Q4 19/20

Jun 18, 2020

Ladies and gentlemen, good day, and welcome to the Payday Life Industries Limited Q4 FY 'twenty Results Conference Call posted by Essex Capital Limited. As a reminder, all participants are in 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 note that this conference is being recorded. I now hand the conference over to Mr. Anand Shah of Axis Capital. Thank you. Good morning, sir. Yes. Thank you, Ayesha, and good evening, everyone. And on behalf of Axis Capital, I welcome you all to Pedralyte Industries Q4 FY 'twenty earnings conference call. We have with us the senior management of the company, represented by Mr. Apoorva Parekh, Executive Director and mister Fadip Menon, chief financial officer. With this, I would like to hand over, the call to the management for opening remarks. Thanks, and over to you, sir. Thank you, Anand. Good evening, everybody. The quarter performance was significantly impacted by the lockdown on account of the pandemic as well as related disruptions in the supply chain. While top line growth remains subdued, earnings have improved substantially, primarily as a result of softer input costs. COVID nineteen is a significant challenge, and Pigilite remains committed to working with our partners to overcome this crisis. As normalcy returns slowly across various markets, we remain cautious and focused on restoring volumes, enabled by investments in brand building, growth categories, capabilities, sales and distribution. I'll begin with a summary of the financial performance for the quarter and year ended thirty first March twenty for the stand alone business. As a result of the nationwide lockdown declared in March 2020, the standalone net sales in the last ten days of the quarter and of the year were lower than the same period last year by around 150 crores. This is equaling to around 11% of q four net sales last year. Lower sales in the last ten days of the quarter and the year resulted in Q4 stand alone net sales growth reducing from around 9.6% as on twenty first March twenty twenty to a negative 4.3% as on quarter end. Full year stand alone net sales growth reduced from around 7.1% as on twenty first March twenty twenty to 4% as on year end. The consequence impact on stand alone EBITDA growth is estimated at a 29% for q four and six percent for full year. The operations at all our factories, warehouses, and branches have started in a phased manner during May and June, and all requisite safety protocols being adhered to in a stringent manner. Most of the employees are working from home and necessary office connectivity is in place. While April 20 sales ground to a halt due to closure of most markets, In May and June, we have seen the country open up for business gradually with rural markets restarting quicker vis a vis urban markets. We observed the markets in the South and the East have opened up gradually with North and West being slower to open up. Large cities continue to be constrained, especially those in West, North, and Central India. We continue to see challenges around labor availability in our own units, warehouses and factories as well as at users and customers. As normalcy returns slowly across various markets, we remain cautious and focused on restoring volumes enabled by investments in brand brand building, growth categories, capabilities and sales and distribution. Moving on, in case of stand alone performance, net sales at INR $13.00 8 crores declined by 4% over the same quarter last year. Net sales for the year ended stood at INR 6,290 crores and grew by 4% over last year with sales volume and mix growth of 2%. This was driven by 2% growth in sales volume and mix of Consumer and Bazaar and 4% growth in sales volume and mix of business to business. Material cost as a percentage of net sales is lower by four seventy one basis points versus the same quarter last year and 192 basis points versus previous quarter. It is also lower by four zero eight basis points when compared to prior year. The consumption cost for q four twenty is around $845 as compared to q four nineteen consumption cost of $1,100. There have been benefits versus prior quarter in dollars, utilized by adverse currency movements. Current spot price of our major raw material, vinyl acetate monomer, we call VAMP, is around $650 to $700 on account of low demand and strict market conditions. We do not believe prices at these levels are sustainable. EBITDA before non operating income stood at INR286 crores and grew by 8% over the same quarter last year on account of softening input costs. EBITDA for YTD March 20 stood at INR $14.85 crores and grew by 14% over last year. Profit before tax and exceptional items at rupees 262 crores declined by 7% over the same quarter last year, mainly due to lower income from investments in current year due to falling interest rates and higher mark to market gains last year. PBT for the year ended stood at 1,496 crores and grew by 9% excluding exceptional items and in current year an income from intercompany transfer of intangible assets and dividend income from subsidiaries in last year. And this grew by 13% over last year. PAT at INR160 crore declined by 34% excluding exceptional items plus previous year write back growth of 3%. For the year ended, PAT at INR $11.00 2 crores grew by 13%. Excluding exceptional items and current year and income from intercompany transfer of intangible assets and dividend income was subsidy, an effect of tax thereon last versus last year grew by 23%. Effective tax rate for the year has been reduced from 28.8 to 22.4% due to reduction in corporate tax rate. Exceptional item represents impairment loss on plant and machinery at the age elastomer project amounting to rupees INR33 crore for current quarter and rupees INR55 crore for current year and impairment in value of investments of a subsidy amounting to rupees 4 crores for current quarter. Current tax for the same quarter last year includes rupees 53 crore being excess provision of earlier years written back and therefore a one off in the prior year. Consolidated performance, the quarter and year end performance was significantly impacted on account of COVID pandemic in India as well as the growth. Net sales at 1,535 crores declined by 6% over the same quarter last year. Material cost as a percentage to net sales were lower by 505 basis points over the same quarter last year and 165 basis points versus prior quarter. EBITDA before profit, before nonoperating income stood at 303 crores, a growth of 9% over the same quarter last year. Profit after tax at 157 crores declined by 34% over the same quarter last year. And excluding exceptional items in previous year write backs declined by 3%. Moving on to our domestic subsidiary performance. Performance of subsidiaries were impacted on account of nationwide lockdown due to COVID nineteen. Lima, Percept and Citi continue to face a challenging market condition in the wake of economic slowdown in real estate, auto and engineering industry. This was further impacted due to the COVID nineteen conditions. Ica Pitalite has delivered EBITDA growth on account of improved margins due to scaled up local manufacturing. During the quarter, company through its subsidiary, Madhu Mala Ventures, has made an investment of INR 71.5 crore in Trend Sukra platform services