Good afternoon, everyone, and I would like to welcome on behalf of Axis Capital, all of you. We have with us from the management today, Mr. Apurva Parekh. We'll start with a small introduction about the quarterly results, and after that, we can take the question and answers. Thank you, and over to you, sir.
Good afternoon, everyone, and thank you for joining the conference call today. Despite challenging demand conditions, we have delivered resilient performance driven by consumer franchise expansion in rural and small towns, earlier pricing actions, and moderation in input costs. We remain cautiously optimistic in the medium term of delivering consistent, profitable, volume-led growth. The net sales for the quarter grew by 11%, with underlying sales volume and mix growth of 6.3%. This was driven by 6% growth in sales volume and mix of consumer and bazaar product, and 12% growth in volume and mix of industrial products. Net sales growth during this quarter was on a base of 21.9% growth in the first quarter of previous year. Gross margins during the quarter improved by 1.3% over the same quarter last year, and by 0.6% over preceding quarter.
The current spot prices of our major raw material, that is vinyl acetate monomer, is about $870 as compared to quarter one 2020 consumption cost of around $980. EBITDA before non-operating income is INR 418 crore and grew by 16.4% over the same quarter last year. EBITDA as a percentage of net sales is 23.7% as compared to 22.6% in the same quarter last year. Profit after tax grew by 7.7%, excluding income from intercompany transfer of intangible assets and effect of tax thereon in the same period last year, grew by 19.2% over the same quarter last year. I will come to the consolidated performance. Net sales grew by 10.3% over the same quarter last year. EBITDA before non-operating income grew by 15.7%. Profit after tax grew by 22.2% over the same quarter last year. Moving on to subsidiaries business.
In case of domestic subsidiaries, Nina Percept and CPE reported decline in sales and EBITDA due to market conditions. During the previous year, ICA Pidilite had acquired brands and technical knowhow of certain wood finish products from holding company that is Pidilite. Like-for-like sales growth after excluding these products is 18% over the same quarter last year. EBITDA growth is on account of improved margin due to scale-up of local manufacturing and some ForEx gains. In case of international subsidiaries, Bangladesh and Pidilite Lanka have reported good sales growth. EBITDA growth in Bangladesh is lower due to higher manufacturing and SG&A expenses to support future sales growth. Sargent Art, a division of Pidilite USA, reported good growth in sales and EBITDA, mainly due to favorable trend and growth of sales to key customers. The subsidiaries in Thailand and Egypt reported flat sales due to competitive pressures and market conditions.
We can now start with questions.
Thank you. Ladies and gentlemen, we will now begin the question and answer session. Anyone wishing to ask a question, may please press star and one on your touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is on the line of Abneesh Roy from Edelweiss. Please go ahead.
Sir, congrats on good set of performance. My first question is on Nina. In Q4 also, the sales growth was not there. It was a dip. This quarter, it's a very sharp dip of 17%. In the same market condition, if consumer business can see good growth, industrial can see good growth, why should this business suffer and in fact, decline? You said the market condition. Apart from the macro slowdown, in terms of competitive intensity, if you could highlight, is there anything which is impacting your numbers there?
Abneesh, as you know, Nina Percept is a waterproof services company. They service clients in real estate segment, commercial projects, and also into infrastructure. Amongst all sectors, real estate and infrastructures are stressed sector, as all of us know. While we continue to have good order book and also new orders, there is a significant stress in this segment, and hence we have to be cautious in terms of taking up and executing some of the projects. Market condition for which Nina Percept is seeing is somewhat different than what the overall Pidilite or our industrial business sees. Hence, they are seeing a little bit more challenging market condition, which have impacted the sales growth.
Can I-
Yeah. If you go back one year during the same quarter, I think the growth of Nina and Percept when they were two separate entities was close to 30%. On that high growth base, there has been some correction due to this challenging market conditions.
Sir, two follow-ups on this. One is in terms of % of sales. How much is coming from new buildings and how much is from the older ones?
