an overall level, we are clear that where we have to keep strengthening ourselves and rural, small town, e commerce, for example, obviously, growth rates don't matter because the business has gone up for five times, but we focus on that modern trade has come back very strongly. We are clear that as part of our strategy, making sure that we continuously access what we at Pigilide call sales excellence, which includes, therefore, visibility, availability and the quality of availability across different channels. We're pushing it that hard. And frankly, that has given us good results. One of the reasons why we believe we've grown faster than the market is because we've accessed a much larger part of the market than, we have. Got it. Got it. No, that is very helpful. Thanks. Thank you. The next question is from the line of Nitin Sabdell from Green Capital Single Family Office. Please go ahead. Good afternoon. My question is more to Mr. Blenheim. I noticed in the stand alone statement of assets and liabilities thirty one threetwenty twenty versus thirty one threetwenty twenty one. So financial assets investments is down from INR $7.50 crores to INR 169 crores and trade receivables is up from INR 869.99 crores and cash equivalent position is down from $5.64 crores to 109. And so I just wanted to understand why the cash position and cash equivalent position is down, And why is it that, you know, either financial assets of investments we are showcasing, eleven zero eight and then the year around INR 3,312 crores. Can you just explain the fine numbers behind the cash position and the bank balances and the investment differences? Sure, sure. See, I think one of big yes, I think the first thing I'll call out is the cash part. I think, as you know, we had the significant acquisition during the year of the unspent subsidiary, which was worth about INR 2,100 crores. We funded that from our own internal investments. So between the the investment position at the end of the if you compare March 20 versus March 21, there will be significant difference because there was a the entire payout happened in November 20, and therefore, that's not really strictly comparable. So that is one part. As far as the individual current assets numbers are concerned, again, if you recollect March 20, we had a lockdown in the last five or six days of the year or six or seven days of the year. So things like debtors, etcetera, would not reflect a full completed month of business. Here, we have a period of March 21 where we are going at a certain growth rate, and you we've seen the growth rate of, you know, an extra 40%. So when you have the app when you compare absolutes, you'll always see the numbers are higher. But if you look at the number of days I mean, I'm just trying to respond back on the other question which came during the meeting. If you look at the number of days of trade receivables as an example or the number of days of inventory, we have actually had a significant reduction on both number of days of inventory and the number of days of receivables. So I think you have to look at that in terms of the sales that you're doing rather than the absolute numbers. I don't know if it's not clear, we can obviously again pick it off. Sure. Yes. Yeah. Thank you. Plus, the other invitation I'll have is for you is that, you know, because we have funded the full acquisition out of internal accrual, in a sense, what we've also done is we've improved our return substantially because all of you know that currently, treasury returns are fairly minimal. The fact that we've been able to use that money in a business which we believe is obviously already generating a far higher rate of return is something that is advantageous for us in the long run. Sure. Thank you. Thank you. The next question is from the line of Sunita Sushka from UBS Securities. Please go ahead. Hi, Bharat, sir. How are you? I'm very well, Sunita. Good to hear from you. Yes, sir. My question was more with reference to the construction chemicals industry per se. You've obviously been a very strong part of most of the areas. But just trying to understand, do you have any admixtures or any particular strategy where you would kind of address that part of the market as well? See, we have looked at admixtures in the initial stages. We did have them. However, we believe that's a commodity business, and Sedolide is a value added branded player. And therefore, we exited admixtures years back, and we don't it's a pure commodity. It's like things I mean, I hope I'm not causing offense. It's almost like selling cement. It is not where we want to be. And therefore, we exited we don't believe So that part of the market being commoditized, you've kind of decided not to be part of it. But overall, due to the construction chemicals, if you could just you know, is it, like, 10,000 crores, or how big would that market be overall on construction chemicals? It is very, very difficult to estimate because of the you know, everybody has a different idea itself of what is a construction chemical. So therefore, very, very hard to say as to, you know, because there there are various kinds of chemicals that go into construction. They could be for different purposes altogether. So I my own advice would be, Shailesh, I would not hazard a guess because we first have to define what are construction chemicals, then look at the size of the market. If we were to look at just the waterproofing part of the market, no. It would definitely be much smaller than $10,000. Right. Absolutely. And lastly, if I may, I just wanted to kind of ask you in terms of within construction campaign for the construction chemicals industry, obviously, having a rock solid real estate sector and real estate sector being doing well is important. And given the second wave, can there any insights from you as to where are we in terms of the real estate upstream that we have seen last year? And, how are they managing, you know, on the ground? Thank you. See, very early to say. Just too early to say. We did see real estate going through certain amount of resurgence, if I may put it, in the six months between September and March until we ran into the second wave. Right? So I think it is, in a sense, there is a pause in the press, and we don't know where it's going to play out. But just remember, Suneet, I think the overall waterproof construction markets, there are four big markets we play in. There is two home, individual homes, there is five real estate, which is what you are entering to, which is largely a large town. There is individual homes, which is pretty much 70% in India. There is a large institutional market, which could be, for example, the new housing house in Delhi or it could be new factories coming up or new headquarters of company, IT centers, etcetera. And then there is repair and renovation. There is it is suffer with one of the four large things that suffer the the one that tore it to the fortune of the waterproofing market. Right. Got it, sir. Thank you. Welcome. Thank you. The next question is from the line of Nitin Jain from Telfer and Rice. Please go ahead. Hello. Yes. Thank you for the opportunity. So I just have two small questions. In terms of the waterproofing business, is it possible to quantify what is the contribution to the overall portfolio? And are we losing market share to the paint companies here? Because every quarter, we get to know from the paint companies that they are gaining in the organized sector. So I can answer the second part. The first part is very difficult because it depends on the proportion of what, but those numbers are available. I can tell you definitely that we are not we know our growth rates and we see these missing in the marketplace. Remember, as I said, please remember that waterproofing is these four segments that I just referred to, Suneeta, which is organized real estate, individual, new home, repair and renovation and institutional. Remember, the paint companies tend to play a large part in only two of these four segments, not all four. But having said that, frankly, our own belief is well, by no stretch of imagination do we believe we are losing market share. We believe that, yes, the market is growing fast. We think we are maintaining and at times in certain markets we may be getting. But let's say at an overall level, we believe we are maintaining a share in a fast growing market. And yes, I mean, in any market that is growing fast, you will see a lot of entrants. But frankly, I would look at their staying power over a larger period of time rather than look at one, one year periods. Okay. And my follow-up is, regarding the Predilite Kijunya stores. So we seem to have shown a really good growth there. So what is the overall strategy here for, like the growth plan for the next three years or so, if you can See, we are very clear that rural India offers, stabilized, a great amount of scope equalized even for income. We believe that there is a lot of runway for us in rural India. One of the things, therefore however, in the categories that we operate, just making our product available doesn't help. We have to make our product available, and then we have to train people in the usage of the product and, in a sense, create the category. PKDs are one avenue of doing that and like this we have a number of plans which we are doing in rural India and that's working very well for us. One of the reasons why our growth rates are higher than the average is that in rural and small towns, we're doing much better than most. Okay. And, sir, are these, like, exclusive stores or multi brand outlets? No. These are multi brand outlets where we train the fellow in our outlets. But remember, given that these are all in villages with populations of five to 8,000. So in most cases, we are only amongst the only people who access these people. Most of the other fellows, they tend to buy the product from wholesale. They're honestly only company that actually reaches there and then does work with masons, with carpenters and plumbers in training the product and then building it. But these are multigand. These are not these are not fiddly light outlets. Okay. Thank you. That's all for me. Thank you. Thank you. The next question is from the line of Kedar Pailaji from Fortress Group. Please go ahead. Hi. Thanks for the opportunity and congratulations in good shape of results. My question was on the waterproofing segment. You mentioned that this is a future growth driver and you are also focusing a lot of that. So given that the competition is going to increase, a lot of the paying companies are also entering. So do you think it will have a pressure on your margins and pricing, you will have to have a different strategy? So I just want to be your view on that. See, this question gets asked all the time. See, firstly, remember the paint companies are not entering now. I mean, for example, the paint companies have been in waterproofing over the last five years. This is not something new. And it's only