private limited, also known as Pepperfry. Pepperfry is an online furniture mass marketplace and has operations in India across multiple sites. As an organization, we continuously track the development of the startup ecosystem in adjacent areas and relevant geographies. We intend to support and collaborate with startups from mutual benefits. The company had entered into a definitive agreement with Tenex, HPA Italy, Tenex, also called Tenex Italy, for acquiring 70% of the share capital of Tenex India Stone Products Private Limited for cash consideration of approximately rupees 80 crores. We have this was this particular agreement was entered into in February 20. Tenex Italy is the leading manufacturer of adhesives, coatings, service treatment, chemicals, and abrasives for the marble, granite, and stone industry. Tenex India is a subsidiary of Tenex Italy, engaged in the sales and distribution of Tenex Italy products for the retail market in India. This transaction was completed in May 20. Now moving on to international subsidy. Subsidy, Bangladesh reported higher sales and EBITDA growth for the quarter. Sales for subsidies in Sri Lanka, USA, and Brazil got severely impacted in March 20 due to lockdown in respective geographies. For full year, good sales growth in EBITDA across subsidiaries, etcetera, USA, which is impacted due to onetime tax expense of rupees 6.3 crore. With that, I end my opening statement, and we now open the floor for questions. 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 pencil. If you wish to remove yourself from the press and queue, you may press star and two. Participants are requested to be contacted while asking a question. The first question is from the line of Abhish Roy from EasyWise. Please go ahead. Yes, sir. Thanks for the opportunity. My first question is on the three countries where you are doing well. So Bangladesh, Egypt and UAE, not just q four. Entire year also, have done well and much better than the India business. So what's driving there? If you could discuss a bit of strategy, what is driving there? There there a small size which is helping to more distribution or new products or market share? Yeah. Thank you, Abhish, for the questions. So, actually, it's a variety of reasons. As you know, if you start with Bangladesh, we had we started off as fairly small player in those markets, and we have achieved over a period of time quite strong position across divisions. The performance is driven by your strong activities in the market, the ability to leverage the experience in India, very similar markets to India, and therefore, the experience of working in India, we are essentially transplanted those same experiences in those markets, and we're seeing the benefits of it. Obviously, the fact that when you have a momentum of sales, that automatically also leads to a better improvement in profitability. And these are essentially the factor driving both Bangladesh and also to an extent in Dubai and Egypt. Some of the key products in the electric market have grown well, and we, of course, made sure that we have the right product range for these, for the requirements in these markets. I think the question is your investments, both in your initial remarks also. So, why I'm asking this is, there is a history behind, your investment with Axoma project, and then you have to write off almost the entire investment. So now if I see the investment is extremely new business, which carries very high risk. If you see lot of these, in that segment, many types of closed down, especially post COVID, it becomes that much more difficult. So could you elaborate what really is the reason on Pepperfry? I guess there was news flow on new space and Home Lane. So these are small, big amount, INR 70 crores just in Pepperfry, wherein most of the revenue is just because of discounting. There is a business in survive, three years down the line, big question mark. So what is driving here is if there's a product usage which can get better by the relationship, which you can get beyond equity also. Right? You don't need to have equity to get, sales or any other product sales. Yeah. So, I'll, of course, give a perspective, and, I'm sure Apurva will have a, you know, additional remarks to make on this one. It is like this. You know, what we are what we would ideally like to be as a company is, you know, be present in the areas where there is a, obviously, growth opportunity. And frankly speaking, the online, you know, marketplace is has done well. And going forward in the current conditions that we have here, COVID and so on, it is even possible that these, you know, conversions could be accentuated, and therefore, being present in these segments gives us an opportunity to be very close. Having a equity stake, you know, obviously means that we will have, you know, in a way, a very close collaboration with these platforms, and therefore bring those insights to our organization and which can form a fast strategy. You know, as the market moves, you know, gradually, albeit in a very small manner, to a sort of a platform where ready to make furniture, etcetera, becomes more popular. So we want to be there. Obviously, with COVID having set in and the new developments which are happening, we'll be cautious. We will obviously look at these opportunities much more carefully going forward. But, obviously, the investments we have made have been made with the right set of strategies in place, and some of these points are elaborated. Anurag, would you like to add on to these points? Yes. Amish, just couple of points on this. You know, the investment that we have made are in companies, you know, which are reasonably established. They are still early stage companies, but, however, all of them have had, you know, four, five years of operation, and they've reached certain size and scale. The purpose of this investment, one is, you know, to collaborate with them, which will result in to increase usage of our products and services. And second is also to get a very close view of the evolving ecosystem. Our view is that, you know, as as this ecosystem evolves, if we have a closer view and if we collaborate closely with them, you know, it could result into benefit with us. And, you know, by the and as we are investing in companies which are really ahead in the race and they are not pure start ups, you know, they have proven a certain business case and, you know, we want to work with them to see how it evolves further. So in that process, we have made this investment, and, you know, we very carefully evaluate investment in this space and very selectively, if any investments further investment will made. And you are obviously very long term investment. Right? There's no plan to exit at some stage. No. No. These are these are long term investment, and they are quite interesting. And, you know, as as our partnership with them evolves, you know, you will get a better idea of, you know, what are the overall benefits that we are getting. Our product usage is is one of the benefits, but certainly, these are very long term investment, and they are very strategic in nature. Oh, okay, sir. That's all from me. Thank you. Of course. Thank you. The next question is from the line of Praveen Mehta from IAFL. Please go ahead. Hi team. Thanks for taking the