Almost everything or substantial amount comes from construction. Construction is one. There is a real estate, these commercial projects like manufacturing plants, mall, and other things like that which we can call as commercial construction. The third segment is infrastructure. All of it is new in nature. Very little would be of the nature of repair. Unless if there is a very large project which requires repair, Nina Percept focuses on new construction-related activities.
Sir, follow-up on that. If now the slowdown will continue for the coming quarters, is there any change in terms of business plan, in terms of focusing on the older ones? Second, sir, is there a conscious strategy because liquidity crunch is there, so are you also saying no to some orders because you may not get the payment?
Yes. First of all, to answer your second question, yes, clearly, we are very cautious in terms of financial exposure, and we do say no to projects if we believe that there is a financial risk. That is one. Second, as far as going forward, we are trying to improve our contribution of sales into non-real estate sector. We want to increase our business into other segments of construction and have a lesser focus on the real estate. That is how we plan to change the profile. However, we are not planning to take a repair project. Just to give you an idea, obviously the potential in this segment is very good as construction happens in India. There is a temporary period of stress. In that period, we will see our sales impacted. However, the potential in this segment is significant.
We are the leader in this segment. While we will increase our contribution of sale from non-real estate segment, real estate will also continue to remain important.
My second question is on the Consumer Bazaar volume and mix growth. On a 20% base, 6% is a good number. It's a 26% growth on two years basis. Now, if I see most discretionary consumption, there is a big slowdown. Could you elaborate where you are getting this kind of a growth and is there the GST related market share gains which is panning out, and are we coming to an end on that, there could be a slowdown in terms of the volume growth?
No. Also, you need to see that last year's 20% growth also had some benefit of GST slowdown in the previous year. Right? When we say 20% last year, which was a very good growth, that was also on a lower base of GST impacted sales in 2017, 2018. Right? That is just to set the numbers right. Second is that where have we gained? We believe that our market position continues to remain strong in most of the sectors that we operate in. I would not say that there is a very significant impact due to transfer of business from GST. Our growth comes from our normal initiatives like distribution into smaller population centers, premiumization of our products, adding new products in each of our segments, focusing on demand growth, including advertising and other things. Basically it is coming from several different areas.
Sir last question, Bangladesh SG&A has increased and margins have come down significantly. Is this because of competitive reasons or is it just some festive related or a new launch which has happened?
There are two reasons in Bangladesh. One is we are setting up a second manufacturing plant, which is close to getting commissioned. It will be commissioned soon, during this quarter. There are certain expenses that we have had to increase in terms of our staffing and other expenses, which are due to the increased activity which is likely to happen. Otherwise, SG&A is just a shift from across the quarter. There is no material impact. Our focus there is still first is to build a strong top line in that country. Our margin profile is very healthy. Quarter to quarter, we may have some differences like that, including some higher expenses related to startup of new plant.
This new plant is on extra capacity, as in your capacity utilization was an issue? Is this a new product category?
It is both. Our existing plant, which makes our main products, the capacity has now reached the limit. We need new capacity for the growth, as well as some new products that we are adding.
Okay, sir. That's all from my side. Thank you.
Thank you. The next question is on the line of Avi Mehta from IIFL. Please go ahead.
Hi, Apurva and team. Just wanted to kind of first understand the sales growth front. If I go back to the fourth quarter conference call, you had indicated that second half growth rates are more an indication of the underlying demand growth. Now, volume growth in the first quarter suggests some weakness from this level in the Consumer Bazaar. Just wanted to kind of get your comments on what exactly has driven this weakness, and is it more demand or is it some segment? If you could help clarify that.
No, I think we believe that the demand conditions have been challenging also in this quarter. That is the situation, as you may have also seen with results of other companies. We believe that there is some general slowdown and some challenges in demand. That I would attribute as the main reason.
Is this across the segments or is it vastly in waterproofing or any particular sub-segment that you would want to call out?