that newer paint companies as they the smaller ones see the bigger fellows and they also want to make an entry. At an overall level, we don't see our margins being hit. This is not price competition here. When you're trying to protect your home for a period of time, you want a trusted brand, which does the job rather than look at price. And therefore, we have not seen our margins being hit. We don't see them being hit over a longer. It's not a price competition game. It's about brand and the service and stroke the products that we offer, products that we have. Okay. Okay. Fine. That's it. Other questions have been answered. Thank you. Thank you. Thank you. Ladies and gentlemen, till the time comes free, that was the last question for today. I would now like to hand the conference over to mister Jidarsha for closing comments. Thank you, everyone, for joining the call, and thank you management for presenting an opportunity to hold the call. And now hand over to management for closing comments. Okay. I'll just give a set of closing comments. I think a lot of had been answered. So what has been answered in questions, won't focus on. I just wanted to give an overall view of how does Pedialyte view the overall market stroke situation. We said this last year and we said the same thing this year. As far as we are concerned, we are focused on the India story over a longer period of time. The pandemic is extremely unfortunate, but it's a reality. And obviously, therefore, our first priority becomes safety and security of our people and of our extended business ecosystem, whether our dealers, whether it's our, you know, users, etcetera. And we've actually taken a lot of steps to try and help them. You know, we actually did COVID insurance for our carpenter community, for our nation's community, etcetera. So step one is, in this situation, focus on agility, resilience via first ensuring safety and security of the network. The second thing is we've continued to substantially invest in getting our supply chain to be agile and be much closer to the customer. So something that doesn't get talked about a lot over the last one year, we've actually completed seven brownfield projects, one greenfield project in biotech. As we speak, in progress are 10 new greenfield projects 10 new factories of Pedalite coming up for different product ranges across. Our CapEx remains at the same INR 300 crores to INR $3.50 crores a year. We've actually upgraded, added space or added new warehouses in 10 of our warehouses, again, in terms of getting closer to the customer. We've made a substantial amount of expansion and substantial amount of investment in the rural small town. And I talked about that, so I won't repeat that. The other thing that I'd like to mention is digital. I think Pidelight has always been a digitally adept company, but we are trying to push the envelope. Today, we've got all of our distributor force, all of our sales force, everybody operating digitally. 87% of our dealers are on the pure auto replenishment. Therefore, there is no need for us to take orders on. All our major end users now have loyalty apps, which are being regularly scanned. Our field marketing has got totally automated. We now have for the retailer, we have a Dealer Genie app, and we already have more than three lakh dealers who are actually dealing with us on that app. So a whole set of measures, which I can take you through. But one of the reasons of our competitive edge has been digital, and this is something we are pushing substantially. The other, obviously, is innovation. All of you know that Pedalite is known for innovation, not just innovation in communication and advertising, but also in products. So we've had a whole set of ranges of products, whether it be in the construction, chemicals, waterproofing area, whether it be in the Siemens area, which we continue to introduce the moment the markets came back. And that's again been a significant driver of growth. And in the end, I think there is this amorphous thing, which we all call culture. I think at Pedalite, we've always said that it is crisis that tests the character of a company. And if we look at the last twelve months, Pedalite's culture has really, in a sense, been one of our factors that is we were voted as one of the great places to work, so on. But more than that, it is just that people putting up their hand, owning their consumer, owning their customer and therefore ensuring that even in these times, we deliver service that is hopefully an edge better than others has been the overall Pedalite picture. So I thought let me just give you an overall picture. Apoorva, Pradeep, would you like to add anything? No, I think you have covered it well, Bharat. Nothing more to add. Thank you. Maybe the only other thing is we had always said that we believe that Huntsman is an accretive and a very strategic acquisition for us. And you can see in the six months of the results of that that we're already on that road very strongly. Pradeep, over to you. Sorry. No. No. I think, Bharat, all points are covered. I just wanted to if there's no other point, I just wanted to end the call by, well, wishing everybody on the call to stay safe. And, you know, hopefully, you and your extended families are, you know, able to get through the situation absolutely fine. And, you know, hopefully, we'll come out all stronger at the end of it. Absolutely. Thank Thank you. You. On behalf of ICICS Security, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.