question. I just wanted to get an update on how this first quarter has been post COVID post long term, you have said, but would it be possible to kind of give a sense on what production levels are at versus pre COVID levels and how has that played out? Because you've mentioned there is a labor challenge. So is supply disruption still an issue or it's still a demand? If you could give some clarity with this, sir. Yeah. So, obviously, some of the points that I would say would be sort of repetitive from my opening statement, but I think it's important to highlight it again. So, obviously, the the since April was, you know, virtually, the same ground to a halt, we are talking about May and June where markets have gradually come back. In a way, you know, production is sort of linked with the demand, and therefore, you know, it is not just, you know, you know, we we, you know, open our factories, you know, because those, you know, availability of production or labor. So broadly, I would say that broadly between April where there was, you know, virtually, sales down to a halt and May where broadly 50% of the markets we are working, we would broadly be in the range of about 75 to 80% in terms of, you know, the capacity at which our factories are operating. And therefore, that would be, again, you know, dependent on it will vary by factory by factory, but broadly, that will be the kind of level at which we will be operating today. Oh, perfect. Okay. The second bit was of the input cost. While you highlighted the current price around $7.50 to $65,700 US dollars in rand, what was the average for the fourth quarter? And in linked, is there any high cost in I mean, is the inventory high cost which could be made a pass through of this benefit? Yeah. Good question. So our current quarter four, you know, level is at $845, roughly $850. And you would remember that when we look at the dollar price, there is also, of course, a currency factor that we consider. It depends on the currency impact. Going forward, we typically have a coverage between again, in a way, it's a difficult question to answer. It will be also linked with demand. Typically, we would have, you know, at least a three month kind of a period where we will be covered, whether with raw materials or with finished goods. So these will not really get a immediately passed on, and b, in terms of passed on, in terms of benefits, and b, we don't know, you know, whether these are, you know, as you said, sustainable as we enter the following quarter. So these are the two data points too. Sorry. So this three month is based on the pre COVID or you are essentially adjusting for the change in mind? I just want to look at the confirm or clarify. Yeah. Yeah. Just I'm just adjusting now. I'm just taking it from here on I mean, from Okay. From there on broadly about two months, we will be covered. Okay. Two more two months, we will be covered. From it's probably sorry. From here on, we would be covered because Okay. And the the bookkeeping question, if I may, the employee cost price, is there a reduction in Q o Q basis? And that's all from my side. So employee cost, you know, the point here is that we the employee cost, obviously, is a combination of the fixed cost as well as the performance linked, pays or, variable pay. What we do is we accrue cost as the year progresses. And at the end of the year, we pull it up for the actual performance of the company. And therefore, there has been some adjustments we have taken in the quarter four, to true up for the actual performance and what we'll really pay out in terms of the delinquency. So there are adjustments that you see around that account. So there is no underlying difference or change in the, you know, costs. Okay. Okay. I'll come back in the queue with the other questions. Thank you very much. Thank you. The next question is from the line of Latika Chopra from JPMorgan. Please go ahead. Yeah. Hi. Thanks for the opportunity. I just wanted to check if you could comment on a few some growth trends, you know, you're witnessing across categories. And I have a very specific focus on how are the trends spanning out for the water sourcing business from product portfolio segment for you through FY 'twenty? And how do you expect the growth outlook to look like? And in the same context, how do you think the competitive landscape is shaping up in this strategy? Sure. So I give a sort of a color. I already gave you one color from a, you know, the the type of or the the areas in the country where your growth is sort of returning a little faster. So it's more the rural and, you know, smaller towns which are returning to growth faster than the urban town. That's one point. The second point is that from a, you know, category perspective, wherever there are, you know, the people staying in house or within the house, there are certain categories where there is a trend of greater usage. For example, things to do with, you know, where self help can can, you know, can be done. For example, a fairly quick or a or a or a MC, which is more like a maintenance kind of product, which can be also a do it yourself set of products. Those are the ones which are coming back faster. We are also seeing pockets because of the fact that monsoons are always setting pretty quickly in some places already setting. There is a there is a tendency to do the the repair part of the waterproofing, and therefore, there's there is a sort of a sort of a sort of a demand coming in there because we already lost, you know, April and May in that space. But very difficult to make out a trend because it it it's kind of a current environment unless we wait for all the various factors to settle in. It's difficult to, you know, give a sort of a perspective. The new construction piece, obviously, as far as waterproofing is concerned, was already going through some challenges because of the the real estate sector. Even within that, we see greater opportunity in the smaller towns rather than the larger metro cities, etcetera. So that's the broad perspective. Anurag, do want to add anything from a competitive and other lens on the CC retail? No. I think, you know, despite the difficulties last year, still our, you know, construction and paint chemical business grew double digit in value last year. So there were challenges in real estate and construction segment, but we had reasonable growth rate. Sure. Thank you. Just just one last bit. If you could give us some color on on your domestic portfolio, how much of the debt of the sales in your view broadly will be linked to new construction? And, also, how much of sales will be linked to semi urban and rural data? Any rough sense on that on an aggregate basis for domestic portfolio? So I'll take a shot at the the urban rural one. Again, again, it's not easy because, you know, we have got several products distributed through wholesale and so on and so forth, which, you know, then turn up in the rural areas. So broadly, we believe that around 30% of the, you know, 30 to 35% of the sales will be semi urban or rural, and the balance would be in the the urban, you know, exposure. And afterward, you want to take the call or the other one, new construction? Yeah. I think as far as OEM and which as far as new construction versus repair and maintenance, it's difficult to estimate. It