Little bit more pronounced into sectors related to construction.
Okay.
I would say that, yes.
Okay. Waterproofing, et cetera, is bigger.
Waterproofing and also a lot of our other products are used for interior and construction-related activities. Adhesives also go into that segment. To that extent, it has had an impact.
Okay. The second bit is the underlying demand momentum continuing to remain challenging, or have there been any signs of change from there on?
No, second quarter, it has only been one month, and I think it will not be fair to comment on the second quarter. We will have to wait and see the full quarter before we make comment on that.
What do you look forward or things that you think can drive pickup, or have you kind of revisited your yearly expectations or no, you believe that you're still on target because of ABC? I just want to kind of get your thoughts on that.
Our effort is to continue to focus on fundamentals and our own growth initiatives. We have not spent too much time trying to evaluate that and then try to reset some internal numbers. We continue to focus on our initiatives, and we believe we have several growth initiatives. We are doing our best on that. There are some external factors which we have no control, so we don't end up spending too much time on that. For example, we continue to make new advertisements, we continue to introduce new products, we continue to expand our distribution, we continue to focus on international markets. These are some of the growth initiatives which we continue to put our efforts on.
Okay, sir. That's fairly helpful. The second bit, sir, is your comment about expansion into rural. You highlighted as one of the drivers or aiders for growth rate. Is it got to do with more in our parlance, direct reach or that you're kind of getting into given what we hear about liquidity constraints in the market, or if you could help explain what exactly is the sense of this expansion? Is it more the quality of distribution or is it more number of outlets that you're focusing on?
All of it. Basically, as we know, we have been saying this for the last few years, is that our focus is on what we call as emerging India. Basically, the small towns of India and rural area. We have a whole new distribution model there. All categories of businesses of Pidilite, we take them together to smaller towns, having a common distributor, having a common sales team. With the effort that we cover as many towns as we can, within town, we have a much better width of distribution and also better market development by reaching out to more end user. Essentially, we have been doing, and we continue to put greater resources into smaller towns and rural areas in terms of both sales and distribution efforts and market development efforts.
This is along the same line, the urban that we used to kind of focus on. It's the same line that you're talking about, right?
It is what we used to call as rural. There is a rural and there is a small town India. There is a small town is what we define as anything with population less than 200,000. There is a rural area, which is typically what we call as rural, which is below 50,000. We have focused effort in these two areas. One is small town, and second is rural, where we continue to put more resources to achieve better growth rates. It is in line with what we have been doing for last few years.
Sir, lastly, on the VAM price, clearly there's a very sharp moderation that we are seeing. Just wanted to understand, would it be fair to argue that there is margin benefits that kind of are still there, or is there anything that I might be missing in kind of taking the simple assumptions?
No, I think your assumption is correct that the current spot prices are lower than our average consumption cost of the first quarter. The raw material prices continue to be benign, and hence it should help us favorably. At the same time, we did take some pricing action in the first quarter, as I said in my opening statement. We did reduce prices of some of the products, which consume VAM. Some of that improvement in margin, we did already pass it on to the customer because the reduction in cost has been fairly sharp.
How much was it, sir, on a portfolio level, would you be able to share? This was done in the start of the quarter, so one gives a fair representation of that?
Some of the initiative pricing were taken right from the start of the quarter, means the impact was in all three months. In some of the product categories, it was possibly from May.
Okay. Just the quantum?
The overall price reduction impact may have been about a couple of percentage points on the overall sales.
Okay, sir. Okay, perfect. I'll join the queue for the other questions. Thank you very much, sir.
Thanks a lot.
Thank you. The next question is from the line of Arnab Mitra from Credit Suisse. Please go ahead.
Yeah, hi. Thanks for the opportunity. Just carrying on the question on the margin front. Even with the price reduction that you've taken, you possibly will have very strong gross margin expansion. As you look into FY 2020, do you think that will slow down into EBITDA or there are initiatives where you can potentially reinvest some part of it in terms of growth-driving activities?