varies very widely from product to product category. Number of our product categories, adhesives, consumer adhesives and all, you know, they they are not linked to that at all. So it's difficult to give a figure at the company level on how much would that segment be. But one thing which I want to stress to you is that even within construction, there is a big difference with what we see as a traditional construction, which is large building, is much smaller part of our business. The much larger business is the individual construction, the individual building. And, traditionally, they are less impacted by the real estate stress. So as far as stand alone goes, lot of businesses from the stand alone, you know, what we call as individual housing. That is a much larger component of even new construction. Sure. This is helpful. I'll come back in the queue. Thank you so much. Thank you. The next question is from the line of Ajam Mitra from Credit Suisse. Please go ahead. Yes. Hi. Good evening. Thanks for taking my question. Just one clarification on a comment you had made earlier. So in the month of June, when I think the supply chain issues are behind and the country is fully opened up, did you mean that the business is at a 75%, 80% of normative levels now when you made that percentage comment? I just wanted to clarify that and on in terms of the recovery. No. What I meant was that 75% 75 to 80% of our, you know, factories are in a position to operate and at a normal capacity. Whether we will operate, whether it will be operating at that capacity, it all depends on the demand situation. And therefore, frankly speaking, we're going to wait for another two months to get a sense of the new normal or the new demand sort of picture. Right. And any comment on what level of normative business you would possibly be now on a run rate? This is not for the full quarter, but on a ongoing run rate basis now that the country has opened up. If if you if any kind of ballpark number you could give us on that? So I would hesitate to say that because, you know, the as I said, you know, there are so many factors playing in. We have got an April which was shut. We have got May which was, like, you know, half of the countries are opening up. So, you know, if you look at June, you you may see suddenly some particular category. And I said, let's say, where somebody wants to do waterproofing urgently because, you know, once in a year. So that doesn't mean that, you know, that's the new norm. So we as I said, it's impossible for us to just teach to give us that kind of phone number. We're gonna wait for a couple of months. Then we'll be able to get a sense that what you know, after it evens out, we'll then be able to give you a picture. So we gotta wait, unfortunately. Sure. Completely appreciate that. The second point was on, you know, the the you've highlighted in your opening comments also that the the bigger problem is in the larger cities. So while you give a rural urban mix, any sense of how how much the metros would be contributing? Because that's where it seems that the activity level recovery is very, very slow because of COVID. I'm afraid I don't have a number to give you, and we don't really track it in that manner. So maybe we'll have to cover time, give you that offline or something. And one thing to add on that about metro is not actually metro is through wholesale market. You know, wholesale market in metro still are traditionally very strong. And what we are finding is already lot of that demand because some of the wholesale markets in metros are shut. Some of this demand is already coming from rural areas and the urban area. And with our deep distribution, you know, once that demand comes here, we are able to cater to it. Understood. And just one last bit, if I may. In terms of carpenters and masons who are the executors, you know, is there any problem of availability of people given the migration that we have heard, or is there sufficient, you know, workforce there to execute waterproofing Yeah. Anurag, you want to take that? Yeah. I'll I'll take that. Yeah. So I think, yes, there is currently, there is a shortage of labor availability. As as all of you know that a lot of migrant labors have gone back to their villages, but some of them are coming back as well. So overall, what our view is that as demand starts coming up, you know, the labor will come back. There may be some temporary gap, which always happens. In fact, traditionally, every summer if you recall last year also post election, lot of labor had gone back, and it does create a temporary impact. But our view is that as as the economy opens up and as the demand starts happening, the labor also will start coming back. But as of right now, yes, there is some shortage. Okay. Thanks. Thanks for the answers. Very helpful. Thank you. Sure. Thank you. The next question is from the line of Young Men from Tokio Marie. Please go ahead. Yes. Thank you for the opportunity and for people to ask questions. Can I just ask, for the revenue up to twenty first March, 9.6% year on year, What's the volume growth and ASP breakdown? Would you be able to give us that? Yeah. So I think the you know, the just give me a second. Yeah. So if you look at our performance or even sort of full year basis, the volume growth was broadly around half, you know, roughly half of the total net sales for for the full year. If you if you look at our full year growth of what we reported up 4%, broadly 2% was volume and mix. So I would expect that broadly around out of the 9.6, about three to 23% on would be volume, but we have not really done our working up to twenty first March to do the working to to to arrive at the numbers. We're taking a differential to give you a sense. Okay. Okay. That's that's that's alright. And and can I ask, what is the current primary inventory compared to the secondary inventory in the channel? Are you able to give you the sense of of of that? How many days of inventory is in the channel And how many days of inventory you have at your factories or warehouses? Yeah. So I'll yeah. Give me the short and of course after all the shipping. So I think the fact is that the quantum of inventory is in this depends obviously on the demand situation and, you know, what is what is the sale, you know, in terms of days that we are talking about. Obviously, when it when you are in a April situation, the inventory is different. And now with the markets having opened up, we typically don't have a significant amount of inventory in the trade. You know that if you look at our dealers who deal with our products, I mean, these are not like you know, they don't have large warehouses with the store products. So relatively, you know, limited kind of, you know, coverage they would have. And therefore, it is not that there is a significant set of stocks lying with the trade. So that's the kind of color I can give you. Apurva, do want me to add any specific schemes? Yeah. I I can't hear any other points. So is there any other question? Are all just following? Yeah. Yeah. No. I I I didn't hear the I didn't hear the answer the second part of the answer in terms of I just said 35%. Yeah. So what I was just trying to say that, you know, you know, for us, you know, our primary customer is a distributor or a stockist. And, you know, our sales to them is on a replenishment basis. And, typically, the inventory with our distributor and stockist is seven to fifteen days, and that doesn't change pre COVID, post COVID in terms of number of days. It remains more or less constant. And, you know, pre wise inventory, depending on the product range, you know, it's it's it's around thirty days plus minus. So that's the kind of inventory we keep with us, and and and we replenish the stock to distributor and stockist. We don't have direct visibility of invite inventory at dealer level, but they are fairly careful in terms of kind of inventory they keep and they adjust as per the demand situation in the market. Okay, great. And my last question on the synthetic elastomer impairment, is there any more to impair or this investment is fully written out? Because this has been a project that's been for some years that been writing down. I'm just curious if there's any more left or this is fully written off now. Yeah. So I can confirm that we can that this is a complete write off. There's nothing else left to be written off. There is a small value which we are transferring to our to our internal other business for utilization. But as far as the project is concerned, there's nothing left to use. Thank you so much, and all the best. Thank you. Thank you. Thank you. The next question is from the line of from Spark Capital. Please go ahead. Hi. Thanks for the opportunity. Hope the whole team is keeping safe and healthy in this crisis. First question, sir, if you can give some direct sales comment on market share moment on annual basis and other business? Approval, would you like to market share. Is the question on market share? Yes. Even even direct to movement will help if not the number. Directionally, think, you know, we have, you know, maintained or strengthened our market share in last year. I don't believe that there is, you know, any significant movement in any of our major product categories. Yeah. So second, from the supply chain perspective, there's a lot of concern around around sourcing of chemicals from China from any other categories. And last week, border crisis is in a registered hurdle now. So do you see any supply side disruption of late, and then for that, raw material prices are hardening in certain divisions? Yeah. So, you know, we, of course, have done a review of our portfolio. We have, you know, all the raw materials all the key raw materials that we source, we do have, you know, alternative locations as far as servicing is concerned. And therefore, we do not see a risk from a that perspective in terms of, you know, anything in terms of China sourcing at this stage. And we have got multiple vendors, and we continue to evaluate opportunities so that if there are any supply disruptions, we have alternative sources in place. Hello. And sir, a couple of clarifications. So there is a reclassification in our consolidated segment to where $6.35 crore of consumer in Bazaar revenue has been shifted to b two d division. So this pertains to which segment or which subsidiary? No. This is this is not a subsidy. See, what what we have done here is that we have reviewed the way the information is presented, and it is reviewed by our chief operating division maker, which is in this case, BND. And for that purpose, we have moved certain businesses, specifically joinery and construction chemicals, which are in the project space, from b two what was C and D to b two b. And this is essentially a change which will align with the way the information is reviewed by the COLI and in line with our internal reporting requirements. Right. The numbers are not as big the numbers are not as big as 635 crores. The the movement is around 228 odd crores. That's the kind of movement. So, Farif, I think he may be referring to consolidated. Consolidated. Yeah. We have also moved the waterproofing services and flooring business also to B two B. Yeah. So that is true for me. The what I spoke was on standalone. And what what Apuva is talking also about the consolidated entity, which is in waterproofing and also on our floor or floor paint Flooring. Like, city. Yeah. Flooring. Yeah. Yes. Got it. Got it. Very helpful. And, sir, one more question last time. The 71.5 crore then then, Shiptra, for how much take? It's 2.04% take. Two times, Sutra. Okay. That's all from my side, All the best. Thanks. Thank you. A reminder to the participant, anyone who wishes to ask a question may press star and one now. We would request the participant to please limit your questions to one per participant. The next question is from the line of Nikun Stoci from Bay Capital. Please go ahead. Yeah. Hi. Thanks for the opportunity. Just wanted to ask a question on the innovation front. We were we are tied up for your the internal strategic ventures with a few other partners for the new category. But, organically, are we looking at any new category or any new segment to drive the future growth? Pourrev, you want to take this first? So I you know, for for PD LIGHT, innovation has been always very important, and the almost entire sale of PD LIGHT is from, you know, product and technology developed in house. So on a on a very regular and continuous basis, we develop new products and innovation in all our core category and some adjacent categories. So within even say, for example, within construction chemical last year, we introduced several new products in terms of for tiling, for coating, and for several other application for waterproofing. So within each product category, we have introduced new product. Even within adhesives, there are new substrates which are getting developed. We have developed new products for, you know, for those applications. And so across all product category, new products are introduced on a regular basis. And do we have a number as to what percentage of turnover comes from the products introduced in last two years or something? So No. That that number, we do not share because sometimes, you know, it may replace some other product, and it's very difficult to estimate. And, also, we we do not see the impact on it. Sometimes it, you know, doesn't give the right picture. Of course, some of our product category, gestation period is long. So for us, you know, innovation is a very continuous exercise, and we don't see there's a separate need to try. But it should drive the overall growth. That is the you know, check. Okay. Okay. Thanks, Kailesh. Thank you. Thank you. The next question is from the line of Amit Tindra from Macquarie Capital. Please go ahead. Yeah. Hi. Hi, sir. Thanks for the opportunity. My first question was on your overall, you know, basically the overall cost saving program, especially in the current environment. And most of the companies have talked about the their cost saving program because of the lower demand, etcetera. So how do you see the expense going forward, the A and P spend? And any any particular program which you're running for other costs? Yeah. So thank you for the question. I think, like, any sort of responsible, sort of prudent corporate, we are obviously taking measures to make sure that we, you know, conserve cash. So, you know, in terms of deferring CapExes, which are not really urgently required, or they don't have an immediate sort of benefits in terms of meeting