First of all, as we see expansion of gross margin, some of that we will pass it on in terms of pricing action, as we've already done in the first quarter. Some of it we may invest in terms of higher spend on advertising and some of the other activities. However, as in when we have had low raw material prices, if you really look at Pidilite over the last many, many years, whenever we have very low raw material prices, our overall gross margin and EBITDA margin do expand. It will certainly benefit us, but if the reduction is very sharp, some of it will be passed on in terms of both pricing action and increase in certain expenses.
All right, Thanks. Other than VAM, the other key raw materials that you use, the overall RM basket, is there deflation in all the other parts of the RM basket also? Just wanted to get a bit of sense on that.
There has been a reduction in a number of raw materials. Some raw material have increased also. Broadly, if you see as an index, there has been a reduction compared to Q4 as an overall basket.
My last question was on staff costs. On the staff cost side, standalone, the growth is higher than the sales growth for the last few quarters. What is driving that, and does that situation continue where you will see this high teens kind of staff cost growth in FY 2020?
Our staff cost increase is higher. I'd like to answer it in two way. Overall, our staff cost is higher because of the nature of our business. Our business is of the nature where we have many, many smaller businesses, many, many niche businesses, which require their own sales and marketing network. Hence our staff cost overall is a little bit higher than possibly comparable companies. Second, the increase has been higher is that, we are sort of improving both our overall capability as well as staffing for some of the growth areas in which we want to invest in coming quarters and years. Some recruitment is done ahead of time. Second is, there is an overall effort to improve the capability within Pidilite, including hiring of a lot of young managers in all areas like finance, sales and marketing, R&D, and other capability improvement initiatives.
Having said that, we are also taking a close look at our staff cost, and if we believe there are areas to optimize and improve, we will certainly do that.
Okay, thanks so much. All the best.
Thank you. A reminder to the participants, anyone wishing to ask a question, may please press star and one. The next question is on the line of Jaykumar Doshi from Kotak Securities. Please go ahead.
Hi, thanks for the opportunity. There is an update on the exchange today that you received an in-principle approval from the board for forging some joint ventures in the business areas of technical mortars, epoxy grouts and bolt technologies. Could you give us some idea of what these areas are and what are the opportunities in these areas, and are you looking at entering into some of these things?
Jay, these are some of, as exactly the release to the stock exchange goes, this is an in-principle approval from the board to enter into JVs with separate companies, for the products and technologies which are mentioned in the release. As we know, in the construction-related area, there are many different types of technologies and product categories, and there are some very good companies who have very good technologies. We are planning to enter into joint venture with them to further advance our business. Like in the past, we have done in our tie-up with Pidilite ICA and otherwise, or Jowat. We have been tapping into companies with good product technologies to help further our growth. In terms of the names of the company and further details, we will share as soon as the joint venture agreements are signed.
Till that time, we cannot share more agreement, but it's in process. It should happen in few days. As and when actual agreements are signed, we will share more details.
Will this be on the B2B side of the business or it will be B2C products?
Largely in terms of what we call as our bazaar segment. It is bazaar segment, but it will also have some usage into larger construction as well.
Thank you so much. I look forward to hearing more on this later.
Sure.
Good luck for the next quarter.
Thank you.
Thank you. The next question is on the line of Tejash Shah from Spark Capital. Please go ahead.
Hi, thanks for the opportunity. Sir, we are picking up from many consumption categories this quarter that the growth momentum was largely front-loaded. As the quarter progressed, there was a deceleration visible. Was it the same in our case or was it different?
I would not like to comment on the growth on the months within a quarter.
Not the-
I would not like to generally go in that direction, no.
Not that way, sir, because the outlook on economy, because of liquidity issue also changed materially in the second half of the quarter. Hence a lot of optimism that a lot of companies had in the first half vanished in the second half. From that perspective, are you seeing serious liquidity crunch in the economy or any of your channel partners in the second half of the quarter?