demand requirements and so on and so forth. Similarly, we also looked at our costs, our discretionary costs, and, you know, made appropriate adjustments, different spend where it is appropriate. Even in the area of advertising and promotions, we will be looking because many of the expenses are actually not possible. For example, many of our spends are in the region of they are relating to spend in physical meetings with our users, which are not possible in this current environment. So some of those spends are, you know, automatically getting deferred. The idea here is to make sure that we have the ammunition in place when market returns and the demand returns to, you know, to meet the requirements and at that stage. Having said that, we are not shy away from making investments, for example, digital spend. Even during the period of lockdown, we may have seen some fairly interesting digital ads from Pedalite. And and therefore, those, you know, leveraging the right technology in the in in the in the current environment, we continue to do. In terms of cost, we are obviously making sure that, for example, on people cost, we have taken a a test to defer increments to the latter part of the year based on how the the the current, you know, few months progress. So those kind of typical sort of prudent actions we have taken. And no structural action at this stage because we we are still believing that, you know, we are a long term believer in the India story, and we are positive long term. So no structural action as we go. No. I think you have covered all the right points. I think as as the year unfolds, we will get a better idea, and then we will decide. Sure. Okay. Secondly, sir, sorry to, again, you know, hop on the same demand related question. And, you know, I I know it is not easy for for any any of us including I mean, you to give us kind of any kind of indication when will be the recovery and what kind of a recovery we'll see now, let's say, in the next six months or so. But, you know, some of the companies have given, you know, their guesses in terms of sort of normalization, you know, of and and basically, in that direction, any view will be, you know, to whether the recovery in the entire portfolio, especially the domestic business will be there in third quarter or do you do you think it will the recovery can be much faster than the third quarter? Any color there will be will be will be helpful. Okay. I'll, again, make an attempt and after that, can see, I see, this is a black swan event. Okay? And and in this kind of an environment, it's very difficult for us to even estimate how things are panning out. We as you said, you know, I I gave you a color in terms of how things have worked within April to June. And we are not confident that whatever you're seeing in May and June is actually a new novel. And you must understand that we are not really, you know, in that essential, you know, commodity category or essential product category. You know, people are gonna use it every day, like like like some of the other categories. So at this stage, it's very difficult to give a sense, and we we really would like to study and look at it for the next couple of months before really making taking a call. Obviously, when we talk next time around for the q one result, certainly, we'll be in a better position to give you a view. But at this stage, we are not able to give any further color. I also give you some color in terms of the category where we see starting, you know, demand, but some of that demand could be pent up. So it is very difficult to estimate at this stage. See, what I will I would like to add to it is, you know, of course, you know, that we all know how the situation was in April, which was a complete a complete yeah. Sorry. So I know you know, compared to what we were in April and May, you know, a lot of things have opened up in India as all of you know. A lot of small town, semi urban and rural areas have opened up. A lot of parts of South Bai in Chennai has opened up. So there has been a good progress in June compared to April to May. So but going forward, what will happen, you know, it's very difficult for us to say or or we are not in any position to say better than all of other experts. So we need to see how economy performs over next few months, how GDP performs over next few months. That we have to see. But, clearly, June, you know, lot many more things are open as compared to April and May. And, you know, the the the trend in, you know, semi urban and rural area is happening. And any any kind of, you know so the difference between the semi urban and, you know, rural area versus, let's say, some of the areas which are still under a sort of a lockdown, like, Chennai and and to to some extent, the other metro. Is the difference very stark in terms of the company? Correct. The difference is obviously for a very short period, so, you know, we can't comment on it. But, yes, you know, cities like Chennai and Mumbai, still, have not fully opened up. Lot of market remains closed. Lot of lot of users are not actively working. So there is there is a fair amount of difference between cities like, say, Chennai and Mumbai, which are which are significantly impacted as compared to semi urban and rural area. You know, South, if you and, know, in our note, we have covered a of things. We have tried to give as much detail as possible about what is opening and not. So, you know, as I said, in South, barring Chennai, a lot of business has opened up, but the the rest of the India, you know, continues to be slow. But semi urban and rural area, almost across India, has started opening up. But I think it's too early, and I think, you know, as just we said, we need to see how next one or two months go to get a better sense of the of the demand condition. And, you know, you will also have a better sense by looking at how other companies are performing and how markets are opening up. I completely understand, sir. Thanks for the detailed answer. Just one last booking bookkeeping question, if I may. The other income this quarter was significantly lower compared to the run rate of fourth quarter. So if if you can give some, you know, kind of details there. Yeah. Yeah. So I think the primary reason is I did briefly cover in my opening remarks also. So there are two parts to it. One, the, you know, significant drop in interest rates versus the prior year. That is one factor. So on the portfolio, we see we are earning much less, and all of you know the interest rates which which have happened in q four, the kind of reduction which have happened. And the second is last year, we did have certain, mark to market gains in the treasury portfolio, which are sitting in the base. Obviously, they've not repeated itself this this quarter this year, and that's primarily explaining the difference between last year and this year, quarter on quarter. Okay. Sure, sir. Thanks a lot and all the best. Thank you. Thank you very much. Thank you. The next question is from the line of Prasad Deshma from Bank of America. Please go ahead. So good evening. Two questions. One, in terms of geography revival in different geographies. There have been certain comments in your press release. What kind of revival trends do you see in, say, north East west, north south? I mean, if you leave aside, you know, a couple of metro comments metro related comments that we have given, what kind of revival trends are there? So, Poonaw, do you want to take this for the for the question? No. I think I think that's what we have I know what we have said. I think that, Pradeep, if you want to, you know, sort of repeat what we have said. I think we have said that's what we have which is available to us. Yeah. But but you can maybe repeat that. Yeah. I so so, you know, I'll just add see, it's there in in our release as well. See, I think if you want to put a further color to it, all I can say is that certain markets in the West, like example, you know, Maharashtra, Gujarat, in particular, you know, the opening has been much lower. So that is one color I can give you. In particular, the city, you know, Surat, Maharashtra, Mumbai, Pune, and so on and so forth. So those are the that's the further color I can give you. But other than that, you know, pretty much what we are seeing is rural basically, we believe now that the demand, you know, will be led by rural and semi urban markets in this, you know, in this environment, and the metro cities will follow. And that's the kind of broad trend that we are seeing so far. Got it. And, on your balance sheet, there is a sharp jump in the cash and books. I don't know if that this is just because the investments have gone down. Just wanted to check if there is any I mean, are you keeping powder dry for any acquisition possibilities, or is it just a movement from investments to cash? Yeah. So, obviously, what we have done, the overall investments between end of last quarter and this quarter has come down because, as you know, we declared our interim dividend, which we paid out in March, and that was about INR $4.28 crores because all that happened well before the pandemic happened. So the overall investment between last quarter and this quarter is lower. We have moved some part of our portfolio in a prudent manner to fix deposits, which are around 500 odd crores, and therefore, you see the cash balance looking larger. But if you look at it from an overall investment perspective, the differential between December and now is broadly the movement in the the in the dividend interim dividend that we paid out. Got it. Got it. Thanks. Thank you. The next question is from the line of Gautam Singh from IDBI Capital. Please go ahead. Yeah. Thank you for the opportunity, sir. Just wanted to understand in front of 22 lakh investment that is coming to the side, what kind of revenue are you expecting from product product sales on a normalized basis, maybe over 2 to 3 lakhs? Kunal, would you like to Yeah. No. I I think, you know, it is not only for the, you know, for a product. It's all about that revenue, which is relevant. As I said earlier, you know, enterprise leader in this segment. And, you know, we have a number of different, you know, sort of collaboration and partnership initiative, which is planned, which is, you know, across various product services and joint marketing activities. So I would not like to put a finger in terms of related to consumption of our product. Then it is one of the one of the one of the benefits of the association between that. In that case, sir, what is the They are clearly the largest player in this space, and they they are the largest player in this space at this point. And hence, you know, the overall collaboration, you know, with multiple initiative is is the purpose of investment. So so so what do we expect from PayPal, it's not revenue? So we will we will have revenue. We will have some joint marketing activity, just some common services that we may offer. So number of other things, plus it's an investment in a space which will allow us to have a very close access and view on how this ecosystem is developing, which would allow us to also develop strategy and product which may be applicable to other customers in this space. So overall, it is it is it is an investment for which, you know, of course, we get a part of the stake in that company. And, you know, we we can see very quickly in terms of how this, you know, thing that the new start up companies are operating and growing. And along with that, we will have some associated benefit in terms of use of our products and the the code everything that's in solutions. Sir, I mean, are we saying that our employees will be at their place and will be observing the way they are doing things and how this will be category work? Our employees you don't have our you don't need to have employees at their place. Yes. We will be closely working with them at a very senior level to understand how the business is developing and how the overall ecosystem and market is developing. As we all know that the new age economy is developing well and our business is is growing in this space. And hence, it's important for company like us to get a better understanding of this. But, yes, our our team will closely collaborate together. Thank you. The next question is from the line of Keur Pandya from ICH Financial Life Insurance. Please go ahead. Hello, gentlemen. Sir, just two questions. So the question earlier participant asked, so I would ask different ways. So, basically, what would be key monitor was that we would be tracking to to track the progress of this investment? If we are doing a new generation company, So what would be key monitorable? That is one. Probably internal monitorable, not in only in financial terms. And second question is, so as we divide our product in growth in pioneer category, So those growth and pioneer pioneer categories are those sort of products which we need to teach to the channel as well as to the consumer how they are supposed to be used. So because of the entire relatively complex process, do you think that the growth rate or growth in partner category can be slower for near term? Because, I mean, it is not easy to reach everyone in this kind of constrained environment. Is it the right assumption? So I'll just make a very generic comment, of course. Apoorva will give a more detailed one. See, I don't think we should just go by a few months or a few weeks of, you know, COVID to completely, you know, relook at, you know, growth of this, you know, pioneering category. So we we are not really looking at it that way, some of these categories that we are talking about, we have a long term, belief in the growth in those areas, which is why we are invested. And in many of the, categories that Piglet has got growth have come with some lag and with some you know, it takes time for some of these categories to develop. And we've got the benefits out of those investments, so we don't believe that, you know, we should change our strategy for two, three months. But a few of these seem free to No. I think I I didn't fully understand. What was the second question? The first question was what are the monitorables related to some of these early stage investment. Right? And what was the second question? So if I so for example, this call, I mean, I believe the channel as well as the user, I don't know how to use it. They have growth or I think growth in partner category. They need some kind of teaching for the channel as well as for the consumer. So this is a evolving process. So do you think the growth the growth can be slower in those