Really, I think, commenting exactly on what is happening now and all generally as a company, we would not like to do that. Also saying how was it in the first half of the quarter and second half, we really cannot comment and give a color on this. As we have already said, we find that overall demand condition has been somewhat challenging. We are cautiously optimistic that things will improve and demand will improve.
Sure.
More than that, we don't have any comments on that.
Sure. Second, a lot of activity has been seen by MNC for a while now, but this quarter it was visible more by paints player in construction chemical segment. Are you seeing competitive intensity in our segment also increasing? These players are largely into remedial side of the business. Just if you can share some observation on competitive intensity in the segment.
As we have shared earlier, paint companies have been active in construction chemicals for the last few years. What they have focused on is the use of construction chemical by painters. They have a strong presence in paint channel and also with painters. Paint companies have largely focused on developing products which painters can use as waterproofing, a waterproof coating or a waterproof primer, waterproof putty. A lot of their focus has been in that area. In those segments, they have been able to expand market and achieve sales.
What % of the market will be fresh and what will be the remedial in nature?
See, rough estimate, again, without any sort of published or reliable data, we would think 2/3 of market would be new and 1/3 would be remedial.
Great. This is helpful, sir. Thanks an all, sir.
Thank you. The next question is on the line of Harsh Shah from CGS-CIMB. Please go ahead. Also, we would like to remind participants that you may press star if you want to ask a question.
Hi, Amit Prajit here, and thank you for the opportunity. Sir, just on this consumer bazaar segment, EBIT margin, you indicated there is an intangible income represented. Can you explain some about this?
This was in the last year in the first quarter. What we had done is Pidilite had a brand of wood finishes called Woodfin, which was Pidilite's brand. We entered a joint venture with this company called ICA. We entered a 50/50 joint venture with ICA, the name of the company is Pidilite ICA, to manufacture and sell premium wood finishes. Once we entered that joint venture, the wood finish brand, Woodfin, owned by Pidilite, was then sold to the joint venture. That was the transfer that we did. The trademark and the related goodwill was transferred to this joint venture to operate from. Hence, last year, we had a one-time gain on the sale of that trademark from Pidilite to Pidilite ICA.
Okay. Sir, on the overall pricing cuts that we have done, do you want to highlight any specific categories that you've done, or is it across the board?
We have done the pricing actions in woodworking adhesives, some of the construction chemical products. Some of our major product categories, we have taken some pricing action in the current quarter due to significant reduction in raw material costs.
Yeah. Sir, lastly, on the overall outlook, considering that the demand looks to be weak, and are we looking at incentivizing trade more going forward in terms of versus a pricing action?
See, we are taking some normal initiative that you can. If the demand scenario is weak, then the trade actions have limited benefit because then the offtake will not happen. You can have some temporary benefit from some incentivization. It all depends on the demand scenario. We are cautiously optimistic that demand scenario will improve. That's why we are not doing anything which is out of ordinary or unusual.
Okay. Sure. Thank you.
Thank you. We'll move on to the next question that is on the line of Ashish Shah from Tata Capital. Please go ahead.
Thank you for the opportunity, sir. The other expense growth has been lower versus the top-line growth. Is there any one-off or it is just because of our cost-cutting initiatives?
It could be some one-off item last year and some cost reduction impact, but I would not look too much into other expenses on the quarter-to-quarter basis. There is always some legal and professional expense or some other one-time assignment or expenses of that nature. It is made up of many number of expenses, so I would not look too much into it.
Fair enough. Sir, on the EBITDA, sir, this time we had a very strong EBITDA, partially helped by raw material prices and some other lower other expenses. Going forward, do you think there is further scope for margins to expand? I know, sir, that this quarter, the raw material prices have gone down further and we plan to use some of these benefits to lower prices and for growth initiative. From here on, is there a scope for margins to improve?
If you look at our historical numbers, our margin, as we have always said, we like to operate in a band of around 22%-24%. However, many times when the raw material prices are very low, our margins are higher than 24%. There is always a possibility that it can be higher than 24%. It depends number of factors, including the sales growth and overall material cost scenario. It is always possible as it has happened historically. We have to see.
Fair enough. Thanks a lot.
Thank you. A reminder to the participants, anyone wishing to ask a question, may please press star and one. The next question is from the line of Avi Mehta from IIFL. Please go ahead.
Hi, sir. Sir, first was the industrial segment. Now, we've been seeing a steady growth rate in this segment for the last few quarters. Does this suggest that our journey of improving the product mix is more or less done? We've kind of done the hard work. Now, obviously they'll be incremental, but most of that impact on sales growth rate is more behind us. Would that be a fair way to look at this, sir?
No, I would not say the journey is over. See, industrial products are always evolving, and you need to continuously ensure that your products and technologies keep on evolving as customer needs change. Also, the competitive scenario can change from product category and segments also over a period of time. It is something that we watch very closely, and we take various initiatives to continuously upgrade our product mix and customer mix. Having said that, some of the recent high growth, including this quarter, has come. Our pigment business has done quite well. There is a clear increase in demand. Partially, this could also be for the fact that manufacturing of some of these product categories has reduced in China, and there is a greater preference towards India. There is a certain benefit because of that as well.
We remain consistent in our industrial business approach that we are focused towards superior product and customer mix. We want to have reasonable margins and return on capital. That is how we operate in this business. Current trend has been favorable.
Would you say this is a reasonable number in terms of the margin that you want to be in, or you think this is still much inferior? How should I look at that, sir?
No, I would not say that. I think we have been comfortable with our industrial product margin. Again, because since we operate in large number of product category within industrial product, which is like industrial adhesive, leather chemicals, textile chemicals, pigment powder, there is a fairly wide range of product, hence product mix can play a significant role. Generally, we are comfortable with a margin in and around this range.
Okay, sir. Perfect. The second bit is some bookkeeping questions. Sir, if you could share the ad spend number for the quarter and likely CapEx for FY 2020.
Yes. Advertising and sales promotion. Advertising and sales promotion spend for the quarter was around INR 75 crores.
INR 75 crores. Sir, CapEx expectation for FY 2020, what should I assume, sir?
CapEx would be of about 2%-3%, you can say around 3%. In some year, it could be higher if we commission a new manufacturing plant, but you can say somewhat 3%.
Sorry, one more bit on the tax rate, sir. You had highlighted 32%, 33% because some tax exemptions, that is what I should assume for the year as well, right, sir?
Yes.
Okay, perfect, sir. Thank you very much, sir. That is all from my end, sir.
Thank you. A reminder to the participants, anyone wishing to ask a question, may please press star and one. The next question is from the line of Shirish Pardeshi from Centrum Broking. Please go ahead.
Hi, Apurva and team. Good evening. Congratulations for good numbers.
Thank you, Shirish.
I have three question. One is on VAM. We have seen the significant reduction in the VAM prices. Generally, we tend to have some VAM holding. Would you be able to share what kind of holding we have with the high price, or is the whole holding is at the lower price?
I don't have the figure of the current VAM holding. The normal inventory, we will have about one, two months of inventory, possibly. If you look at the rates, the VAM rates were lower in the last quarter. They have somewhat further reduced. We will have a little bit higher inventory than the latest spot prices. That is for sure. I don't have the exact quantity of VAM being held right now.
Okay. I'll take it offline. The other question I have, if I look at your industrial and consumer business growth, somewhat you've highlighted at least that rural and tier 2, tier 3 you're trying to expand. Is that the distribution reach has a further scope? Maybe if you can share what is their coverage in terms of touchpoints?