kind of categories in in the account? No. I I think think Yes. Despite being lower despite, I mean, a lower level of penetration. Just because of the awareness issue. That process closed down. Okay. I I I don't think I fully understood the question. But, overall, I think our growth and, you know, pioneering categories, obviously, we expect them to grow at a faster than the rate and established product. And, obviously, we put lot of initiatives in those categories. So tomorrow, they become larger and established category. As far as our established category goes, you know, we still we believe that there is, you know, India, there is a lot of growth and consumption which is likely to happen for them. We continue to remain products of our focus, and we expect good growth rate in them as well. I I can fully understand your question, so I hope I have answered it. On the first point, as far as the investment goes into the start up, you know, first of all, the key purpose of this investment is to get, you know, you know, these are strategic investments. It is to get the right insight of how the user behavior is changing, how online interior decor is changing, how the consumption pattern will change. It is primarily very important for us. And by making this investment, which are not very large, we get very close eye in terms of what is happening in that space, and it allows us to develop products and services which will have application with them as well as application outside of them to other customers. And hence, tracking cannot be in terms of only what they use. The tracking is on number of criteria. It will depend on how we are able to evolve our products and services in medium to long term for for usage by such strategic customers as well as others. And normal consumption, someone asked before, yes. You don't need to invest in a company for them to use. Most of the customer in India would use our product. Some of them were already using our product. However, a strategic investment allows us to operate and collaborate very well. I think in today's time also, you have heard in other cases where companies make strategic investment into other companies. And, you know, you have heard of number of cases in in India where this has happened, where where companies will make this strategic investment so that they can collaborate and work closely together. And our strategy and approach is similar. Okay, sir. Perfect. Sir, thanks a lot, and all the best. Thank you. The last question from the line of from. Please go ahead. Yeah. Hi, Apurva and Pradesi. Thanks for the opportunity. I have two questions. The first question is, like, you have given some understanding on India business. Can you show some light how the international business is spanning out and which are the geographies is not open or still in the lockdown period? Sorry. By the way, this one. Yeah. Yeah. Yeah. Yeah. Sure. Yeah. So as far as far I know international market, many of them were in lockdown and slowly, they were opening up. You know, for example, US was completely shut in April and May, but now has opened up. But while they were closed, know, a lot of the sale was happening through ecommerce and retail channels. But, you know, the manufacturing and warehouse was closed. Brazil was set in operation. Bangladesh and Nepal, I guess, was similar to India in terms of they also had a fairly fairly strict lockdown. So a lot of countries had a different period, but most of them had lockdown. I think barring the, you know, the lockdown was not as strict. And in most of their markets, manufacturing and warehouses was impacted. But in most places, it has started opening up. So it looks like India, you know, there could be a gap here and there, but many of the markets have started sort of opening up and the the normalcy is returning in some places faster than others. So did you want to add anything to that? No. I think only the one point is that I think one of the markets are so small. In Nepal, for example, I don't think the lockdown has yet been lifted. So there are some pockets like that, but, yeah, largely getting, like, in India's choice. Okay. And my last question is on you earlier mentioned that south is working for I mean, south is up to the mark, and even north, some buckets are up to the mark. So would you be able to quantify what kind of business we get south and north market? No. I I don't think we share that level of data, you know, that that that sense. So, you know, I don't think we'll be able to give that info on the call, but I don't know, Akhil, you wanna give any other color? No. Adi, what what we would like to say is that clearly, South and East have opened up much faster than North and West. In South, barring Chennai and Sea District around it, you know, bulk of South has opened up. So, you know, sir, basically, that means that the business has opened up, consumption has started happening, and the market the market is, you know, has opened up last year other than Chennai and Sea District. East is also much better. North, west, and center is taking a little bit longer time. Percentage right now, I think it's too early to share because, you know, we are just about fifteen, eighteen days in June month. So quarter end would be an appropriate time to reflect on it. But even within that, it would be very difficult to differentiate on what is the pent up demand and what is sort of a normal demand. So I guess you will have to wait and watch. But, you know, with company like us, you know, obviously, as the market opens up, GDP starts to respond, we will certainly be prepared to benefit from it. Yeah. Apurva, thanks for that detailed explanation. What I was trying to understand, is the consumer business is taking a lead or is the project business is taking a lead? Hello? Yeah. Hello? Sir, can you hear me, Bhajan? You know, both the business has started our b to b business our b to b business also is linked to the conserve consumption with lot of end users. So our b to b business has also started responding. As far as construction goes, as I said earlier, the individual housing segment has started, you know, responding responding in in this this geography which I just talked about. But in larger metro, the larger construction still will take a longer time to to open up. So a lot of large construction, which is mainly in bigger cities, you know, the multi story building or larger, you know, which which greatly impacts our companies like MENA Percept. You know, they are still impacted because the activities has not really geared up. So a lot of individual housing, especially in areas like South and Eastern, some parts of North and West has started responding. Construction activities in smaller area, rural area, lot of construction which was in pipeline has started. But, you know, it's too early. We won't be able to give you any number if that is what you are looking for. It would it would be very early and it would be misleading. Okay. Thank you. And all the best to you and the team. Thank you. And I'll hand the conference over to the management for closing comments. I approve your close. Thank you, everybody. Thank you for the call and questions. Yeah. Thank you all. Thank you very much. Bye. Thank you. On behalf of ActiveCapital, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.