This small town and rural area is a very large geography and a very large population, and it is further growing. Our effort is to have direct distribution in as many towns as we can, and we have been making steady progress. As far as potential, yes, there is still substantial potential to expand the distribution further because almost 65%-70% of Indian population lives in villages with population below 10,000. That is a very substantial population where direct reach is very difficult, and there is a lot of scope for us to grow.
Is there a target your sales team has got that you will target certain number of villages less than 10,000?
We have a target, which is every year to incrementally increase the distribution. Every year, we make steady progress on distribution. Due to obvious competitive and other reason, I would not like to spell out the exact number of outlets we are covering and we plan to do in next year or two.
Sure.
What I'm saying is, we have been making, and we continue to make efforts to expand our direct reach into smaller population centers.
I'm just trying to pick up and extend this. Is there any similarity where you have a common distributor for consumer bazaar and industrial in the rural towns?
Yes. In smaller towns, all our distributors are common. Most of them are common. In smaller towns, most of our distributor of consumer bazaar and consumer products are the same.
Is it fair to assume that your growth in consumer bazaar will replicate the similar growth into the industrial and construction chemicals in the rural?
No, no. The distributors are common for consumer and bazaar. That's what I said. It has nothing to do with industrial.
Okay. All right.
Having a common distributor does not result into the same growth rate. The growth rate would largely depend on the demand scenario and number of other factors. Distribution is just a means for us to have a common infrastructure to take our products to smaller towns. The demand scenario in consumer and bazaar product is not always the same. It depends on the demand scenario as well.
Got it, Apurva. Just last question. On the raw material basket, you said right now raw material is the largest part, which is declining. Is there anything which is inflationary? You mentioned which are the products or which of the raw materials are under inflationary growth?
There are some intermediate products that we use for our pigment business where there has been some increases. There are some polyvinyl alcohol type of product which have seen some inflationary impact. We have a very wide and diverse raw material basket where things like vinyl acetate monomer and acrylates are on a bit of decline. However, there are some chemicals where there has been some increase as well. Like as I said, polyvinyl alcohol or carbazole or some of the other raw materials, there has been an increase as well. Overall, as a basket, our raw material cost has reduced.
I got it. Okay. Thank you and all the best.
Thank you.
Thank you. A reminder to the participants, anyone wishing to ask a question, may please press star and one. Participants, if you wish to ask a question, you may please press star and one. The next question is on the line of Deepak Jain from JM Financial. Please go ahead.
Would want to know your NPD pipeline and what is there next in innovation basket.
Deepak, we cannot share with what is coming. We have new products which are planned in almost all product categories. We do it on a continuous basis, but I cannot disclose the new products which are likely to come.
Okay.
Deepak, are you done with your question?
Yes.
Thank you. A reminder to the participants, anyone wishing to ask a question, may please press star and one. The next question is on the line of Ashish Shah from Tata Capital. Please go ahead.
Sir, thank you for the opportunity again. Sir, one quick question. Sir, if you can throw some light on the inventory at the dealers or any such thing which is happening on the ground. Is everything normal?
We started by saying there is challenging demand scenario. If there is a challenging demand scenario, inventory level with dealers could have gone up a bit. Again, that is not something we can accurately track. It is inventory at dealer level. We track the inventory at our distributor level, which we do on a replenishment basis, so it remains at the same level. I do not have a track of the inventory at dealer level. Whenever the demand scenario is challenging, their inventory level would go up a bit.
Would that have any impact on our future sales? I mean, just thinking out loud.
It would be, Ashish, very short term. If there is some inventory, first of all, they would not increase their inventory too much. In our case, they order the product. If they don't need it, they don't order it. Essentially, inventory level increase or decrease can have some impact, but it is not very significant.
Fair enough.
It's possible that if their inventory level has gone up, they can reduce their purchase by a few days. That could happen.
Okay. Fair enough. Thank you.
Sure.
Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to Mr. Gaurav Jagani for his closing comments.
I just would like to thank once again to everyone for joining the call.
Thank you.
Thank you, everybody, for joining the call. Thank you. Bye-bye. Have a good day.